If you can't decide which type of fund--growth or income-- you'd like to invest in, how about a combo? That's what you'll get with the Janis Equity Income Fund.
Growth and income funds are the second most popular type of fund in the mutual fund universe (second to growth funds), according to financial data services company Lipper Analytical Services Inc. With about 700 different funds in the category, the investment objective of this group is to put its assets in companies managers feel will grow over time, as well as ones that have a solid history of paying dividends. That generally means investing in larger, blue-chip companies.
"I just try to find the best companies with the best management teams so I can fall in love with the companies," says Blaine Rollins, who has managed the Janus Equity Income Fund since its inception in 1996.
Like other Janus portfolio managers, Rollins is a bottom-up stock picker. Instead of finding a hot industry and buying lots of stocks of the individual companies within it, he looks at individual companies first and lets the industry sector weightings develop on their own.
Rollins likes to invest in companies that can generate plenty of cash, possess a strong market position, have franchise potential, have the ability to control pricing, and have a management team that cares about its shareholders as well as revenue growth.
Because the fund has two goals--long-term growth and income--along with dividend-paying stocks, assets can be invested in foreign and fixed-income securities. With fixed-income securities, Rollins prefers to minimize risk by investing in short-maturing bonds rather than in those with longer maturities.
The Equity Income Fund keeps close to 120 stocks in its portfolio and has a portfolio turnover rate of 180 percent per year. That's higher than most funds and means securities in the fund's portfolio are traded frequently. Even with the higher turnover, this is considered one of Janus' more conservative funds.
The largest position in the fund is Dionex Corp., which makes machines that help detect the chemical compositions of any soluble compound. Rollins believes Dionex is a cash-rich niche company that dominates market share within its industry and spends a lot of money on research and development. "Dionex almost always [comes out with] the freshest products," he says.
Minnesota Mining & Manufacturing is another one of the fund's top holdings, as are department store giant Dayton Hudson; Swiss Life, Sweden's largest life insurance company; and Royal Caribbean Cruises Ltd.
Like many young money managers today, Rollins has never managed a portfolio through an extended flat or bear market. His management experience, however, has taught him something all investors would be wise to remember.
"Investing," says Rollins, "has a lot to do with patience. You can't get caught up in hype and hysteria. I try to avoid hot tips and invest in things I know--and in good people."
Dian Vujovich is a nationally syndicated mutual fund columnist and author of Straight Talk About Mutual Funds (McGraw-Hill); Straight Talk About Investing for Your Retirement (McGraw-Hill); and 10-Minute Guide to Stocks (Macmillan).
At A Glance
Fund name: Janus Equity Income Fund
Managed by: Janus Capital Corp.
Total assets: $80.6 million
Return: 48.11% (since inception on June 29,1996)
Management fee: 1%
Phone: (800) 525-8983
Lipper Analytical Services Inc., (212) 393-1300, http://www.lipperweb.com