Top fund managers leaving Janus

NEW YORK (Money Magazine) -- The Janus fund group just received a big blow - star manager David Corkins, a 12-year company veteran who currently runs the flagship Janus fund, is leaving at the end of this month.

Corkins took over the $12.6 billion Janus fund JANSX (Charts) in February 2006. And over the past 12 months, he scored a hefty gain of 22.3 percent, nearly eight percentage points ahead of the S&P 500.

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The departure follows the news in August that another top manager, Scott Schoelzel, who ran Janus Twenty JAVLX (Charts) for the past decade, will be leaving at the end of this year.

The $11.6 billion fund is the group's second largest, and its 10-year average annual return of 9.5 percent ranks in the top 7 percent of its large-growth category.

"These manager departures are a real concern for fund shareholders," said Karen Dolan, analyst at Morningstar. "You have to wonder about the stability of the corporate culture."

Several other long-term managers have left the group in recent years, including Blaine Rollins, who formerly headed the Janus fund, and Claire Young, who ran the Olympus fund.

A Janus spokesperson had no immediate comment beyond the firm's written statement announcing the manager change, which noted that Corkins was leaving to pursue other opportunities. Neither Schoelzel or Corkins could be reached for comment.

The latest departures come just as the Denver-based fund group was making a comeback from devastating losses during the 2000 to 2002 bear market. The fund group rode tech stocks to lofty highs during the go-go 1990s. But when the Internet bubble burst, Janus' funds collapsed as well.

And in 2004, the company admitted that it allowed some big investors to market time its funds. Investors fled Janus in droves.

But lately there were signs of improvement. For the three years ending in August, the majority of Janus stock funds rank in the top half of its peer groups - some 40 percent rank in the top third.

And investors have taken notice. Janus funds pulled in $3.5 billion in new money during the first nine months of this year, according to Financial Research Group.

To keep the fund group on an upward track, Janus CEO Gary Black, a former Goldman Sachs executive who took over early last year, has stepped up Janus' investing risk controls, which limit the ability of funds to load up on the same stocks, as they did in the late 1990s. He has also beefed up the research staff - the number of analysts has grown by 50 percent.

In the process, said Morningstar analyst Rachel Barnard, Black is gradually moving away from the star manager system toward a more team-managed approach to stock-picking.

"There needs to be a process in place that will preserve the stability of the fund if someone leaves," said Barnard. "Janus can't rely on being a star manager shop in the future."

Reflecting that strategy, two managers are replacing Corkins at the Janus fund. The lead manager will be Jonathan Coleman, manager of Janus Enterprise JAENX (Charts), a mid-cap growth fund that ranks in the top 16 percent of its category over the past three years. He will be joined by Dan Riff, who will continue to run two Janus long-short funds.

Janus Twenty will continue to be run by a single manager, however: Ron Sachs, manager of Janus Orion JORNX (Charts), a mid-cap growth fund.

For now, said Dolan, "investors in these funds are in good hands." Coleman and Sachs are both highly rated stock-pickers with solid records at their previous funds.

But Corkins' departure could have an impact on other funds too. "Corkins was known for his mentoring of analysts," said Dolan. "Janus is losing someone with a lot of experience, who was very invested in the analysts and an advocate for the research process."