Hayes Entering ’02 Cautiously
Burned by stock markets this year, one of the top global-stock mutual fund managers of the 1990s is taking a very cautious approach to 2002.
The giant Janus Worldwide Fund, managed by Helen Young Hayes, is entering the new year “with a sizable cash cushion and perhaps the most defensive posture the fund has ever had,” Hayes and co-manager Laurence Chang tell shareholders in their semiannual report, mailed last week.
The $21.4-billion fund has fallen 24% this year, worse than nearly three-quarters of its rivals. But it still is ranked at the top of the world stock fund category for the last 10 years, with an average annual return of 14.2%, according to fund tracker Morningstar Inc.
The average world stock fund--that is, funds that invest in U.S. and foreign shares--is down 19% year to date, Morningstar said. That is worse than the average 12.5% decline of domestic funds.
Many foreign markets have fallen more sharply than the U.S. market this year. What’s more, the strong dollar has magnified losses in foreign shares: A strong dollar means foreign stock holdings are worth less when translated from weaker currencies into dollars.
“The fund’s short-term performance was below the standards we set for ourselves,” Hayes wrote to shareholders. Janus funds in general have suffered heavy losses the last two years, in part because of heavy technology-stock bets.
Janus Worldwide, which is closed to new investors, had nearly 10% of its assets in cash as of Nov.30, up from 8.3% in April and 6.5% in October 2000, according to Janus. High cash holdings can help buffer a fund in a weak market. But if stock prices soar, a fund with a large cash stake can miss out by being on the sidelines.
The Janus Worldwide fund boosted its health-care holdings to about 12.6% of the portfolio as of Nov. 30, up from 9% at the end of April, while cutting cellular-phone holdings to 4.5%, down from 9.3% in April.
Other Janus portfolio managers also told shareholders in year-end letters that they were becoming more defensive. Janus Enterprise manager Jim Goff, whose mid-cap growth stock fund is down 41% this year, wrote that he has “become increasingly valuation-sensitive, spending far more time looking at historical ranges and other analyses” of stocks.
