Schwab Dumps Janus Allocations, And Merrill Reportedly Plans To Follow

Wednesday, May 18, 2011 06:31
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Schwab Dumps Janus Allocations, And Merrill Reportedly Plans To Follow

Tags: mutual funds

Some of the biggest Janus funds are getting pulled from some of the biggest product shelves out there, and it's unclear what the once-unstoppable money manager can do to reverse the trend.

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Last quarter, Charles Schwab pulled ten Janus funds from its OneSource Select list, leaving only three on this prestige "top shelf" of products pitched to self-directed investors.

 

The issue was unlikely size -- Janus portfolios still have billions of dollars in assets, compared to a minimum AUM of $40 million for most Schwab categories -- so performance might've been a problem.

 

However, with Merrill Lynch reportedly taking Janus Twenty and Janus Forty off one of its managed portfolios, there's still a fair amount of bleeding out there. Janus saw redemptions triple in March to $770 million, which is enough to give even a $100 billion behemoth pause.

 

The interesting follow-up question is why these funds are getting the boot and what that says about the rating agencies.

 

Janus Twenty and Forty get three stars apiece from Morningstar and have for awhile, so the ratings and the Merrill analysts seem to be re-converging here.

 

But most other Janus funds are rated four- or five-star. Is Schwab choosier than Morningstar? Probably, where the OneSource Select list is concerned.

 

Comments (2)

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vguettlein
I hate questions. Dammit, Spock, I want answers!!! Keep us posted, please.
vguettlein , May 18, 2011
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ScottMartin
Working on it, believe me. If the big shelves are now stricter than Morningstar, I have no idea how reliable the star system is these days. (Not to say it was ever a great reason to pick a fund, but you know what I mean.)
ScottMartin , May 18, 2011

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