Q. I have Janus Enterprise Fund in my individual retirement account and experienced huge losses over the last few years. What is the outlook for this fund?
D.S., via the Internet
A. Whacked by its inopportune investments in technology and telecom, the fund installed Jonathan Coleman as its new manager in early 2002 to try to reverse its fortunes.
He’s been broadening its approach by looking at additional segments of the stock market for growth opportunities, buying somewhat slower-growth companies and increasing its 55 stocks to 90.
The $1.73 billion Janus Enterprise Fund (JAENX) declined 26 percent over the past 12 months to rank in the lower half of all mid-cap growth stock funds. Its three-year annualized decline of 31 percent placed it in the lowest 10 percent of its peers.
“At this point in the game, it’s too early to say whether the reforming of the Janus Enterprise Fund has worked and everything’s OK now,” said Dan McNeela, analyst for the Morningstar Inc. research firm. “But it is clear that steps have been taken to remove some risk from the fund.”
While Coleman has been at Janus since 1994, he co-managed another fund for just a few years before receiving this latest assignment and is therefore not the most experienced of portfolio managers, McNeela noted.
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Investors should carefully examine the existing large-cap and value components of their personal portfolios before they work a mid-cap growth fund such as Janus Enterprise into that overall framework.
This “no-load” (no sales charge) fund requires a $2,500 minimum initial investment and has a low annual expense ratio of 0.90 percent.
Q. I want to change the beneficiary on some Series EE U.S. Savings Bonds I own. What are the tax consequences of reissuing bonds with a new beneficiary? Is it considered a sale?
D.P., via the Internet.
A. There is no immediate tax consequence for any parties involved in changing the beneficiary.
The income earned on the Series EE Savings Bonds that hasn’t yet been reported can still be deferred by the new beneficiary if he continues to hold them. The beneficiary won’t get an IRS Form 1099 for interest income until cashing in the Series EE bonds or when they reach their final maturity, which is 30 years.
“On the other hand, a taxable event does occur when the first-named person–the owner of the Savings Bond–dies,” said Daniel Pederson, president of the Savings Bond Informer (www.bondhelp.com) in Detroit. “Then the value of the bonds is included in the value of the estate for tax purposes.”
Another taxable event would occur if the first-named person removed his name from the bond and replaced it with another name. He would receive a Form 1099 for interest earned up to the time that it was reissued, Pederson concluded.
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Andrew Leckey answers questions Sunday in Business and Tuesday in Your Money. Address inquiries to Andrew Leckey, #184, 369-B Third St., San Rafael, CA 94901-3581 or by e-mail at [email protected].