The psychology of US citizens has shifted irreversibly as they come to terms with structural changes to their nation’s global leadership position, says Janus Capital Group CEO Richard Weil.
As a result, he believes US investors will increasingly seek to put their money to work overseas – it will just take time, given that they still remain a little punch-drunk from the credit crisis in 2008.
“The psychology of the American population is changing to recognise its new role in the world, which is different from the single hegemon it has been since the fall of the Communist empire in Europe and the Berlin Wall. Those days are over and we know it,” says Weil, who grew up in Denver (where Janus is based).
“That psychological shift has occurred and it will eventually lead to much more investing outside the US, more awareness of regional differences and individual country performance.”
It comes as no surprise, then, that Weil is embarking on a mission to expand Janus’s US-centric footprint, having joined this February. Just last week Janus introduced three global funds: the Janus Emerging Markets Equity Portfolio, the Janus Global High-Yield Portfolio and the Janus Global Investment Grade Bond Portfolio.
These latest launches point, perhaps, to another reason why Weil was picked as CEO: to improve awareness of Janus’s fixed-income capabilities. He did, after all, spend the previous 14 years helping in the successful global build-out of fixed-income specialist Pimco.
“Fixed income is not so deeply ingrained in the culture at Janus [as at Pimco],” Weil notes. “But when I arrived I discovered it has a first-class fixed-income product that just needs support and to be introduced to clients.
“We are never going to replace Pimco and we cannot compete on a macroeconomic basis. But we can offer expertise in company research that approaches fixed income from a different perspective and is a valuable complement to some of the big houses now.”
Janus Capital employs three distinct investment styles: there is Janus, which is a research-driven growth equity and fixed income manager; Perkins, a US value manager based in Chicago (that is moving towards global equities); and Intech, a mathematical manager based in New Jersey and Florida offering diversity-weighted indices and actively managed volatility strategies.
For his part, expanding Janus’s Asia-Pacific presence is top of Weil’s agenda, which means more products to tap into Asian investor appetites are likely around the corner.
“We need to make sure we are offering products that are of great interest to [Asian investors],” he confirms. “We don’t have super-strong regional offshore offerings and we are not a deep Asia ex-Japan manager at the moment. We are travelling a fairly traditional path into global [products]. Then we will have emerging markets and then regional both on the equity and fixed income side.”
At present just 8% of Janus Capital’s $160.8 billion in assets under management is based outside of the US. Its target is to increase this to 20-25% within five years. This includes building out its distribution footprint and adding investment resources in the region.
Working across offices in Tokyo, Hong Kong and Melbourne, Janus has 35 staff taking care of client-servicing, compliance and sales. Almost all of its portfolio managers and research analysts are based in the US (it has a few in London and also trades out of Singapore).
Weil aims to add one or two portfolio managers and three or four research analysts in Asia, probably next year. He declines to reveal where (although Hong Kong would seem a safe bet).
Asked for a timeframe for Janus’s international expansion, Weil suggests 10 years. He likens it to the process he participated in at Pimco, which in 1996 when he joined had $60 billion in AUM and no significant presence outside of the US. (Pimco Asia alone now manages over $30 billion in assets out of a global AUM of $1.1 trillion).
“I saw a huge number of stages of development at Pimco,” notes Weil. “Participating in that process was a wonderful experience that taught me all sorts of lessons about how to develop a non-US franchise.
“You have to go in a logical sequence, from a US domestic product to a global product and then you can start to become more successful and get into regional product. You also have to build friendships around the region, and these things take years.
“So this is a slow-moving strategy in a sense, but it needs to be a freight train that moves, if not quickly, then powerfully down the road of globalisation, and that is what we are working on.”