Janus Henderson Enterprise fund outperforms amid market volatility, focuses on sustainable growth
The Janus Henderson Enterprise fund (JAENX) has been attracting attention as an attractive investment option for those seeking exposure to growth stocks without the extreme volatility experienced in 2022. The $18.9 billion fund has demonstrated resilience amid market turbulence with a decrease of 16.1% last year, significantly less than the average Mid Growth fund's drop of 27.8%. Over the past decade, JAENX has achieved an annual return of 11.9%, outperforming 94% of its counterparts in Morningstar’s Mid-Cap Growth fund category.
Co-managers Brian Demain and Philip Cody Wheaton have been focusing on identifying stocks that offer sustainable long-term growth while ensuring they are not overpriced. The average price/earnings ratio for the fund’s holdings is currently at 19.0, significantly lower than the average Mid-Cap Growth fund's ratio of 26.6.
Recent additions to their portfolio include WEX (NYSE:WEX), a financial technology firm specializing in fuel cards for trucking fleets. WEX holds a duopoly in this sector with FleetCor Technologies (NYSE:FLT), resulting in high profit margins. The company also has growing operations in health savings and flexible spending accounts administration and virtual credit-card payments processing.
The fund carries a significant weight in the industrial sector at 24.0%, as companies restructure their supply chains due to geopolitical tensions with China and pandemic-related disruptions. One such industrial holding is TFI International (NYSE:TFII), a trucking logistics company that could benefit from the reshoring trend.
Interestingly, the fund has recently ventured into government-regulated utilities like Alliant Energy (NASDAQ:LNT), which is not typically considered a growth stock. However, utilities like Alliant are investing heavily in renewable power generation and grid hardening, which can lead to cost savings and efficiency improvements.
In contrast to other growth managers who have invested heavily in semiconductor stocks due to the artificial intelligence boom, Demain and Wheaton have been reducing their holdings in microchip stocks due to valuation concerns. Instead, they have been increasing their investments in healthcare companies like Revvity and Waters (NYSE:WAT), which manufacture life-science tools. These companies stand to benefit from the growth in biotech drugs without needing regulatory approval.
As of August 31, technology stocks made up 26.0% of the fund's portfolio, exceeding its Russell Midcap Growth benchmark by over 4%. With an expense ratio of 0.91%, JAENX is more cost-effective than most active mid-cap funds. The fund's strategy also includes investing in companies with prudent CEOs who allocate capital wisely for acquisitions, research and development, dividends, or stock buybacks. One such example is TFI's successful acquisition of its less-than-truckload business from United Parcel Service (NYSE:NYSE:UPS) in 2021.
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