Schwab Dumps Janus Allocations, And Merrill Reportedly Plans To Follow Hot

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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.

 

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