Janus Capital Profit Falls 34% as Investors Withdraw Cashby and
Revenue declined as firm ended year with fewer assets
Money manager saw $300 million in long-term net outflows
Net income fell to $29.8 million, or 17 cents a share, from $45 million, or 25 cents, a year earlier, the Denver-based money manager said in a statement Tuesday. Adjusted earnings of 20 cents a share missed the forecast of 24 cents by nine analysts surveyed by Bloomberg.
Firms such as Janus that run actively managed investment strategies have been losing market share to competitors offering lower-cost index-based mutual funds and exchange-traded funds. Janus said in October that it plans to merge with London-based Henderson to form a $320 billion asset manager, signaling a potential wave of industry consolidation amid rising regulation and pressure to compete on fees.
Assets under management totaled $194.5 billion as of Dec. 31, compared with $195.1 billion on Sept. 30. The decrease was a result of performance and $300 million in long-term net outflows.
Investors pulled a net $1.6 billion during the quarter from the firm’s Intech funds, which use quantative strategies to invest in equities. Those funds underperformed benchmarks last year, even after the stock market’s surge following the surprise election of President Donald Trump.
“They experienced five really bad months in a row,” Janus Chief Executive Officer Richard Weil said on a conference call. “The Trump reversal was, I think, an extraordinary event.”
The drop in assets contributed to the firm’s decline in revenue as fees from investment management fell 1.4 percent to $223.3 million at the end of the quarter. Revenue declined 6 percent to $251.4 million during the quarter due while operating expenses rose 1.4 percent to $189.6 million.
BlackRock Inc., the world’s largest asset manager with $5.15 trillion, pulled in less revenue than analysts forecast during the quarter as investors moved money to lower-fee ETFs, the New York-based firm said earlier this month.
Janus expects to complete its $6 billion merger by May 30, following shareholder votes in April. In December, the firms outlined plans to consolidate funds with similar strategies and announced leadership teams for combining the equity and fixed-income divisions.
The company’s shares were down 2.1 percent to $13.08 at 11:10 a.m. in New York trading.
The stock rose 6.1 percent over the trailing 12 months through Monday, compared with a gain of 5.3 percent for the 31-member Bloomberg index of global investment managers.