Mutual fund manager Janus Capital Group
The past few years have been bumpy for Janus, whose high-octane growth funds bled assets after being pummeled by the relentless sell-off in technology stocks. Massive redemptions carried assets -- and the fees they generate -- out the front door, and those that remained were dwindled even further by a declining market. Then, just as the company was getting back on its feet, it was entangled by the now-infamous market-timing scandal. Janus allowed its judgment to be clouded by kickbacks, and the ensuing maelstrom of negative publicity sent investors (and $35 billion of their assets) scampering for the exits in droves.
The company has weathered the storm, though, and the worst may now be in the past. It has been nearly a year since the company agreed to a $225 million settlement, the first step to restoring investor confidence. Part of the arrangement includes a compulsory fee reduction, which should help attract new business. And a pending $2.2 billion withdrawal from ING
I do not think that Janus' credibility has been irreparably damaged, but it will not be fully mended overnight, either. Assets under management, the lifeblood of a money manager, stand at $132.2 billion -- down about 9% from a year ago. About $7 billion in assets were shed during the first quarter, $2.6 billion from market depreciation, and the rest from net outflows. However, the number of equity funds showing positive flows did double from the prior quarter to 30%. Meanwhile, T. Rowe Price
Janus, along with Alliance Capital
In that regard, Janus is on the right track. After putting up some dismal performance figures in the past, three-fourths of Janus' equity funds now reside in the top half of the Lipper rankings for their respective category over the past three years.
There are a few rays of sunlight peeking through the storm clouds. A new management team is in place, fund performance is improving, and advertising has been ramped up. The company has also stepped up its distribution in the advisor channel, where the number of wholesesalers pushing Janus funds has increased from 16 to 25. Is it time for a rebound at Janus? The pendulum swings both ways.
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Fool contributor Nathan Slaughter owns none of the companies mentioned.