Janus Capital Group, Inc. (NYSE:JNS) Q3 2015 Earnings Conference Call Transcript

Oct 22, 2015 • 10:00 am ET

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Janus Capital Group, Inc. (NYSE:JNS) Q3 2015 Earnings Conference Call Transcript

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Presentation
Operator
operator

Good morning. My name is Danny and I will be your conference facilitator today. Thank you for standing by and welcome to the Janus Capital Group Third Quarter 2015 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period. In the interest of time, questions will be limited to one initial and one follow-up question.

(Forward-Looking Cautionary Statements)

Thank you. Now it is my pleasure to introduce Dick Weil, Chief Executive Officer of Janus Capital Group. Mr. Weil, you may begin your conference.

Executive
Richard Maccoy Weil

Thank you, operator. Welcome, everybody, to the Third Quarter 2015 Earnings Presentation for the Janus Capital Group. As usual I'll give you a bit of an executive summary to start us off. Jennifer McPeek will take us through the results in some more detail. We will then turn to some topics of special interest that have arisen during the quarter and finally we'll take your questions.

So on to the executive summary. The story of the third quarter from my perspective has really three primary pieces: flows, performance, and strategy. On the flows, total company net flows were $3.3 billion out compared to slightly positive in the second quarter. This was driven by a couple of different things. First and most significantly, there were $2.9 billion of that $3.3 billion outflow which were institutional or lumpy individual decisions. Obviously they count and we don't want to say they are one-time only, but neither do we expect them to repeat every quarter.

The second thing is the third quarter was a challenging market and industry background for us. Active equity strategies across the mutual fund industry saw annualized organic loss of 3% during the quarter and active fixed income strategy saw an annualized organic loss of 6% all according to Simfund. So I think we know that this summer had a lot of market volatility with the bond, with the equities and the treasuries. And we know that it was a difficult environment for mutual fund flows and active investment flows in particular.

So I would say the combination of those two factors made a tough quarter for us in terms of total flows. That said, we did see organic growth and strong market share gains during the quarter across a number of our really well performing strategies. We saw it in mid-cap growth, in global life, in global tech and global multisector fixed income and balanced and emerging market strategies. And so we're encouraged.

As I said at the start the story of the third quarter has three primary pieces, flows, performance, and strategy. We've just addressed flows. Let me move on to investment performance. Despite a very volatile external environment both from an investment perspective and a business perspective in the third quarter, we saw some very good performance across our product offerings. Complex wide, 70% of our assets were ranked in the top two Morningstar quartiles relative to peers on a