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 5 analysts surveyed by Bloomberg.
“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 fell 2.4 percent to $7.74 in New York. The shares have gained 23 percent this year, compared with the 14 percent gain of Standard & Poor’s 20-company index of asset managers and custody banks.
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.
Janus’s net income was reduced 3 cents a share by costs associated with a debt tender in the first quarter. The firm repurchased $59.4 million of debt set to mature in 2014 and 2017 with cash on hand. Janus also repurchased 263,600 shares of common stock in the quarter at an average price of $9.05 a share for a total cost of $2.4 million. The firm’s board of directors voted April 19 to raise the quarterly dividend, payable May 21, to 6 cents a share from 5 cents.
T. Rowe Price Group Inc. today said it won $12.4 billion in net deposits during the quarter. Net income increased to $196.5 million, or 75 cents a share, from $193.8 million, or 72 cents, a year earlier, the Baltimore-based company said today in a statement.
BlackRock Inc., the world’s largest asset manager, said April 18 clients withdrew a net $48 billion in the first quarter. Market gains helped the New York firm increase net income by 0.7 percent to $572 million, or $3.14 a share, as assets rose to $3.68 trillion.