Another American giant targets Canadian investors
Janus joins Fidelity, Scudder and AIM in a bid for a share of our growing funds market.
The Americans have looked north and like what they see.
First, it was the big Boston-based Fidelity organization that decided to take a run at giving our domestic fund companies a taste of U.S. competition. That was just over a decade ago and now Fidelity’s Canadian subsidiary is one of the largest mutual fund companies in this country.
Scudder was the next U.S. giant to stick a toe in our waters. Its growth was much slower but a recent merger with Maxxum and Investors Group has opened new possibilities.
Then came the Houston-based AIM group, which took over the tiny Admax funds and is in the process of building a very impressive line-up.
Now we have Janus, a huge operation out of Denver with more than 4 million clients and about US$250 billion under management. It’s one of the successful fund companies in America right now with founder and CEO Tom Bailey featured in a cover story in Forbes last summer under the title: Janus: How It Became the Hot Fund Family.
But Janus is taking a different approach to cracking our market than its U.S. competitors have done. Inste of going to the expense of setting up its own Canadian subsidiary, Janus has swung a deal with the Maxxum Group of Funds to act as the exclusive distributor for its products in this country.
The agreement was announced in late January and it looks like a win-win proposition for both sides. Janus gets access to an established distribution network in Canada, with none of the associated costs. Maxxum, a fund group with which relatively few people are familiar, gets exclusive rights to one of the top brand names on the continent.
The deal grew out of an arrangement made two years ago, when Maxxum hired the services of Janus to act as an advisor for two of its funds: Maxxum American Equity and Maxxum Global Equity. The U.S. fund was a decent performer prior to Janus assuming responsibility, around the bottom of the first quartile. The Global Equity Fund was a mid-pack entry, with nothing much to distinguish it.
Since Janus assumed responsibility, both funds have been in the top 10% of their respective categories. The American Equity Fund shows an average annual compound rate of return of 67.9% for the two years to Jan. 31. The Global Equity Fund has averaged 38.2% over that time.
Investors are starting to pay attention. The U.S. fund has grown to almost $240 million in assets, while the global entry is pushing $100 million.
The impressive results are largely due to the fact that Janus has been aggressively riding the technology wave. Warren Lammert, who runs the American Equity Fund, currently has committed 45% of the portfolio to technology issues like Nokia, Amazon.com, Cisco Systems, and Electronic Arts Inc. Another 8% is in communications companies.
The Global Equity Fund, directed by Helen Young Hayes, is also heavily into high tech with names like NTT Mobile, Viacom, Microsoft, and Cisco prominent on the list of top ten holdings. Geographically, this fund is weighted towards the U.S., but at 29% of assets not overly so. Japanese companies account for 13.5% of the asset base, with the rest widely distributed.
As a first step in making the Janus name familiar to Canadians, these two funds are being renamed as the Janus American Equity Fund and the Janus Global Equity Fund. Both will also be offered as RRSP-eligible clones.
The next step will be to introduce more Janus funds to Canada. A precise timetable for this hasn’t yet been announced.. But when they come, they’ll be worth your attention.
Mutual Funds Update is published monthly by Gordon Pape Enterprises Ltd.