«This Brochure provides information about Janus Capital Management LLC’s (“Janus”) qualifications and business practices for Janus’ advisory ...»
Janus Capital Management LLC
151 Detroit Street
Denver, CO 80206
March 28, 2016
This Brochure provides information about Janus Capital
Management LLC’s (“Janus”) qualifications and business practices
for Janus’ advisory clients. If you have any questions about the
contents of this Brochure, please contact us at 303.333.3863. The
information in this Brochure has not been approved or verified by
the United States Securities and Exchange Commission (the “SEC”), any state securities authority or non-U.S. regulatory authority.
Janus is an investment adviser registered with the SEC. Registration of an investment adviser does not imply any level of skill or training.
Additional information about Janus is also available on the SEC’s website at www.adviserinfo.sec.gov.
Item 2 – Material Changes This Brochure replaces the one previously provided to you. We revised and expanded certain information to help you better understand our firm, and the investment products we offer, the business issues we face, the risks associated with investing and with our investment process and our efforts to ensure clients are treated fairly. We do not consider these changes to be material.
The changes primarily apply to Item 4 – Advisory Business, Item 5 – Fees and Compensation, Item 8 – Methods of Analysis, Investment Strategies and Risk of Loss (Additional Methods of Analysis – Volatility Management, General Risks, and Additional Risks Associated with Volatility Management Strategies), Item 10 – Other Financial Industry Activities and Affiliations (Investment Advisers and Broker-Dealers and Other Financial Industry Affiliations), Item 11 – Code of Ethics, Participation or Interest in Client Transactions and Personal Trading (Participation in Client Transactions and Related Conflicts and Investment Personnel), Item 12 – Brokerage Practices (Trade Aggregation and Allocation Policy, IPO/Limited Offering Allocations, Security Valuation and Error Correction Policy), Item 13 – Review of Accounts, Item 17 – Voting Client Securities (Class Actions and Conflicts of Interest) and Appendix A.
Further, we updated any out-of-date information and have made other changes throughout the document in the spirit of providing information clearly and concisely.
2 Item 3 – Table of Contents 1 Item 1 – Cover Page
Item 2 – Material Changes
Item 3 – Table of Contents
Item 4 – Advisory Business
Item 5 – Fees and Compensation
Item 6 – Performance-Based Fees and Side-By-Side Management
Item 7 – Types of Clients
Item 8 – Methods of Analysis, Investment Strategies and Risk of Loss
Item 9 – Disciplinary Information
Item 10 – Other Financial Industry Activities and Affiliations
Item 11 – Code of Ethics, Participation or Interest in Client Transactions and Personal Trading
Item 12 – Brokerage Practices
Item 13 – Review of Accounts
Item 14 – Client Referrals and Other Compensation
Item 15 – Custody
Item 16 – Investment Discretion
Item 17 – Voting Client Securities
Item 18 – Financial Information
Additional Supplementary Information
1 The SEC requires advisers to use a certain format and certain headings for this Brochure. To the extent that an item does not apply to Janus' business, we will indicate it is not applicable.
Janus offers growth and core equity, international and global equity, as well as balanced, global macro fixed income, fundamental fixed income, asset allocation, volatility management, alternative and retail money market investment strategies. Janus believes its depth of research, knowledgeable portfolio managers and analysts, willingness to make concentrated investments when Janus believes it has investment insight and a commitment to delivering strong long-term results for its investors are what differentiate Janus from its competitors.
Over the last several years, Janus has expanded its business to become a more diversified manager with increased investment product offerings and distribution capabilities. Each of Janus’ affiliates specializes in specific investment styles and has its own unique and independent perspective. Investment products are distributed through three primary channels: retail intermediary, institutional and international. Each distribution channel focuses on specific investor groups and the unique requirements of each group. Headquartered in Denver, Colorado (with offices in Newport Beach, California and Darien, Connecticut), Janus and its affiliates also have offices outside the U.S. in Dubai, Frankfurt, Hong Kong, London, Melbourne, Milan, Munich, Paris, Singapore, The Hague, Taipei, Tokyo, Sydney and Zurich.
Janus also offers investment strategies through its affiliates:
• mathematical equity strategies through INTECH Investment Management LLC (“INTECH”),
• value-disciplined investment strategies through Perkins Investment Management LLC (“Perkins”),
• Asia and other non-U.S. equity strategies through Janus Capital Singapore Pte. Limited (“Janus Singapore”), and
• a global macro fixed income strategy through Australia-based Kapstream Capital Pty Limited (“Kapstream”) (effective July 1, 2015).
Please refer to Item 10 – Other Financial Industry Activities and Affiliations and each of INTECH’s, Perkins’, Janus Singapore’s Form ADVs for additional information.
Janus, through its predecessors, has provided investment management services since 1969 and has been registered with the SEC since 1978. Janus is wholly-owned by Janus Capital Group Inc. (“Janus Capital Group”), a publicly-traded company (NYSE:JNS), and an affiliate. Janus Capital Group is responsible for the strategic direction of Janus, INTECH, Perkins, Janus Singapore and Kapstream. As of December 31, 2015, Janus had $143,077,289,843 in assets under management on a discretionary basis. The SEC has adopted a uniform 4 method for advisers to calculate assets under management for regulatory purposes which it refers to as an adviser’s “regulatory assets under management.” Regulatory assets under management are generally an adviser’s gross assets, i.e., assets under management without deduction for outstanding indebtedness or other accrued but unpaid liabilities. Janus reports its regulatory assets under management in Item 5 of Part 1 of Form ADV which you can find at www.adviserinfo.sec.gov.
