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Henderson to Merge with Janus Capital

Asset manager Henderson is to merge with US firm Janus to form Janus Henderson Global Investors. What does it mean for UK funds?

Emma Wall 3 October, 2016 | 4:30PM

 

 

Emma Wall: Hello, and welcome to Morningstar. I'm Emma Wall and I'm joined today by Morningstar Senior Fund Analyst, Simon Dorricott, to discuss the merger between Janus and Henderson.

Hello, Simon.

Simon Dorricott: Hi.

Wall: So who are Janus I suppose is the first question.

Dorricott: Yeah. They are an established U.S. group, less well-known in the U.K. of course, based in Denver, Colorado. Historically, they have been very much focused on U.S. equities with a pretty strong growth style as well. But they have been diversifying away from that over the last decade or so I would say.

Wall: And lot of the rhetoric coming out today about this is it is not an acquisition. It is a merger. What are the terms do we know?

Dorricott: Well, it does seem to be very much a merger. We've seen the announcement that going forward should it all go ahead there will be two CEOs. So CEOs of both companies will remain in place and operate in partnership.

It's something where it's pretty clear that there are business benefits, I think. Both companies are looking to diversify away from their bases. I'd say Janus historically has been focused on U.S. equities and Henderson has quite a focus on Europe including the U.K. as well. And I think both companies in the past have stated an intention to try to diversify away from that as I say. And this very much – or this potential merger very much achieves that aim.

Wall: And for reader or for watchers of this video, they are more likely to be Henderson fund investors rather than Janus fund investors. If I own a U.K.-domiciled Henderson fund, how does this affect me if at all?

Dorricott: Well, certainly, in the short-term it's going to be very much businesses as usual. And Henderson, their investment culture is very much to leave individual fund managers to operate their own processes. They monitor them quite closely to ensure they continue to do that. But that's their stated aim and that comes from the top in terms of Graham Kitchen, Head of Equities and Andrew Formica as well. So it would be unusual to see that change and to see a significant change in the way the individual funds are actually managed.

That being said, this sort of activity obviously creates some potential for uncertainty within those individual teams and there is some potential for cultures to change slightly. And I think the culture at Henderson, as described already, is something that has resulted in a pretty high retention rate for their managers historically. So, we need to ensure in terms of Morningstar ratings that we are happy that the culture can be maintained under the new structure.

There is going to be a CIO for the new group. Having spoken to our analyst colleagues in the U.S., they seem pretty happy with the CIO and what he has been doing for the Janus Group. So we have some positive views there as well.

That being said, as I say, we do need to monitor that and ensure that the culture remains in place and that the fund managers are happy to stay put essentially. I don't think they have announced any sort of lockings for individual managers, but part of the reason for merging the groups is to increase distribution and obviously that gives the potential for fund managers to increase their AUM and as a consequence of that to increase their bonuses and hopefully, that will work through and we are left with fund management teams that are happy with the new structure. But essentially, only time will tell.

Wall: Simon, thank you very much.

Dorricott: Thank you.

Wall: This is Emma Wall for Morningstar. Thank you for watching.

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About Author Emma Wall

Emma Wall  is Senior Editor for Morningstar.co.uk