The Very Best of Janus Funds

We look at the colorful history of Janus and analyze some of the best funds Janus has to offer today.

When you hear the name Janus,you probably think of mutual funds. But if you’ve been an investor for more than a decade, you might also associate Janus with the stratospheric returns produced by growth stock funds in the 1990s, followed by the spectacular declines of the early 2000s when the technology bubble burst.

janus-funds-to-buyWhether you are a beginning investor or an experienced one, you may have some similar questions about Janus: Did any of their high-flying funds of the 90s return to glory since then? Which are the best Janus funds now?

The Past and Future of Janus

Another association you might make with Janus is their logo and namesake, the two-faced god from Roman mythology. The two faces are not meant to represent conflict or deception but rather of one face looking to the past and one looking the future, which lends itself well to investing concepts.

Janus began about 45 years ago with their flagship fund named, you guessed it, Janus (JANSX). Providing a clue about their future direction, this fund focuses on large-cap stocks with growth potential. The management company and fund adviser, Janus Capital Managment LLC, really began to pick up investor assets in the mid- and late-90s when growth stocks were all the rage.

As I mentioned in my recent article on growth funds market timing, Janus delivered on the high demand of growth stocks in the 90s with funds like Janus Mercury, which was so stigmatized following the tech bust that it later changed its name to Janus Enterprise (JAMRX). From the beginning of 1998 through the end of 1999, JAMRX had a staggering gain of 162.8%, compared to the S&P 500 Index gain of 50.4%. But from 2001 through 2002, JAMRX fell 46.8% compared to a decline on the S&P 500 Index of 31.8%.

Janus’ fall from grace was punctuated by the 2003 mutual fund scandal and lawsuit, along with several other mutual fund companies, where Janus had to pay fines of $262 million for unfair trading practices.

Fast forward about 10 years to today and Janus has more than 350 funds, which includes all share classes and the new acquisitions of INTECH and Perkins Investments. Janus hasn’t changed significantly in terms of its investment style, which is research-based active management. So you won’t find any index funds in the Janus lineup.

To see what Janus has to offer investors today, let’s take a look at the very best of Janus funds in a cross-section of three categories that represent the most prevalent fund types in the Janus family — large-cap domestic stocks, hybrid/allocation, and bonds.

Best Domestic Stock — Janus Contrarian (JACNX)

Janus Contrarian (JACNX) came into existence in February of 2000,  just in time for the bursting of the technology bubble. But its performance history is outstanding. This all-cap stock fund has performed especially well since current manager, Dan Kozlowski, took the helm three years ago.

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The 3-year return is 18.5%, which beats 95% of funds in the large blend category for that period. The 10-year performance rank is 2nd percentile, which means it outperforms 98% of its category peers since 2004.

The fund’s blend of large-cap, mid-cap and small-cap stock can make for a good core holding in a portfolio, especially for investors who like to take a little more risk compared to a broad benchmark, such as the S&P 500. With an expense ratio of 0.68% — or $68 per $10,000 invested — it’s not exactly cheap, but it’s in line with similar funds.

Best Hybrid Fund — Janus Global Allocation Growth (JNSGX)

Janus Global Allocation Growth (JNSGX) is a hybrid fund, also known as a balanced fund or allocation fund, which means it invests in a combination of stocks and bonds. JNSGX is a diversified mix that also includes foreign stock, hence the global allocation moniker.

janus-funds-global-allocationAlthough it’s one of the more recent additions to the Janus family of funds, with an inception date of Dec. 30, 2005, JNSGX has an impressive performance record. The 5-year rank of 20 places it ahead of 80% of its world allocation fund category peers.

However, this performance leadership comes with a caution: The bond allocation of 13% is barely more than one-third that of the average global allocation fund, which has 36% allocated to bonds. This means that a sharp decline in stock prices will likely mean underperformance for JNSGX.

Expenses for JNSGX run 0.99%.

Best Bond Fund — Janus Flexible Bond (JANFX)

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Janus Flexible Bond (JANFX) is the oldest of Janus bond funds and the best overall. The fund’s inception year is 1987, although the co-managers average seven years with JANFX.

In five of those seven years, the management team outperformed the Barclay’s Aggregate Bond Index. This performance was primarily accomplished by holding high-yield bonds (the portfolio averages a BBB credit rating).

JANFX can make a fine addition to your portfolio. Its flexibility thus far shows no sign of negative downside, with nine of the past 10 calendar years showing positive returns. Only 2013 had a slightly negative return of -0.08%.

Expenses for JANFX run 0.6%, making it the cheapest of the three Janus funds.

As of this writing, Kent Thune did not hold a position in any of the aforementioned securities. Under no circumstances does this information represent a recommendation to buy or sell securities.

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