January 03, 2012 at 11:13 AM EST
Janus Capital May Be Unable To Compete In Consolidating Asset Management Industry
It may be too late for Janus Capital Group to remain competitive in an industry that continues to consolidate around the strongest players, according to Morningstar Credit Research: Janus not only has significant financial leverage but is a leveraged play on stock market returns. While Janus has been diligent about paying down its debt, it has done [...]

It may be too late for Janus Capital Group to remain competitive in an industry that continues to consolidate around the strongest players, according to Morningstar Credit Research:

Janus not only has significant financial leverage but is a leveraged play on stock market returns.

While Janus has been diligent about paying down its debt, it has done little to improve our overall credit rating for the firm. With equity-focused investments, primarily from retail investors, accounting for 90% of total AUM (assets under management), the company s business model, which is closely tied to the stock market, brings heightened uncertainty relative to others in the asset management industry. Lacking the product mix and distribution capabilities necessary to attract and retain a stickier set of clients (such as institutional investors), we do not believe Janus is well positioned to hold on to assets during periods of extreme market volatility.

While Janus has put forth plans to broaden the firm s product, distribution, and geographic mix (through an expansion of its fixed- income, institutional, and international asset bases), we think it may be too little too late for the firm to significantly improve its competitive position.

For details see Morningstar’s Credit Research Report on Janus

Technorati Tags: asset management, Janus Capital Group, Morningstar

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