Janus provides investment management services, as an investment adviser or sub-adviser, to U.S. and non-U.S.
institutional and individual clients. Janus offers its investment management services through the following types
• U.S. mutual funds, including exchange traded funds (“ETFs”), registered under the Investment Company Act of 1940, as amended (the “1940 Act”) (“U.S. Mutual Funds”),
• non-U.S. domiciled funds, trusts or similar entities (“non-U.S. Funds”),
• private investment funds, including hedge funds, offered pursuant to Regulation D of the Securities Act of 1933, as amended (“Securities Act”) and excluded from the investment company definition under either Section 3(c)(1) or 3(c)(7) under the 1940 Act (“Private Investment Funds”),
• institutional separate accounts (“Separate Accounts”),
• separately-managed account wrap programs (“Wrap Fee Programs”) offered by unaffiliated investment advisers or broker-dealers (“Sponsors”),
• collective investment trusts (“CITs”), and
• other proprietary accounts.
In this Brochure we refer to U.S. Mutual Funds, non-U.S. Funds, Private Investment Funds and CITs collectively as “Funds” and to our proprietary Funds as “sponsored Funds.” Except for certain Wrap Fee Programs discussed below, when Janus serves as investment adviser, it enters into a written investment management agreement with each of its advisory clients. Investors in most Funds are not considered Janus’ advisory clients and do not enter into investment management agreements with Janus. With respect to any Fund, this Brochure is qualified in its entirety by the fund’s offering memorandum, operating or limited partnership agreement, prospectus, statement of additional information or similar disclosure and governing documents (collectively, the “offering documents”).
Investment management agreements include provisions related to each client’s management fees, investment strategy, investment guidelines, termination rights, proxy voting and sub-adviser, if applicable. If a client chooses 5 one of Janus’ affiliates as a sub-adviser for its account, the sub-adviser generally will be responsible for the dayto-day management of the client’s investment portfolio, proxy voting and other related activities. Janus’ standard investment management contract generally permits either party to terminate the contract at the end of any month following 30 days written notice or 60 days for non-sponsored Funds. Upon termination, clients are billed only for the pro-rata portion of the management period. Clients do not pay a termination fee.
When Janus serves as sub-adviser, it enters into a sub-advisory agreement with one of its affiliates or an unaffiliated investment adviser. These sub-advisory agreements typically include information related to Janus’ sub-advisory fee, investment strategy, investment guidelines, termination rights and proxy voting. The adviser enters into an investment management agreement with the end client.
Janus partners with Separate Account clients, non-sponsored Funds and in limited circumstances, Wrap Fee Program clients, to tailor investment services to clients’ specific needs. Janus works with clients to formulate appropriate and agreed-upon investment guidelines. Generally, clients may impose restrictions on investing in certain issuers, types (e.g., excluding tobacco companies from a portfolio) or quantities of securities, investment instruments, asset classes, geographic regions or sectors. Janus works with clients to determine the feasibility of monitoring proposed restrictions and limitations. For example, Janus assesses the scope of socially responsible restriction requests to determine if a third party provider, such as MSCI Inc., can provide an acceptable restricted list. Clients who restrict their investment portfolios may experience potentially worse performance results than clients with unrestricted portfolios even for clients with similar objectives. Janus reserves the right to reject or terminate any client’s account that seeks restrictions which Janus is unable to implement or which may fundamentally alter the investment objective of the strategy selected by the client. Investors who participate in pooled investment vehicles such as the Funds may generally not tailor investment guidelines.
Janus does not offer traditional financial planning services, however Janus provides an interactive asset allocation tool online at www.janus.com free of charge. The asset allocation tool is designed to illustrate how a user, based on an investor profile, could diversify his or her portfolio among various asset classes.
Certain employees of Janus are also employees of Kapstream, its affiliated investment firm. This dual-hatting relationship is reviewed for potential conflicts of interest and supervised as necessary. See Item 10 – Other Financial Industry Activities and Affiliations for more information.
6 Wrap Fee Programs
Janus offers certain of its investment strategies to clients invested in three different types of Wrap Fee Programs:
• “Single Contract Programs” in which Janus enters into a contract with a Sponsor to provide discretionary advisory services to the Sponsor’s clients;
• “Dual Contract Programs” where Janus enters into a contract directly with the client to provide discretionary advisory services and the client enters into a separate contract with the Sponsor, custodian and other service providers; and • “Model Programs” where Janus provides a model portfolio to the Sponsor or overlay manager who typically retains the ultimate authority to execute investment transactions. In most Model Programs, Janus treats the Sponsor or overlay manager as its client. As of December 31, 2015, Janus provided model portfolios to Sponsors or overlay managers with respect to approximately $2,079,380,632. As discussed below, Janus generally does not have investment discretion or trading authority for these assets. As such, these assets are generally not included in Janus’ assets under management provided above.
In Single and Dual Contract Programs, Sponsors introduce clients to Janus and generally provide clients a package of services which may include any or all of the following: discretionary investment management, trade execution, account custody, performance monitoring and manager evaluation. Sponsors receive a fee (“Wrap Fee”) from clients for providing this package of services and Janus receives a portion of the Wrap Fee from the
Sponsor for its investment management services. Sponsors typically:
• assist clients in defining their investment objectives based on information provided by the clients;
• determine whether the given Wrap Fee arrangement is suitable for each client;
• aid in the selection and monitoring of investment advisers (whether Janus or another adviser) to manage accounts (or a portion of account assets); and
• periodically contact clients to ascertain whether there have been any changes in clients’ financial circumstances or objectives that warrant changes in the arrangement or the manner in which clients’ assets are managed.
Janus generally receives client information through Sponsors and relies on Sponsors to forward current and accurate client information on a timely basis to assist in Janus’ day-to-day management of clients’ accounts.
Single and Dual Contract Program clients may also contact Janus directly concerning their accounts.