Janus Fund Closing Raises Concerns
From New York Times
Janus caused a torrent of ink again. This time the outpouring of stories was triggered by the firm's decision to close it flagship fund (Janus) and announce Janus 2. The closing means that eight of the Denver giant's 23 funds are now closed. Five have closed this year alone. The Janus fund has $48.6 billion in assets and has doubled in size during the past year.
From USA Today
USA Today's John Waggoner wonders if Janus shut the door to the fund tightly enough. Of the 23 funds Janus offers to the general public, eight are now closed to new investment. He points out that current shareholders can purchase more as can clients of investment advisors with a relationship with Janus, and corporate 401(k) plan clients. Waggoner fails to note that all of these exceptions to the closing are industry standard practice.
TheStreet.com wonders if the quick opening of Janus 2 will create problems for shareholders of the original fund. The article points out that if the clone is a near exact copy it will not really solve the problem of the Janus Fund's manager running out of ideas of where to park new cash. It would also create a temptation for investors of the old fund to buy into the new fund to avoid the old fund's embedded capital-gain overhang. The article does point out, though, that two may look different enough from one to make this a moot point. The article also points out that the closing of the fund may lead to amn upsurge in inflows to other Janus funds, creating still more pressure.
Fidelity Top US Firm in Japan
Fidelity is now the largest foreign fund firm in the Land of the Rising Sun. It recently passed Goldman Sachs Group to take the title with 802.4 billion yen in fund assets under management in Japan at the end of August compared to 700 billion yen for Goldman. Fidelity ranks eighth overall in Japan with a 1.4 percent share market. Merrill Lynch is the third largest foreign-owned manager with 528.7 billion yen in assets. The biggest fund managers are Nomura Securities, Daiwa Securities and Nikko Securities which combine for a 68.2 percent market share in Japan.
Is Schwab or Citi the Right Model?
From Wall Street Journal
The spate of articles detailing yesterday's blockbuster merger between the house of Morgan and the house of Rockefeller continues. The Journal states the obvious: "the banking industry is headed toward a massive consolidation into a handful of global megaplayers offering every possible financial product and dominating the world of finance." Then it punches holes. A decade ago, it argues, J.P. Morgan and Bankers Trust New York were seen as the model of the future. Today both are eaten takeover bait. Now, Citigroup is the model, the paper says. It adds that the deals are driven by a change from "traditional lending" to "stock underwriting and sophisticated derivative transactions" as business drivers. The article also points to Charles Schwab as a model of success. Schwab has not built through acquisitions, but rather discount-securities brokerage, mutual-fund "supermarkets " and online stock trading.
JP Morgan Chase Likely to Cut 10,000 Jobs
From New York Post
The Post reports that as many as 10,000 jobs may be axed from the combined J.P. Morgan Chase which employees 90,000 plus. It also reveals that the code name for Chase was "Champ", while that of Morgan was "Glass". Not to hard to figure out who was in charge from those names. The two sides started talking around three weeks ago when Bill Harrison called Sandy Warner at his Lake Michigan vacation home. The two carried on the talks at a dinner in honor of the new Mexican president, Vicente Fox. Headhunters say the axed middle-managers will get two to three years salary as compensation. Support staff will be less fortunate. More cuts will come oversees than in New York, it adds. More of the inside story of the deal is provided in the Wall Street Journal
Business as Usual for American Century
From Wall Streey Journal
The big deal us unlikely to affect fund firm American Century, the paper reports. JP Morgan owns 45% of American Century and is able to exercise an option on another five percent before the end of the year. It also has the right, beginning Jan. 15, 2001, to sell some of its stake back to in American Century or the public if the fund company passes. Combined JP Morgan Chase has $80 billion in fund assets under management, with only $22 billion of that in stock and bond mutual funds at the end of the second quarter and the rest primarily in money-market funds, according to Financial Research Corp. in Boston. Meanwhile American Century has $117 billion in assets under management, mostly in stock funds. Ramon de Oliveira, a J.P. Morgan executive who will run the banks' institutional-asset management and wealth-management businesses, said that the two asset-management units and the minority stake in American Century represent "a very important synergy." He added that "It's business as usual" for American Century. Douglas A. Warner III, J.P. Morgan's chairman and chief executive boasted that "We've created great opportunities in defined-contribution [business]. I see every reason that that will continue."
Chase already has a relationship with American Century as it acts as its custodian for the firm's mutual funds. The article further notes that Chase has just finished a "realignment" of its equity fund operation and now will have to figure out where Morgan's fund business fits in. Look for consolidation of some fund operations, but separate management teams for now Morgan Stanley analyst Henry McVey is quoted as saying.
Distance No Barrier
From Wall Street Journal
Distance does not make the heart grow fonder in the fund business. The article reassures investors that they should not be nervous if the manager of their Japan fund is sitting at a desk in Manhattan. It reports that "numerous studies have shown that the physical location of the fund manager makes little difference when it comes to how well a fund performs." Some managers say being separate even provides an edge.
More on Capital Gains
From Investors Business Daily
The story of outsized capital gains distributions continues to make the rounds. The article gives a brief overview of the whys, the implications and where the big fund firms stand. Janus, it reports, is sticking with its normal late-fall announcements. So is Fidelity. American Century is reported as saying that "its small-cap and sector funds are experiencing 'typical industry' distributions. IAI, Merrill Lynch, Evergreen and Warburg Pincus all made summer announcements.
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