Profile: Janus tries to build on Bill Gross hire

Agar SylvainJanus Capital Group is a well-established name in the US, having launched 40 years ago, and is now building on its presence in the UK with some key hires, impressive performance figures coming through in its Ucits range and a raft of new funds planned to meet UK investors’ requirements. 

It would be remiss not to mention bond veteran Bill Gross, who left Pimco – the firm he founded in 1971 – to join Janus in September 2014, quite a coup for the group. Gross took over the management of the recently-launched Global Unconstrained Bond fund and a Dublin-domiciled version was launched in November 2014.

Although the US fund has seen outflows this year with almost $40m (£26m) pulled out in June according to Morningstar, the US strategy still has $1.45bn in assets, while the offshore version has $176m. Since launch the Ireland-domiciled fund has returned 3.9 per cent in sterling terms against the 3 per cent rise in the FO fixed interest sector, FE data shows.

“We are delighted to have Bill Gross. It has been a tremendous help in terms of running and positioning for the whole Janus brand.” 

Gross has been made a member of the Janus global macro fixed income leadership team and has been tasked with building out the firm’s global macro fixed income strategies to complement Janus’ existing fixed income offering built by fixed income chief investment officer Gibson Smith.

He has also joined the Janus Capital Group global allocation committee, which focuses on the expansion of the asset allocation business.

At the time of his appointment, Gross said he chose Janus because of his “long-standing relationship with and respect for [chief executive] Dick Weil” and was looking forward to returning to investing rather than managing a large organisation.

“We are delighted to have Bill Gross,” says Sylvain Agar, head of financial institutions for UK and Europe at Janus. “It has been a tremendous help in terms of running and positioning for the whole Janus brand.” 

He adds: “We continue to see an appetite for the global unconstrained fixed income product.” 

Another figure of note to join the firm is Myron Scholes, who won the Nobel prize for co-developing the Black-Scholes model, based on his options pricing theory. Scholes joined Janus in July 2014 as chief investment strategist at the same time as Ashwin Alankar joined as global head of asset allocation and risk management. Together they developed the Janus Adaptive Global Allocation fund. 

The Janus Adaptive Global Allocation fund was unveiled to US retail investors in June this year, with Alankar and Enrique Chang, chief investment officer for equities and asset allocation, as managers. Agar says plans are now in place to roll out a version of the Adaptive fund to UK retail investors. 

“We are aiming to import the fund to the UK to appeal to investors, hopefully this year. The idea is to have a solution that meets the appetite of European investors,” Agar says. 

There are 33 funds in the Dublin-domiciled Janus Capital Funds (JCF) range and Agar says the firm is “always looking to launch more”. The firm also has equity income funds and emerging market debt in its sights. 

Box 1

“We have seen a trend for equity income funds because of the pension situation in the UK,” Agar says. “We don’t have any equity income funds today but some clients have been approaching [their income requirements] in a different way, by investing in the Balanced fund, which has a good yield.” 

Agar continues: “We don’t have any Asia bonds or emerging market debt funds, but we are looking at this actively. We could launch funds in house or with our partners. We will do whatever is best to provide returns to clients.” 

The JCF range caters for platforms, private banks and family offices, and currently includes mainstream offerings such as US equities, fixed income and real estate as well as more niche products such as the £1.2bn Global Life Sciences fund. Over the past year the Global Life Sciences fund has seen stellar performance, returning 61.7 per cent against the 45.8 per cent average of the FO Equity Pharma Health and Biotech sector, FE data shows. 

“Global Life Sciences is a tremendous fund,” Agar says. “It appeals to ultra-high-net-worth individuals as it brings diversity to the portfolio, but it is also on some key platforms.

“It is different from the usual offerings as there is no correlation [with other asset classes]. The fund has a story – the ageing population – and it is a mix of all healthcare sectors, not just biotech.” 

Meanwhile the £176m Janus US Venture fund was soft closed in April this year to preserve the managers’ freedom in the small-cap market. 

Founded 40 years ago and based in Denver, Colorado, Janus was set up by Thomas Bailey who decided it was best to be “in the middle of nowhere” to escape the noise of Wall Street. 

The Company: Janus was founded in 1969 and is headquartered in Denver. It now has 19 offices and employs more than 1,200 people worldwide, including 40 investment professionals with more than two decades of industry experience. Under the Janus, Intech and Perkins brands, the group offers more than 100 fixed income, equity and multi-asset strategies.

