The Janus fund took the award in the Hong Kong equity funds category while the JB fund won in the the Singapore equity funds category.
The Ireland-domiciled Janus fund was launched in 2000 and had $955.6m in assets under management on 31 January. The Luxembourg-based JB fund was launched in 2008 and had $180.3m in AUM on 31 January.
Market analysts have a positive outlook on the healthcare sector. Ageing populations in large economies and trends such as rapid product innovation, faster new drug approval and recent healthcare reform in the US are fueling investor interest in the sector.
The Janus fund aims to invest globally in companies engaged in research, development, production or distribution of products or services related to health and personal care, medicine or pharmaceuticals.
On the other hand, the JB fund seeks to achieve long-term capital growth by investing globally in innovation-driven companies active in all health-care sub-sectors such as pharmaceuticals, biotechnology, healthcare services and supplies, medical technology, specialty pharmaceuticals and generics.
Both Janus and JB funds have the bulk of assets invested in US companies and both are overweight the biotechnology sector, said Luke Ng, vice president at FE Analytics, who provides a comparative analysis.
Investment strategy review
According to Ng, managers of both funds have a positive outlook on the sector over the long-term due to the rising demand for healthcare products and services. Furthermore, increasing merger and acquisition activities are acting as a growth catalyst for the sector.
“Both funds are significantly underweight on the pharmaceuticals sector compared to their [shared] benchmark index, the MSCI World Health Care Index. On the other hand, both are overweight on the biotechnology sector,” Ng said.
“Despite their similar allocations, you can see that the magnitudes are different. The Janus fund has lower exposure in pharmaceuticals and higher in biotechnology [compared to the JB fund] The JB fund has a stronger overweighting position in the US [compared to the Janus fund].”.”
The Janus fund has 93 holdings in its portfolio while the JB product tends to hold a more concentrated portfolio of around 50 stocks, Ng said.
Furthermore, the Janus fund tends to have a bias toward small- and mid-cap companies.
A snapshot of portfolio allocation:
|
Particulars |
Janus fund |
JB fund |
|
Assets as on 31 January |
$955.6m |
$180.3 |
|
Launch date |
31 March 2000 |
31 January 2008 |
|
Top sectors* |
Pharmaceutical: 35.7% (weight in benchmark 56%)
Biotechnology: 33.8% (weight in benchmark 15%) |
Pharmaceutical: 46.3% (weight in benchmark 56%)
Biotechnology: 20.3% (weight in benchmark 15%) |
|
Top country breakdown* |
US: 74.7% (weight in benchmark 65%) Canada: 4.5% Switzerland: 4.5% |
US 78.5% (weight in benchmark 65%) Switzerland: 7.7% UK 3.5% |
|
Top stocks |
Biogen Idec 2.9% Johnson & Johnson 2.9% Amgen 2.5% |
Pfizer 5.2% Salix Pharmaceutical 4.5% Actavis 4.4% |
* Both the Janus and JB funds use the same benchmark index: the MSCI World Health Care Index.
Performance review
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The FE Crown Ratings of the two funds are very close: the Janus fund is rated 4 Crowns and the JB vehicle gets 5 Crowns. (The FE Crown Rating ranks funds based on alpha, consistency and volatility).
Both products track their performance against the MSCI World Health Care Index.
“Both funds outperformed the benchmark and peers every calendar year over the past five years. Both funds delivered similar returns in 2014 and so far in 2015. But the JB fund delivered comparatively higher returns in and before 2013.”
“If we look deeper into details, we can see that exposure to biotechnology was the dominant factor that made the difference.
“The biotechnology sector performed very well over the past five years. Therefore, the higher the exposure a fund held in the biotechnology sector, the better it performed.”
A look at the calendar year performance:
|
|
2015* |
2014 |
2013 |
2012 |
2011 |
2010 |
2009 |
|
Janus Global Life Sciences A Acc USD in SG |
14.72 |
39.32 |
57.58 |
15.38 |
7.37 |
-3.24 |
21.28 |
|
JB Multistock Health Innovation B USD in SG |
14.58 |
38.78 |
70.5 |
19.59 |
12.84 |
0.9 |
1.64 |
|
MSCI World Health Care Index GTR in SG |
10.35 |
24.58 |
41.67 |
11.5 |
11.51 |
-5.99 |
16.62 |
*Data on 7 Mar 2015
“The Janus fund had a 29.02% and a 28.87% allocation to the biotechnology sector by the end of 2012 and 2011, respectively. During the same period, the JB fund’s allocation toward biotechnology was as high as 76.4% and 69.3%, respectively. That more or less explains why the JB fund outperformed the Janus fund in and before 2013.”
In 2014, the volatility ratio of the Janus fund and the JB fund was 17.54% and 16.46%, respectively.
“While both funds remain overweight in the biotechnology sector, volatility of the funds was still higher than the benchmark and peers. In addition, as the valuations of biotechnology companies are generally higher [than pharmaceutical companies], the valuations of the two funds are higher as well.”
Manager review
Andrew Acker has been managing the Janus fund since May 2007. According to Ng, Acker is supported by a team of four analysts.
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“Janus has a stable team, whose members have been working together for over five years.”
Coming to the JB fund, Christophe Eggmann has been managing the portfolio since 2010.
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“The JB fund used to be co-managed by Eggmann and Nathalie Flury. However, Flury left the team around the second half of 2014.”
“Whether the departure of Flury will have an impact on the fund in the long-term is yet to be seen,” Ng said.
Fees
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The annual management fees of the Janus fund at 1.5% are lower than the JB fund fees of 1.6%.
However, the total expense ratio, or on-going charge of the Janus fund is higher.
The TER for the Janus fund was 2.56% for the year ended June. The TER for the JB fund was 1.81%
Conclusion
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According to Ng, both the JB and Janus teams have demonstrated expertise and knowledge in the field and this has helped the strong performance of the funds.
Taking into consideration the current portfolio allocation, Ng favored the Janus fund.
“With the current positioning (higher exposure to biotechnology stocks), the Janus fund tends to be better off, provided the biotechnology stocks continue to outperform.”
“At the same time, investors should also be aware about the potential downside as valuations of these stocks have reached a decade high,” he added.
