The two faces of Janus Henderson: CEO Ali Dibadj on the battle for inflows amid more expansion

Janus Henderson Investors “always had a great foundation,” according to Ali Dibadj, chief executive of the firm, despite a recent history of outflows.

Dibadj took the helm at Janus Henderson in June 2022, having previously served as chief financial officer at AllianceBernstein. At that time, the foundations at his new firm may have looked decidedly shaky.

Following the merger of Janus Capital and Henderson Group in May 2017, there were no less than 23 consecutive quarters of outflows, leading to a net fall of $119 billion.

Janus Henderson returned to inflows after that sustained period of outflows in the first quarter of 2023. Since then, however, it returned to outflows four quarter in a row before booking net inflows for the quarter ended June 30. Investment returns have helped to bolster assets under management to $361 billion as of June 30, vs. $345 billion at the time of the merger.

With some signs that the ship may be turning around on his watch, Dibadj said, “Janus Henderson continues to have a great foundation based effectively on three things: strong investment acumen, great research and intellectual curiosity.”

Dibadj represents a next stage of Janus Henderson, with the heady days of Bill Gross’ infamous 2014 decision to jump ship from PIMCO to the firm in the rearview mirror.

“We don't really talk about that time frame as much. We don't candidly talk about the merger. What we do talk about is our forward strategy,” Dibadj said.

Acquisition spree

A return to inflows intertwines with Janus Henderson embarking upon an acquisition spree. A recent move was the September completion of its acquisition of NBK Capital Partners, the alternatives investments arm of the National Bank of Kuwait, signaling both a further expansion into an asset class and into the Middle East region. Since it was founded in 2005, NBK Capital Partners raised approximately $1.1 billion, and looks to provide capital to the middle market through equity capital, mezzanine debt and sale-leaseback structures. Following the move, NBK Capital Partners was renamed Janus Henderson Emerging Markets Private Investments.

“As we talked to sovereign wealth partners both in the Middle East and all the way from Turkey down to North Africa, what we found is that they were for a long time very pleased to give their capital away to others, to invest outside of the regions.

“Now, they are more interested in finding opportunities to invest within those regions, which are places where entrepreneurialism is really vibrant. Yet the local banking system isn't currently ready or able to provide the necessary capital, and so by providing that capital locally we can grow those businesses,” Dibadj said.

Dibadj confirmed that while Janus Henderson already has offices based in the Gulf region, such Dubai and Abu Dhabi in the United Arab Emirates, it may be looking to open more across this geography in the near future.

Another recent move was the acquisition of the $6 billion Victory Park Capital Advisors, with Janus Henderson completing the deal in October. With Victory Park acting as a global private credit manager, this signaled Janus Henderson expanding its holdings in this asset class as it did in alternatives with NBK.

Victory Park is a firm that focuses on asset-backed financing, which is particularly appealing to Dibadj: “Private credit is not a monolith. With cash flow backed lending, you’re essentially underwriting that company. That's what most private credit is today. Frankly, I think most of that is maxed out, certainly in terms of what should be being placed in the marketplace, and a lot of the diligence has fallen away.

"The other part is asset-backed private credit, when you're underwriting the asset, which could be anything from freight liners to intellectual property rights. That’s where we were focused, where there is an asset to back up the loan as opposed to cash flow only,” he said.

In July, Janus Henderson completed the acquisition of Tabula Investment Management, making an entry into the European ETF space for the asset manager. Tabula has more than $500 million in assets under management, with strategies listed across 10 European exchanges and a strong focus on fixed income and sustainability.

“That is a business that seeks to take our investment strategies that need to be amplified and grow that into the ETF platform outside the U.S.," Dibadj said.

In the U.S., Janus Henderson is now the country’s fourth-largest active fixed-income ETF provider.

“In Europe, we're seeing the exact same trends that we saw in the U.S. on ETF growth, just eight years behind, so the trajectory is likely going to be the same. Compared to us coming from behind as we did in the U.S., we don't want to have to play catch-up in Europe,” he said.

A sign of Janus Henderson maintaining U.S. institutional interest in this space was shown in November, when Colorado's Public School Investment Board, Denver, rehired the firm to run about $105 million in short-duration fixed income for the state's $1.4 billion Public School Permanent Fund.

While there have been ups and downs, it hasn’t necessarily taken a smart investor to eke out returns in recent years.

For example, U.S. 10-year bond yields were at 4.07% in October, and have been above 2% for over two years. In equities, the S&P 500 has posted double-digit returns in five of the past six years. Prior to the Russian invasion of Ukraine in February 2022, there had also been an era of relative global stability.

Yet, Dibadj argues, times of low-hanging fruit in the investment world may be over.

“We’re entering into a very complex time for investments. In more recent years the geopolitical issues were not as severe, plus the slowing of population growth or demographic shifts wasn't as impactful as it will be going forward.

“If you have a long-term time frame like institutional clients, the cost of capital was previously zero, so it was easy to borrow money. You had a very easy time where the tide would lift all boats. Well, the tide isn't going to lift all boats anymore.”

Dibadj insists that geopolitical issues now need to be front and center when assessing portfolio allocations.

Areas to focus on include key thematics, such as the development of gene editing within healthcare, or legislative responses to the advances of artificial intelligence in the technology space.

“I think there is still a place for passive and index funds, but that place is not as much as it has been before. You have to look at the dynamic economy that we're in. Sovereign wealth funds are shifting away from passive, and candidly, we're getting the benefits of that at Janus Henderson as an active investment shop. Yet you're starting to see this (shift to active) filter through to the smaller institutional players, and then eventually it's going to filter through to retail as well.”