“The industry has failed investors in the asset-allocation structure,” he said. Most products “sound diversified, but the underlying return streams aren’t.” The variation in returns among asset-allocation funds comes largely from the degree of equity risk, he said.

That explains why many such funds didn’t protect customers well enough during the financial crisis, Weil said. The average asset-allocation fund dropped 25 percent in 2008, the same year the S&P 500 Index slid 38 percent, according to data compiled by Bloomberg.

Weil in May hired Andrew Weisman, a former chief investment officer and board member at Nikko International, to head the firm’s new alternative-investments group. In September he added Richard Lindsey, a former Bear Stearns Cos. executive, to be chief strategist of the group.

Forecasting Volatility

The new fund doesn’t target a specific mix, Weisman said, but seeks to identify independent sources of risk found within asset classes. The goal is to make investments across asset classes that won’t collectively move in step with broad markets.

As of Dec. 31, Janus Diversified Alternatives had invested 29 percent in commodities, 26 percent equities, 21 percent bonds and 20 percent currencies, according to the firm. The allocations change over time based on risk weightings.

“We can do an OK job at forecasting volatility,” Weisman said. By lowering the volatility for a given average return, the fund can give clients a smoother ride and greater wealth in the long run.

The first fund seeks 3 percent historical volatility, a measure of price variation, on an annual basis. That compares with 2.4 percent volatility for the Barclays U.S. Aggregate Bond Index in the year ended Feb. 28, and 13 percent for the S&P 500. Two other strategies Janus offers only to institutional investors target 6 percent and 9 percent volatility. The company plans additional mutual funds in the series, Weil said, without providing details.

‘Liquid Alternatives’

The push into what Janus calls “liquid alternatives” follows earlier efforts by Weil, a former chief operating officer at Bill Gross’s Pacific Investment Management Co., to expand the firm’s bond team and the assets it oversees. Fixed- income investments have grown to $26.4 billion, or 17 percent of assets, from $7.8 billion, or 5 percent, since he took over.