Mutual funds industry grew up around a basic idea that professional money managers can pull small investors money, invest it more efficiently, using better knowledge and thus producing consistently superior results than small investors over the long term. You would think then that investing your hard earned retirement $ in a well rated and globally diversified mutual fund run by a reputable no load mutual fund company with low fees and forgetting about it would be the way to go. Think again! Take Janus Funds, a Denver based mutual fund company with 40 year history. Certainly ten years ago, when I invested my rollover IRA with them, their Janus Worldwide Fund fit the bill. Yet, according to Morningstar, as of July 21st, 2010 their total performance over the past 10 years has been nothing but dismal, loosing a cumulative total of over 40%, including reinvested dividends and fees. Of course, such performance landed Janus Worldwide among the worst 4% of all the world stock funds over that time period. Yet, even an average mutual fund in the category would have finished the past 10 years slightly in the red, lagging behind the category index, MSCI EAFE, which had a whopping 0.85% annualized return.
For a Janus fund to loose over 40%, or an annualized more than 5% over a ten year period is much more than embarrassing. After all, Janus actively markets "meticulous, hands-on research" that is "at the core of our investment process." If Janus is truly "committed to uncovering the most promising opportunities for our investors” and “aim to deliver strong, long-term results for you -- no matter what funds you own," they must work really hard to reconcile their current marketing dream with their past performance reality. Perhaps some of their better performing fund managers recognized this as an impossible task and this would certainly explain continual departures of star managers, especially those who have used Janus to make a name for themselves in the industry...
So, why am I raining on Janus's parade? I am not. Despite all the bad news, Janus Worldwide was not even the worst performing World Stock fund. Remember, there were a couple (may be 5 or 10) World Stock funds that did even worse over the past 10 years! My point is simply that the basic premise of buying a mutual fund for retirement and forgetting about it for a decade or longer is seriously flawed. If a well diversified global mutual fund from a respectable fund company, with reasonably low fees, no load and no redemption fees and decent past performance can do no better than to loose 40% in 10 years, how can you depend on such a buy and forget strategy for your retirement?
An investor must take responsibility to monitor his or her holdings on a regular basis and make adjustments along the way, regardless of that investment being in stocks, bonds, mutual funds or whatever other financial instruments. Almost ten years ago, I made the mistake with some of my retirement assets of buying and forgetting Janus Worldwide Mutual Fund; I lost in the process. I entered my IRA Janus Worldwide Mutual Fund (JANWX / JAWWX) position on 9/14/2000 and exited in on 6/20/2010 with a total loss of 37%. That's right, I was one of those suckers who paid Janus for almost ten years to loose 5% a year for me. The good news is that Janus Worldwide was a tiny position in my overall portfolio. On the other hand, it wouldn't have been so tiny, had I taken the responsibility to manage the money I invested with Janus Worldwide myself!
Jake Berzon
http://stockvalues.org
For a Janus fund to loose over 40%, or an annualized more than 5% over a ten year period is much more than embarrassing. After all, Janus actively markets "meticulous, hands-on research" that is "at the core of our investment process." If Janus is truly "committed to uncovering the most promising opportunities for our investors” and “aim to deliver strong, long-term results for you -- no matter what funds you own," they must work really hard to reconcile their current marketing dream with their past performance reality. Perhaps some of their better performing fund managers recognized this as an impossible task and this would certainly explain continual departures of star managers, especially those who have used Janus to make a name for themselves in the industry...
So, why am I raining on Janus's parade? I am not. Despite all the bad news, Janus Worldwide was not even the worst performing World Stock fund. Remember, there were a couple (may be 5 or 10) World Stock funds that did even worse over the past 10 years! My point is simply that the basic premise of buying a mutual fund for retirement and forgetting about it for a decade or longer is seriously flawed. If a well diversified global mutual fund from a respectable fund company, with reasonably low fees, no load and no redemption fees and decent past performance can do no better than to loose 40% in 10 years, how can you depend on such a buy and forget strategy for your retirement?
An investor must take responsibility to monitor his or her holdings on a regular basis and make adjustments along the way, regardless of that investment being in stocks, bonds, mutual funds or whatever other financial instruments. Almost ten years ago, I made the mistake with some of my retirement assets of buying and forgetting Janus Worldwide Mutual Fund; I lost in the process. I entered my IRA Janus Worldwide Mutual Fund (JANWX / JAWWX) position on 9/14/2000 and exited in on 6/20/2010 with a total loss of 37%. That's right, I was one of those suckers who paid Janus for almost ten years to loose 5% a year for me. The good news is that Janus Worldwide was a tiny position in my overall portfolio. On the other hand, it wouldn't have been so tiny, had I taken the responsibility to manage the money I invested with Janus Worldwide myself!
Jake Berzon
http://stockvalues.org
