After two decades of upheaval, Janus Capital is finally giving up its independence by agreeing to be taken over by Henderson, the Anglo-Australian asset manager.
The Denver-based fund house was once the US’s best-selling mutual fund manager, riding the technology-stock boom and bust as a cheerleader for so-called growth stocks — companies valued for their rapid growth rather than dividend yield. Its assets under management leapt 150-fold to about $300bn in the 10 years to the early 2000s.
But Janus stumbled in the wake of the dotcom bust, suffering billions of dollars of outflows as its performance suffered. The house, founded in 1969 by financier Tom Bailey, has spent the years since then trying to recapture some of its early glories.
This process was not helped by its involvement in the so-called “market timing” scandal in 2003. The fund house let some hedge funds “time” their entry into, and exit from, its international funds, to take advantage of short-term price movements that occurred when foreign markets were closed.
In a note to investors at the time, Morningstar, the data provider, said: “We think that the Janus fund family does not deserve investors’ confidence.”
It also warned there had been some “flat-out awful stockpicking” at the asset manager during the late 1990s. “[Janus’s] research effort focused on a relatively narrow list of companies, and a number of them ended up being duds,” it added.
However, Dick Weil has led a turnround at the company since becoming chief executive of Janus in 2010.
Under Mr Weil’s watch, Janus’s assets have grown from $151.8bn to $190bn. He brought in Bill Gross, the veteran bond fund manager who co-founded Pimco, in 2014 and diversified the business away from its focus on US equities. Fixed income products now account for a quarter of its assets, up from 5 per cent in 2009.
The fund house has also tried to attract international investors. Almost a quarter of its assets are run for clients based outside the US, up from 8 per cent in 2009.
In the new combined group, Mr Weil will be co-chief executive, working alongside Henderson’s Andrew Formica.
A key rationale for the deal is that Henderson, which has a large European investor base, will help Janus grow its international investors further. The group also brings together two active managers who have had to fight the growing preference for index trackers and other passive funds.
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Mr Weil said on Monday: “Henderson has wonderful client relationships and distribution capabilities in a lot of places we don’t — take for instance the UK retail client segment.
“It is natural to think there might be some appetite there for some of what we do whether in fixed income, equities or alternatives. We think this is a two-way opportunity set.”
Amin Rajan, chief executive of Create Research, the asset management consultancy, added: “The deal provides Janus yet another beachhead into Europe, as growth in the US has slowed to a trickle, due to rising market penetration. America remains the epicentre of global asset management, but Europe and Asia are the new growth engines.”
While the deal is expected to lead to job losses at Janus, Mr Gross is said to be supportive of the merger with Henderson. Janus’s biggest shareholder, Japan’s Daiichi Life, has pledged its support for the deal, according to the announcement.
Mr Weil added: “[This is] such a great marriage for Janus.”
However, Jon Little, a partner at Northill Capital, which buys stakes in asset management companies, said: “Janus has an interesting and turbulent history. [Today’s deal] is a merger based on weakness rather than strength.”