Janus to Shut Its Top-Performing Twenty Fund to New Investors

Janus Capital Corp. will close its top-performing Janus Twenty Fund--the most identifiable mutual fund of the narrow, late-1990s bull market--to new investors, after seeing assets quadruple to $25.9 billion since late 1997.

Janus Twenty, managed by Scott Schoelzel, will stop accepting money from new investors beginning Monday, the company said Friday. The fund, which makes investments in 20 to 30 stocks, will continue to accept cash from existing shareholders.

“Janus is taking the right step,” said Eric Kobren, who runs Insight Management, a financial advisory firm in Wellesley, Mass. “There’s been so much money flowing in at such a fast rate that it makes it more difficult to invest the money in a timely fashion.”

Janus Twenty joins other popular funds such as Fidelity Magellan, Putnam New Opportunities, Vanguard Primecap and Sequoia Fund that are closed to new investors. At least one other Janus stock fund, Janus Overseas, is also shut.

Janus Twenty soared 73.4% last year, ranking 16th of 7,630 funds tracked by Bloomberg Fund Performance. This year, the fund was up 22.9% as of Thursday, making it No. 24 of 1,175 growth stock funds followed by Bloomberg.

“The stellar performance attracted thousands of new investors, and the fund was getting too big to be effectively managed, particularly for a fund that limits investments to 20 or so stocks,” said John Rekenthaler, director of research at Morningstar Inc., an industry research group in Chicago.

Denver-based Janus, the 12th-biggest U.S. mutual fund company and a unit of Kansas City Southern Industries Inc., said the decision was made “as a proactive move to protect its ability to deliver superior performance.”

Janus has, however, been highly successful in recent years by plowing new investor money into many of its favorite growth stocks, meaning shares of companies with sharply rising earnings.

Janus Twenty’s biggest holdings included America Online Inc., Dell Computer Corp., Microsoft Corp. and Time Warner Inc. as recently as Feb. 28, the company said. Other Janus funds, such as Olympus and Mercury, are known for holding many of the same growth stocks.

Schoelzel, 40, started managing Janus Twenty in August 1997 after the previous manager, Tom Marsico, left to start his own firm.

Janus Twenty attracted a net $3.12 billion during the first two months of 1999, according to Financial Research Corp., a Boston-based firm that tracks fund flows. Only Vanguard Group’s Index 500 Fund took in more money.

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Bloomberg News was used in compiling this report.