Does the Henderson Janus Merger Mean Lower Fund Fees?

There is an economies-of-scale benefit to the Henderson Janus merger which should allow them to spread out their fixed costs over a larger pool of assets

Morningstar Analysts 7 October, 2016 | 2:25PM
Facebook Twitter LinkedIn

 

Andrew Daniels: This week, U.K.-based Henderson and U.S.-based Janus agreed to a merger of equals. The deal's expected to close in the second quarter of 2017, with Henderson owning 57% of the combined company and Janus owning 43%. The deal makes clear business sense.

Both firms have been trying to increase their distribution presence and diversify their product offerings. There's also an economies-of-scale benefit which should allow them to spread out their fixed costs over a larger pool of assets, and allow them to improve their financial results.

The benefits to fundholders, however, is less clear. If the added scale brings them operational efficiencies, that should allow them to reduce expense ratios. However, there are no plans to do that in the near future. There's also some cultural problems as well. Any time you're bringing together two different firms, the potential for culture clash exists, and manager and analyst turnover may increase as a result. All told, this deal makes clear business sense, but the benefits to fundholders is less clear.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Facebook Twitter LinkedIn

About Author

Morningstar Analysts   -

© Copyright 2024 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Modern Slavery Statement        Cookie Settings        Disclosures