Janus Capital Group Inc. and its consolidated subsidiaries sponsor, market and
provide investment advisory, distribution and administrative services primarily
to mutual funds in both domestic and international markets. The majority of Janus’
revenues are largely dependent on the total value and composition of assets under
management, primarily consisting of domestic and international equity and debt
securities. Accordingly, fluctuations in the financial markets, relative investment
performance, net flows and changes in the composition of assets under management
are all factors that have a direct effect on the Company’s operating results.
Janus’ strategy is centered on developing “best of breed” investment management
across multiple investment disciplines, developed internally and through acquisition.
Janus has long been recognized for growth equity investing, beginning with the
launch of the Janus Fund in 1969. Over the last few years, Janus began to expand
its product offerings, adding risk-managed products with the acquisition of
Enhanced Investment Technologies, LLC (“INTECH”), and value products through
investments in Bay Isle Financial LLC (“Bay Isle”) and Perkins, Wolf, McDonnell
and Company, LLC (“PWM”), and a strategic alliance with Vontobel Asset Management,
Inc. (“Vontobel”).
The diverse lineup of products in various investment disciplines offered by
Janus includes growth, core/blend, international, value and risk-managed equity
funds, as well as specialty fixed income and money market funds. This business
model attempts to leverage a single Janus brand and global distribution network
and, most importantly, bring greater diversity to Janus’ product offerings that
may ultimately help to insulate the Company from market fluctuations as investment
styles and disciplines shift in and out of favor.
Each investment discipline is managed according to the style and strength of
the respective money management firm. This strategy allows each affiliate to
stay focused on its respective core competency or area of expertise, as follows:
• Janus Capital Management LLC (“JCM”) is one of the largest equity managers
in the United States specializing primarily in growth, core/blend and international
equity investing. For more than three decades, JCM has employed a bottom-up,
company-by-company investment approach based on the conviction that stock prices
ultimately follow earnings growth.
• INTECH has been managing institutional assets since 1987 using mathematically
driven equity investing strategies. INTECH’s unique investment process is based
on a mathematical theory that attempts to capitalize on the random nature of
stock price movements with the goal of outperforming a passive index while minimizing
risk.
• PWM, with more than 22 years of industry experience, focuses on small- and
mid-cap value investing through intensive research and careful consideration
of risks.
• Bay Isle specializes in large- and small-cap value, and REIT equity investing.
For more than 16 years, Bay Isle has employed a bottom-up analysis with an intense
focus on quality companies that trade at discounts to their fair market value.
• Vontobel has been managing value-style equity portfolios for institutional
clients since 1988. Vontobel’s concentrated approach to value investing is available
in large-cap U.S. value and international equity disciplines.
Janus employs a broad and open distribution strategy both domestically and
abroad. Janus’ domestic distribution network includes its direct no-load business
and its well-established third-party partnerships across the mutual fund supermarket,
retirement plan, variable annuity and mutual fund wrap channels. Additionally,
Janus packages products for distribution in the institutional separate account
and subadvised channels both domestically and abroad.
Janus has three segments: Investment Management, representing businesses that
derive the majority of their revenues from providing investment management services
under investment advisory agreements; DST, composed of the Company’s equity
investment in DST Systems, Inc. (“DST”); and Printing and Fulfillment, composed
of the graphics design, commercial printing and fulfillment operations.
Competition
The investment management industry is relatively mature and saturated with
competitors that provide services similar to Janus and often have undifferentiated
capabilities. As such, Janus generally encounters significant competition in
most areas of its business. Janus competes with mutual fund advisors, brokerage
and investment banking firms, insurance companies, banks and other financial
institutions, many of which are larger, have proprietary access to distribution,
have a broader range of product choices and investment capabilities and have
greater capital resources. Janus’ ability to successfully compete in this market
is based on its ability to achieve superior short- and long-term investment
performance; to maintain its current distribution relationships and to continue
to build new ones; to develop products with pricing that aligns well with its
distribution channels and are attractive to underlying clients and investors;
to offer multiple investment choices; to provide effective shareowner servicing;
to retain and grow the confidence of its clients; and to develop and leverage
its brand.
Competition in the mutual fund industry continues to increase as a result of
greater flexibility afforded to banks and other financial institutions to sponsor
mutual funds and distribute mutual fund shares, and as a result of consolidation
and acquisition activity within the industry. Furthermore, the marketplace for
investment products is rapidly changing; investors are becoming more sophisticated,
the demand for and access to investment advice and information are becoming
more widespread, and more investors are demanding investment vehicles that are
customized to their personal situations. The extent of any adverse impact on
mutual fund demand due to the increasing availability of alternative product
types, such as hedge funds, exchange traded funds and separate accounts, is
uncertain.