In 2003 Janus acquired Princeton-based quantitative asset management firm Intech, which Agar describes as “the mathematical component of the group,” and bought a stake in Chicago-based family business Perkins Investment Management, a value manager. Both now each have $50bn in assets under management. Intech runs 30 strategies, including US, Europe, emerging markets, global, and small, mid and large cap strategies, while Perkins focuses on small, mid and large cap and global strategies. 

In total, Janus has $195bn in assets under management globally, with the bulk in equities and fixed income, Agar says. Janus Capital International (JCI) comprises the group’s non-US business and was set up in 2000, marking the firm’s foray into the UK market. 

It was when Dick Weil joined JCI as CEO in 2010 that the business started to motor, with JCI’s assets doubling from around $15bn to $31.7bn in the past five years. Augustus Cheh was appointed president of JCI in 2011, and in 2012 the firm opened six new offices. Agar opened the Paris office, having been at Janus since 2008 when he joined as sales director for French-speaking Europe. In June this year Agar moved to London to assume his current role. 

“There was an opportunity for a more European role and to look after the UK and support growth in Europe,” Agar says. “It was a new role, working alongside Jamie Wong [head of consultant relations for EMEA and Asia].” 

Meanwhile the UK business began to find its feet in 2013 when Alan Glendon joined Janus as sales director for UK financial institutions. Last year Douglas Noble also joined the UK team as client relationship manager, with both Glendon and Noble working alongside Julie Tedeschi, sales manager for UK financial institutions. 

“We have been in the UK for a long while but with the arrival of Alan we really went deeper,” Agar says. 

“The Janus of today, thanks to the diversification of products, is a stronger brand,” he adds. “Our funds are available on most major platforms and we are finalising a few key agreements. We are now positioned with the more dominant players. We used to be a boutique but now we are global partners in terms of the distribution of our funds. But we still talk to the wealth managers, who are the gatekeepers here.” 

However Agar is mindful of keeping his eye on the ball to maintain momentum in the UK market and gain market share. 

“The UK market is extremely competitive,” he says. “It is a matter of keeping close to our clients and building strategic partnerships with key distributors. We need to ask ourselves if our product offering is answering the needs of our clients. 

“We know Oeic funds are popular, so we are looking at them for the future. It depends what opportunities we see. We are very pragmatic.”

Independent views:

Martin-Bamford-MM-Peach-700.jpg

Martin Bamford, managing director of Informed Choice

Janus was one of the first managers to focus on mathematical analysis and has grown since to cover most fund categories. With around $175bn of assets under management, it is a sizable firm although still much smaller than the likes of BlackRock. It has received a higher profile recently following its hiring of legendary investor Bill Gross from Pimco, giving him the Janus Global Unconstrained Bond Fund to manage. It looks set to ride the wave of this high-profile hire for years to come, with plans to create passively managed funds and compete with Vanguard in this space. Here in the UK, Janus is off the radar of most retail investors and has its work cut out to build a convincing market presence.

John Husselbee, Liontrust

John Husselbee, head of multi asset at Liontrust

I can still recall the Janus Capital of the late 90s that rode the technology tsunami into the early 2000s with highly concentrated portfolios. Back then its offering was limited to US equities, but I am now aware of their desire to offer a broader and deeper range of products. This is perhaps wise, with many fund buyers preferring these days to buy inexpensive US passive fund investments. The hiring of the prolific bond investor Bill Gross last year has certainly renewed interest in the group, although I believe that the unconstrained bond fund sector is a tough nut to crack without on-the-ground local fund manager presence. Finally, the amount of choice of funds now domiciled in the UK has significantly grown since Janus Capital first started to market over here, so perhaps their Dublin based OEIC may put them at a disadvantage for some buyers.

Hollands-Jason-400.jpg

Jason Hollands, managing director at Tilney Bestinvest

Despite having a presence in London for 15-years Janus Capital has largely remained off the radar in the UK wholesale and retail market, so my impression is that the focus to date has been on institutional clients and family offices, though they have recruited sales people over the last couple of years. The defection of Pimco founder Bill Gross, dubbed the Bond King, to Janus has certainly helped raise awareness of the firm well beyond the US, but it is yet to be seen as to whether they can capitalise on this news to build serious inroads into the UK discretionary and private client advisory market, for example by getting their funds available on key platforms. The UK is littered with examples of sizeable US players trying but ultimately failing to get cut through because of its fragmented nature and local features.