Jim Goff, Steady at the Janus Research Helm
April 28, 2008
Jim Goff is a rare portfolio manager and research director who sticks to his guns no matter how erratic or rewarding the market. In fact, he has stuck, for 20 years now, with a fund complex that has just about seen it all.
Janus is best known for its meteoric rise during the 1990s' boom years, and then the dot-com mania and bust of 1999 and 2000.
The firm has since been marred by its portfolio managers' stubborn bravado on their aggressive growth calls, costing investors dearly in returns. That was quickly followed by the mutual fund trading scandal of 2003-2005, Janus' widely followed spinoff and IPO from parent railway company Stilwell Financial, significant net redemptions that only started reversing in late 2007, an ongoing drain of talent over the past two years and a total revamping from a direct-sold fund company to one partnering with financial planners. Getting on 100,000 individual platforms isn't easy.
In fact, analysts tracking the firm and its funds have, at times, been brutal.
Yet Goff remains at Janus, where he has continued to excel at unparalleled research skills that have earned him the nickname "research maniac." Shortly after joining Janus in the early 1990s, Goff was promoted from separately managed account analyst to portfolio manager of the Janus Enterprise Fund.
Under Goff's leadership, Janus Enterprise excelled, most notably returning 41% in 1999, without his holding any pure-play Internet stocks. Instead, Goff turned to, and made as sexy a case as possibly feasible, for such stocks as payroll processing, cellular phone towers, wireless connections and arsenide semiconductor chips. It's the nuts and bolts of growing industries that turn Goff on.
In fact, it is much to Goff's quiet credit that the entire Janus family of funds are, once again, delivering outsized returns. As director of research at Janus and portfolio manager of U.S. equity research for the Janus Global Research Fund and the Janus Research Fund, Goff can also be credited with bringing a far more structured approach to research and analysis to the firm.
This approach is earning Janus renewed respect and helping it to attract top-notch, seasoned talent.
In a year when the subprime credit crisis is shaking everyone's confidence, Money Management Executive posed some difficult questions to an asset manager and researcher whose track record speaks for itself. An edited version of Goff's e-mail interview follows.
MME: With JanusINTECH Institutional doing so well, in this momentous year of 2008, with so many leading firms caught by the subprime/collateralized debt obligation/misplaced underwriting crisis, are you ever tempted to set aside proven, rational, man-based approaches to market research in favor of a truly mathematical and unemotional approach?
Jim Goff: We leave the quantitative or mathematical approach up to our sister company INTECH, which has generated tremendous success over time. Fundamental bottom-up research has been the core of Janus' investment culture for 40 years, and that won't change. It is important to recognize what you are good at and stick with it.
It is during times like this where there is a lot of change that we can add a lot of value. We are excited that we have had five straight years of strong investment performance in some very different types of markets, including the current downturn.
MME: That appears to be true. The Janus Global Research Fund you manage is up 8.33% over the past year, beating its category by 10.79 percentage points. That's impressive growth.
Goff: Janus expects to outperform in bull and bear markets, and we believe we can add a lot of value during difficult times such as this. Early results are encouraging.
MME: You have been with Janus for 20 years now. What has it been like to work there all this time, and what has changed?
Goff: In my mind, the most important thing about Janus is what has not changed. We went through difficult times after the tech bubble. A lot of firms that did the same gave up on what made them special.
We never did. It's all about research and investing with conviction. That is the core that drives our performance. We have tripled our spend on research since I became director of research in 2002. And no one has ever accused us of index investing.
We have four disciplines-opportunistic alpha, all-cap growth, concentrated growth and international growth-which are in the first percentile in their categories over the past five years. Furthermore, if you look at the Janus funds that Morningstar rates, 77% of them have four- and five-star ratings.
We continue to invest with conviction.
MME: Are you responding in any specific way to this year's massive subprime crisis, and are you able to do this without stifling the various creative and individualistic approaches of your investment professionals?