I recently attended the Janus Analyst Summit in Denver. Janus hosts the event annually for investment advisors. In addition to product presentations, they always bring in good speakers and in the past several years the conference has been a good source of ideas and information.
This year I was able to schedule a meeting with the lead Portfolio Manager of the Janus Perkins Global Value fund, ticker JPPIX. This fund is a core holding in our KilterHowling Global Growth portoflio. The fund takes a unique and independent approach to managing stocks and meets virtually all of our KH criteria. One thing we like are managers who do not spend a lot of time marketing – we like them in the office managing your money. I was lucky that Greg, who is based in Chicago, was actually in Denver for a trustee meeting and made 30 minutes to meet.
Greg has managed the fund for about five years, relocating to Chicago from Denver in order to join the Perkins team there. Perkins is a subsidiary of Janus, which handles back-office, but otherwise the firm operates completely independently. We prefer management teams that are not located in major financial centers, and JPPIX passes this test.
The fund is managed by Greg with two other managers, all of whom are CFA charterholders (as are Will and I) and also who have significant investments of their personal money in the fund: in excess of $1M apiece.
In addition to being an independent subsidiary of Janus, Perkins is a small firm – 17 members on the investment team and there has been only one voluntary departure in 35 years, and that was a retirement.
Greg’s approach is very much aligned with our mentality at KilterHowling – preservation of capital and focus on downside protection and minimizing volatility. To this end, the team begins stock analysis not by asking the question, “how high could this stock go?”, but rather, “what could go wrong?”. Only after they are comfortable that they understand the worst case outcome do they proceed to looking at potential upside. This is almost exactly the opposite of what nearly every stock picker in the world does.
But does this work? Is the portfolio less volatile, does it protect the downside, and does it achieve these ends in a way that is patient and tax efficient?
- Over the last 3 years the fund has been 36% less volatile than the global stock index.
- Over the past 3 years the fund has captured 73% of a rising market return, but only 32% of a falling market. Over 5 years it has captured 69% and 38%, respectively.
- The expense ratio for JPPIX is ‘low’ relative to its category peers according to Morningstar, and turnover – a measure of how much a manager sells and buys vs. holding patiently, is extremely low at 22%.
Because of it’s conservative bent and approach, JPPIX has lagged as the markets have moved mostly straight up of late, but we are comfortable that Greg Kolb and his team of patient investors will continue to be prudent stewards of your (and our) capital through both the ups and downs of the global stock markets.
In the interest of full disclosure, I used to run into Greg in the locker room at Janus almost 10 years ago and just knew him as an affable if quiet fellow. It was great to get to hear more about his unique and patient process.