The pension plan for tens of thousands of Colorado retirees is dropping the Janus Fund, citing allegations the Denver-based firm allowed improper trading.
The Colorado Public Employees Retirement Association board has voted to remove Janus’ flagship fund from the 401(k) investment options available to 71,000 members.
The board’s investment advisory committee “has lost confidence in the fund and its management’s ability to achieve its original performance and the investment objectives,” according to a memo prepared for the board.
The memo also said allegations that Janus allowed a hedge fund, Canary Capital, to engage in frequent trading of its funds are “a substantial negative development for the firm and are a possible indication of poor policies.”
The allegations ultimately caused the pension plan to drop Janus, PERA spokeswoman Katie Kaufmanis said Monday. The change will be made in March.
The memo also cited the fund’s performance as well as “substantial leadership and portfolio manager departures.” Janus has lost three prominent fund managers in the past year.
Janus spokeswoman Shelley Peterson said Janus is “confident that in the days, weeks and months (ahead), that our shareholders will see that we are taking the right steps.”
Just $30 million of the $828 million in PERA’s 401(k) plan was invested in the Janus Fund.
PERA, with 332,000 members, is the retirement plan for 380 government agencies and public entities in Colorado. The bulk of its assets are in its $27 billion pension plan.
New York Attorney General Eliot Spitzer alleged in September that Janus and three other firms allowed Canary Capital to engage in frequent trading of their mutual funds at the expense of long-term investors.
Janus admitted it had arranged to allow frequent trading but would not confirm whether Canary was involved. Frequent trading is not illegal, but Janus had told investors it was discouraged.
