Sept. 27, 2002 -- American Skandia Investment Services Inc. said it will replace Janus Capital Management LLC as the subadvisor on three of its AST variable annuity portfolios and three of its ASAF mutual funds, effective November 11.
Goldman Sachs Asset Management has been selected to manage the large-cap concentrated growth and mid-cap growth domestic equity portfolios, which had assets of $1.98 billion as of August 30. William Blair & Co. LLC has been selected to manage the international growth portfolios, which had assets of more than $523 million as of August 30.
Specifically, Goldman Sachs Asset Management will replace Janus as the subadvisor on the AST JanCap Growth Portfolio and ASAF Janus Capital Growth Fund/A (JCGAX). The names of these products will be changed to the AST Goldman Sachs Concentrated Growth Portfolio and the ASAF Goldman Sachs Concentrated Growth Fund, respectively.
Goldman Sachs will also replace Janus as the subadvisor on the AST Janus Mid-Cap Growth Portfolio and ASAF Janus Mid-Cap Growth Fund/A (JMCAX). These names will be changed to the AST Goldman Sachs Mid-Cap Growth Portfolio and the ASAF Goldman Sachs Mid-Cap Growth Fund, respectively.
William Blair will replace Janus as the subadvisor on the AST Janus Overseas Growth Portfolio and ASAF Janus Overseas Growth Fund/A (JOGAX). The names of these portfolios will be changed to the AST William Blair International Growth Portfolio and the ASAF William Blair International Growth Fund, respectively.
According to an American Skandia spokeswoman, Janus had subadvised these three funds since 1997.
American Skandia explained that it is firing Janus "because performance of the portfolios on a risk-adjusted basis has been below benchmarks." With respect to the Overseas Portfolio, "the change was carried out due to performance below benchmarks and a need to re-open the portfolio to new investors that has been closed since March 2000," American Skandia said.
Year to date through September 26, the ASAF Janus Capital Growth Fund has declined 31%, the ASAF Janus Mid-Cap Growth Fund has plunged 28.9% and the ASAF Janus Overseas Growth Fund has dropped 26.9%.
A phone call to Janus was not returned by press time.
To select these new subadvisors, American Skandia said it screened a total of 485 large-cap concentrated growth managers, 1,025 international equity managers, and 762 mid-cap growth managers, both retail and institutional, using such criteria as performance, process, discipline, tenure and capacity.
"We have a high level of confidence in these subadvisors' abilities to manage money in a variety of markets," stated Michael Murray, chairman of American Skandia's Investment Committee in a press release. "The growth investing strategy of the Goldman Sachs concentrated growth team, headed by Herb Ehlers, has a 21-year track record. And the William Blair international team has been led for over five years by George Greig, who himself has more than 23 years of investing experience."
"Janus is still reeling from the tech-wreck of two years ago," said Louis Harvey, president of Dalbar Inc., a Boston-based mutual fund consulting firm. "In one sense, this decision is not a big surprise. What is surprising, however, is that American Skandia waited so long to replace Janus."
Harvey also noted that "American Skandia has itself suffered as much as other investment firms in this whole market turnaround." According to press reports, American Skandia's parent, Sweden's Skandia Insurance Co., is seeking to sell the company in order to strengthen its balance sheet.
Based in Chicago, William Blair is an independent investment firm with more than $20 billion in client assets.
Goldman Sachs Asset Management is the asset management arm of Goldman Sachs, which managed $336 billion as of August 30.
American Skandia, the investment advisor for American Skandia Trust and American Skandia Advisor Funds, sells mutual funds and variable annuity products through other firms. According to a company spokeswoman, the company currently has total assets under management of about $26.9 billion.