Gibson Smith and Marc Pinto, who serve as co-managers of the $8.9 billion Janus Balanced Fund, used their research on fixed-income securities to provide investors with the best combination of strong returns and low volatility of asset-allocation mutual funds.
Data provided by Bloomberg Riskless Return Ranking indicates that the fund provided investors with a risk-adjusted return of 2.3 percent over the last five years, which represented the strongest results of 18 different funds that have more than $5 billion in assets and have a bare minimum of 50 percent of their capital in equities.
Bloomberg reports that a separate fund named Janus Balanced yielded a total return of 30 percent during the period, which was also the strongest performance for this metric of any fund in the group, which includes pools of capital managed by Fidelity Investments, T. Rowe Price Group Inc. and BlackRock Inc.
One major play that helped to improve the returns of these managers was a decision to offload financial stocks before the financial crisis started in 2008, according to the news source. They made this move as they grew increasingly worried that lending institutions and other market participants were taking on too much leverage.
The equity and fixed-income research conducted by the fund managers resulted in the firm purchasing shares of beer maker Anheuser-Busch InBev NV, which has surged by more than 100 percent in value since 2009, and the stock of CBS Corp., which has risen by more than 300 percent during this period.
“Because of the collaboration between fixed income and equity, we got some early warning signs on the stress in the financial system in the U.S.,” Pinto, 51, who manages the stock portion of the fund, told the news source in a telephone interview. He said that the fixed-income research conducted by him and his team provided managers with “confidence buying stock when markets were nervous.”
The news source reports that the strategies used by the two co-managers has helped them to generate returns above those of competitors over the most recent five years, such as the $13.5 billion T. Rowe Price Capital Appreciation Fund, which generated a risk-adjusted return of 1.3 percent during the period.
“It’s been a stellar performer,” Jeff Tjornehoj, senior research analyst at Lipper, said in reference to the Janus fund. “It looks particularly good next to other moderate risk portfolios.”
The returns provided by the Janus Balanced Fund contrast with those created by the S&P 500, which is currently 7 percent below its record high set in October 2007.