A Janus global sector team meets to review its Global Research Fund holdings.
Best Ideas from the 'A Team'
The Janus Research Funds epitomize Janus' unique emphasis on in-depth research and teamwork in choosing securities. These funds include the Janus Research Fund, which focuses on U.S. stocks, and the Janus Global Research Fund. We asked Jim Goff, Director of Research, for an inside look into how the Janus Global Research Fund constructs its portfolio.
How would you describe the Janus Global Research Fund?
JG: The Fund consists of a portfolio of best ideas, where the stock-picking is directly driven by Janus analysts. We use a disciplined process we believe captures the value created by a team of highly talented analysts while also managing risk to a moderate level. We've generated consistent returns for direct shareholders (D shares), beating our index in six of the past eight years.
How does the team work together to select stocks?
JG: Our 34 equity research analysts are divided into seven global sector teams. They are primarily based in Denver, but we have analysts in London and Singapore as well. They are experienced analysts bringing years of understanding to their sectors. The teams come together at least once a week to review existing holdings, discuss trends, share observations and recommend their high-conviction stock ideas. Generally, each team owns 10 to 25 ideas. We tie analysts' compensation to the performance of their team. The analysts take great pride in their success. My role as Director of Research is to make sure we have the right people executing the process diligently.
With the Global Research Fund, each global sector team acts as the portfolio manager for its sector. In the end, each sector aims to look quite different from its slice of the index. We then roll up the sector portfolios at the weight of the index, meaning, for example, that our weight in energy is the same as that of the index. We weight the sectors in this way to neutralize the macro risks of the portfolio on relative performance. We also have a portfolio oversight team and risk management process that monitors risk.
This is a team-driven, repeatable process, that aims to deliver strong risk-adjusted returns and consistency for our shareholders. And we are shareholders ourselves. The analyst team and I are invested alongside shareholders in the Research Funds.
Why should investors consider a global equity fund?
JG: If you believe a manager is skilled at stock selection, you want to give him or her latitude. A global mandate gives us the best opportunity to scour the world for leaders. We're not constrained by company size or geography. Most sizable companies are global, and the location of their headquarters is somewhat irrelevant to the factors influencing the company. Having the ability to invest anywhere in the world also allows for greater diversification of stocks.
How is Janus research different from Wall Street research?
JG: Janus founder Tom Bailey taught us to have a skeptical view of what corporate management teams and Wall Street analysts might tell us and that we need to figure out what is going on ourselves. We spend a lot of our time talking to a wide range of people in any given industry to gain insight into the key success drivers of the products and companies we're interested in.
Just recently, one of our analysts traveled to Brazil to look into a new seed that's used on farms for fighting off worms and caterpillars. It was developed by a global agricultural company we have been following. Our analyst got a firsthand look at how successful it was by visiting fields that had used the seed in early trials, and comparing the plants to those in fields that didn't use the seed. Our analyst talked to farmers and agriculture consultants in the region to get more perspective. It shows the great lengths we will go to with our research.
For more analyst research stories, visit us at janus.com/analystviewpoints