Janus Capital Group has something of a reputation for being the house of flame-out mutual funds. Its early success with the Janus Fund led to aggressive strategies like the Janus Twenty Fund , which held only 20 stocks, and the Janus Global Technology Fund , which took 17 years to recover to its year 2000 peak.
Many of its funds posted top-tier performance during the tech boom only to go bust when tech stocks fell out. But not all funds got drunk on tech stocks. Here are three Janus mutual funds that have beat their peers by doing their own thing.
Janus Mutual Funds
Janus Triton Fund
Perkins Small Cap Value Fund
Janus Balanced Fund
Janus Triton Fund
A small- and mid-cap fund that invests in growth companies, Janus Triton's average stock has a market value of $3.5 billion. The fund takes a relatively diversified approach, holding more than 100 companies and sizing its largest positions at around 2% of the fund.
Limitations on the strategy are few, giving portfolio managers the freedom to invest in just about anything. It defines its typical investment as having a market value of less than $10 billion, and can invest overseas, flexibility that its managers haven't made big use of. It didn't hold any foreign stocks as of the end of 2016.
The fund has topped its benchmark Russell 2000 Growth and Russell 2500 Growth Indexes since inception, and over three-year, five-year, 10-year, and 15-year periods. Recently, it's held its positions for longer. Turnover peaked at 88% in 2008, but fell to just 22% by 2016, making it more tax-efficient than other funds that churn through holdings more frequently.
Perkins Small-Cap Value Fund
The small-cap value style has been one of the most rewarding investing styles over history, and in this case, active management has helped to add to the style's tailwind. The fund's positions are especially small, as its average holding has a market cap of about $2.4 billion. Morningstar classifies 15% of the portfolio as being in the microcap category.
Although it isn't a runaway success in its category -- it broadly falls in the top half, depending on the period -- it's done much better than average in down years. In 2008, the fund lost just 22% of its value compared to an average decline of 32% for its peers.
If there's one issue with the fund, it's that its expense ratio tops a full percentage point, which requires managers to top a higher bar to deliver outperformance, net of fees.
Janus Balanced Fund
Balanced funds tend to carry stock-fund-like fees despite carrying up to half their assets in low-return bonds, dragging down performance. But Janus Balanced Fund has been a star in its category, expertly managing its portfolio to capitalize on cheap stocks and cut back when valuations appear rich.
Top stock holdings include cash-flow machines like Microsoft , Altria Group , and Mastercard . Its bond holdings are relatively defensive, sticking to investment-grade rated bonds with an average duration of about six years, thus limiting credit risk and interest-rate risk. Each percentage-point increase in interest rates would roughly correspond with a 6% decline in its bond portfolio, and thus a 2% decline in the fund's value from a simple rate shift.
Unfortunately, the fund's expenses consume roughly one-fourth of would-be distributions, making it, perhaps, less attractive to income seekers. The fund recently reported a distribution rate of about 2.1%, making it only modestly higher yielding than the S&P 500 despite the fact it has a third of its portfolio in bonds.
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Teresa Kersten is an employee of LinkedIn and is a member of The Motley Fool's Board of Directors. LinkedIn is owned by Microsoft. Jordan Wathen has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Mastercard. The Motley Fool has a disclosure policy .
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