(Bloomberg News) Janus Capital Group Inc., owner of the Janus, Intech and Perkins funds, said first-quarter profit fell 40 percent after clients withdrew money for the 11th straight quarter and poor fund performance triggered lower fees.
Net income declined to $22.6 million, or 12 cents a share, from $37.9 million, or 21 cents, a year earlier, the Denver-based company said today in a statement. Profit missed the 16-cent average estimate of five analysts surveyed by Bloomberg. Janus fell the most in almost six months.
"They are going to have continued pressure from falling performance fees given their long-term track records," Michael Kim, an analyst with Sandler O'Neill & Partners LP in New York, said in a telephone interview before results were announced.
Former chairman Steven L. Scheid, who presided over a period of decline at Janus, is set to retire this month as the company has struggled to halt client defections. The company has suffered from poor fund performance and investors' increasing preference for products that track an index, including exchange-traded funds, which Janus doesn't offer. Glenn S. Schafer, a director since December 2007, replaces Scheid as chairman.
Clients withdrew a net $2.5 billion from Janus in the three months ended March 31, countering an 11 percent gain by the MSCI ACWI Index of global stocks. Janus's fixed-income funds, which account for about 14 percent of assets, were the firm's only product category to report net deposits after drawing $1.2 billion from investors.
Janus closed today at $7.74, down about 2.4%, after earlier falling as much as 8.6 percent, the most since Oct. 31. The shares had risen 26 percent this year through yesterday, compared with the 12 percent gain of Standard & Poor's 20-company index of asset managers and custody banks.
Janus's Assets
Assets under management fell 5.5 percent from a year earlier to $164 billion. The drop in assets contributed to a 10 percent decline in investment management fees. Revenue fell 18 percent to $218.4 million as poor performance reduced fees by $19 million. Expenses fell 10 percent, primarily because of a 12 percent drop in compensation.
Money-management firms such as Janus earn fees on the funds they manage for clients. Janus's mutual funds adjust fees lower or higher based on the funds' performance over trailing 12- to 36-month periods. Only 39 percent of the firm's stock mutual-fund assets were in the top half of their respective categories as measured by Lipper in the year ended March 31, according to Janus. Over the past three years, 32 percent of assets were in the top half and in the past five years, that number rose to 78 percent, Janus said.
Chief Executive Officer Richard M. Weil, a former executive at Pacific Investment Management Co. who took over in February 2010, has worked to diversify Janus's offerings, improve sales and cut costs.
Debt Repurchase