If any company epitomizes the meteoric rise in popularity of no-load mutual funds in the past decade, it is Denver-based Janus Capital Corp.

Just four years ago this month, Janus had less than 1 billion under management in a handful of funds. Today, the company manages $20.1 billion in assets, including 15.6 billion in mutual funds.

Janus was founded in 1969 by Thomas H. Bailey and William Mangus.

Mr. Bailey was working in New York as a stockbroker when a Colorado stockbroker offered to sell him a tiny fund management business. A self-professed Vail ski bum, Mr. Bailey leapt at the chance to head for the Rockies. He managed the $650,000-asset business with Mr. Mangus, then bought out his partner in 1970.

Mr. Bailey still loves the mountains, fly fishing, and skiing. He lives in Aspen and commutes by plane to Denver when business calls.

Under Mr. Bailey's leadership, Janus built a solid performance record throughout the 1970s, averaging an 18.4% annual return from 1970 to 1982.

But the bull market of the late 1980s provided the company's rocket fuel. With consistently impressive returns on its showcase portfolios, the Janus Fund and the Janus Twenty Fund, the company started showing up on everyone's list for best fund ideas.

Assets have grown so dramatically that the company recently closed two fund portfolios to new investors. The Janus Twenty and Janus Ventures funds were becoming too big and unwieldly, the portfolio managers argued.

The company's growth investment strategy emphasizes companies that produce consistently increasing earnings. Today, Janus offers 12 no-load mutual funds. Its two newest additions are a federal tax-exempt fund and the Janus Mercury Fund, an aggressive growth stock fund

In 1984, Mr. Bailey sold an 81% stake in Janus to Kansas City Southern Industries. He retains 18% of the company's stock, and a board member holds the remaining 1%. Mr. Bailey continues as chairman and president.

Keith DuBay, American Banker's Denver bureau chief, recently caught up with Mr. Bailey in his Denver office.

Q.: What is fueling Janus' growth these days?

BAILEY: We are getting ourselves involved in the variable annuity products. We are introducing a new Aspen series in that area. It's under registration. We have a pretty strong effort in the 401(k) business. We do research and don't get involved with administration.

We treat the $20 billion [asset base] like a stool and get as many legs as we can. Obviously, the biggest area is no-load mutual funds.

We're also subadviser on a number of other fund products, such as loads for insurance companies. We have 1.9 million accounts.

Q.: Is the mutual fund business getting too big and too complicated?

BAILEY: It's a hell of a lot more complicated now than when I first started, when there were 520 mutual funds. There are almost, what, 5,000 now? It's also become a preferred method of saving in America.

[To succeed in the funds business,] you have to have the research, but also be strong in customer service. You have to answer phones, send out accurate statements.

We're not doing anything too differently. I've turned down some business propositions. I don't want to try to grow this thing in all directions at once.

I don't see us in the discount brokerage business. I don't see us doing a lot of things like sector funds, or index and country funds. We really can't be all things to all people.

Q.: Are today's mutual fund investors different from those of 10 years ago?

BAILEY: The last guy in generally has the highest expectations. Maybe in that respect they're a little different. The 1980s were the second-best 10 years in history. Over the next five years those returns are not going to be achieved.

Q.: Have you made any preparations for an extended market retreat?

BAILEY: What kind of contingency plan can I have for that? I've never been able to predict any downturn.

We can look at prices relative to historical periods and say this and that group are out of line. Hopefully, we're right on the earnings on a lot of these companies. If interest rates went way up, you'd see some things done in the portfolio.

Q.: How much money has come into the Janus funds from banks? And is it still flowing in?

BAILEY: I think generally that's going on. But how much we're getting, who knows? We're not targeting it.

Q.: What do you make of banks entering the mutual fund business?

BAILEY: If I were a bank, I'd probably be in that business one way or another. It's a natural outgrowth. I can't imagine a bank that wouldn't do it.

Funds have always been an ease-of-entry business. I don't see a difference between a Bank of America growth fund and Fidelity Magellan.

It's been conventional to knock banks as not having any expertise in portfolio work. I've got analysts who worked for banks and think they're real bright.

Whether they'll be successful or not is another thing. With Janus, investment is 100% of what we do. Banks are not as focused. But banks are just as capable of hiring bright people as I am.

Q.: It has been said mutual funds are becoming the banks of the 1990s. Do you agree?

BAILEY: I disagree. A typical mutual fund customer might have a three- to five-year outlook with an above-average rate of return. When I think of a bank deposit, I put money in there I might use next week. It's an entirely different objective.

Q.: Does Janus have any plans to sell through banks?

BAILEY: We would certainly entertain being a subadviser. But we don't have any pointed marketing effort calling on banks around the country.

Q.: Is there anything in the works?

BAILEY: We don't talk about potential deals. There are lots of potential deals we could pursue.

We have no banks selling Janus services. We're not entering the bank market. It just wouldn't be our deal. Our business is being the investment adviser on no-load, load for insurance, 401(k), pension, variable annuities, those kinds of things.

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