Janus Capital Group is focusing its high-yield investments in utility, wireless and chemical credits to reduce interest-rate sensitivity, said Gibson Smith, portfolio manager of the $1.4 billion fund in Denver. "We've taken a significant portion of the interest-rate sensitive securities out of our portfolio. We've lightened up on double-B credits and going forward we'll look to buy bank double-Bs as interest rates trend higher," he explained. Smith added Janus is fully invested but will be putting new cash to work in its best total return names--some in utilities and wireless-- and will also add to chemicals. He declined to name specific credits or detail the fund's allocation to each sector. "We're positive on the utilities, where many companies are going through balance sheet repair, and the wireless space offers some of the best growth opportunities within the high-yield universe," he reasoned.
Credit quality is currently an important theme in Janus' investment strategy, Smith said. "Last year was a year of risk taking where it was less relevant what you bought, as long as you were invested in the market. This year is definitely a credit pickers' market," he explained. Janus executes a bottom-up, research-driven process to determine the best buys among individual credits, he noted.
The high-yield fund is run on a total return format and is cognizant of its benchmark, the Lehman Brothers High-Yield Index, but it is by no means an index fund, Smith stated. He said the fund's duration is roughly 4.5 years, short of its index by a quarter of a year.
