Janus Twenty in New, Steady Hands

Don't expect big changes as Ron Sachs takes over the reigns of this fund from Scott Schoelzel.

Now that Scott Schoelzel, longtime manager of Janus Twenty, has announced that he'll be leaving Janus at year-end, investors in the $10.6-billion fund have reason to wonder whether they, too, should jump ship. Our assessment: Probably not.

Janus has a deep bench and another of its top managers, Ron Sachs, will take over the marquee fund when Schoelzel departs. Holders of Janus Twenty (symbol JAVLX) shouldn't expect big changes. Sachs, who has built a terrific seven-year record managing Janus Orion (JORNX), and Schoelzel approach stockpicking in similar fashion. "We like the same kinds of businesses," Sachs says. "Scott and I might articulate it differently, but he’s identifying great companies and so am I, and we're both pulling strong ideas from the analyst team."

Sachs looks for companies with competitive advantages and dominant products. Apple (AAPL) is a top-five holding in both Janus Orion and Janus Twenty. Sachs says the company's stock, which closed at $137 on September 13, still has room to run. The popularity of its products in the U.S. and abroad "could really drive up the stock," he says.

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Other holdings the funds share include fertilizer company Potash Corp. of Saskatchewan (POT) and drug maker Celgene (CELG).

Janus Twenty, a $10.6 billion fund that has been closed to new investors since 1999, makes concentrated bets on 25 to 35 large, fast-growing companies.

Orion invests in growing companies of all sizes but devotes a substantial chunk of assets to large companies (which currently make up about half of the portfolio). Both funds have 30% of their portfolios invested overseas in "global leaders where management happens to be based outside of the U.S.," says Sachs. The Janus philosophy is portfolios without borders -- that is, where a company is based doesn't matter so much as if it's an undiscovered growth story.

Sachs certainly is no stranger to concentrated portfolios. The $4.2 billion Orion recently held 48 stocks and had 45% of assets in its top ten holdings. Over the past five years through September 3, the fund has gained an annualized 23%, placing it in the top 1% of funds that focus on growing, midsize companies (Morningstar categorizes the fund as mid-cap growth.)

Like many funds at Janus, Twenty soared at the end of the 1990s and plummeted during the 2000-2002 bear market. The fund rose 73% and 65% in 1998 and 1999, respectively, before losing 69% of its value between March 24, 2000, and October 9, 2002. Still, the fund's 9% annualized gain over the past ten years through September 3 surpasses its rivals by four percentage points a year, on average. Schoelzel took over the fund in 1997 after previous manager Tom Marsico left to start his own firm.

Staff Writer, Kiplinger's Personal Finance