Major US Mutual Fund Considers Using Performance Fees

by Carla Johnson, Investors Offshore.com

27 April 2005

Janus, America's fifth largest mutual fund firm, is considering the use of performance fees in a bid to improve its trading returns and compete with the ever-popular hedge fund sector on a more equal footing.

At present, regulatory restrictions laid down by the Securities and Exchange Commission mean that less than 2% of mutual funds opt to put performance fees in place.

Janus believes that performance related fee structures will not only give its fund managers more incentive to achieve higher rates of return, but will also attract a larger share of assets which may otherwise be attracted into hedge funds.

Announcing its first quarter results last week, Janus, which last year settled allegations of improper trading, revealed that while assets under management have declined, the company has swung back to profit.

For the first three months of 2005, Janus reported net income of $19.6 million, or 9 cents per share, which compares to a loss of $22.1 million in the first quarter of 2004.

Average assets under management totaled $133.8 billion in the first quarter down from $148.4 billion in the final quarter of 2004.

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