Janus Henderson Investors took its merged team on the road for the first time last week with two of its most senior alternatives managers, David Elms and John Fujiwara meeting up in Australia.
David Elms, the London-based head of diversified alternatives, and John Fujiwara, portfolio manager based at former Janus headquarters in Denver, said the merger of the two alternatives teams was a good example of how the company’s whole integration had gone.
The merger process was effectively started at the time of the initial agreement in October 2016, hailed as one of the most sensible and complementary in the industry’s history. Henderson, once owned by AMP, was a more traditional core active manager across a full range of asset classes while Janus had developed quant-orientated smart beta and other strategies which fit the trend to lower-cost investing.
Janus also had a strong active fixed income team, boasting Bill Gross in Newport, California, and the Kapstream subsidiary in Australia. Also in Australia, Andrew and Matthew Kaleel run about $1 billion in commodities as well as working with the other alternatives teams. Henderson’s alternatives strategies tended to be more complex than those of Janus. Matt Gaden is acting head of Australia following the departure of Rob Adams to Perpetual. Adams had also been head of Asia for Henderson.
Elms, an ex-pat Australian, said this year had been a testing time for risk-premia-style strategies and as rates rise there would be more stresses. He said investors should exercise caution but there was no evidence of panic.
Fujiwara said that the US market was in the final stages of the longest bull run in history and investors were looking at alternatives and defensive strategies. For Janus Henderson, its main risk-premia strategy uses 11 different risk premia under the usual three broad categories of value, carry and momentum,
Elms says that a lot of investors in the space come from quant equities backgrounds and they have a tendency to be over-reliant on equities. The Janus Henderson portfolio differentiates itself by being more diversified. It also has caps on leverage.
“Philosophically, across our alternatives range we focus on what they are supposed to be doing for clients,” Elms says. “It’s all about diversification. They have to be as uncorrelated as possible. It’s also important to use your intuition and common sense. We want to understand the risks we’re taking and how it works.” When volatility is high portfolios need to be adjusted more frequently in order to maintain their risk profile.
Australian-based Tom Kelly, sales director, says that while everyone has momentum, carry and value in these strategies there are a lot of differences between the various managers underneath.
Investors are wary of weight of money factors with most quant-based strategies which can be problematic. Elms says this is a difficult issue to solve. “We can deal with real-world risks but panic and de-leveraging are more difficult. You have to be confident of your long-term strategy.”
– G.B.
