Active Management Gets a Shot: Janus Henderson's JXX Capitalizes on Market Concentration Shift

When the Biggest Stocks Dominate Everything, It’s Time for a Different Approach

For nearly seventy years, history showed one clear trend: the largest companies in the S&P 500 consistently lagged behind the rest of the market. Since 1957, the top 10 stocks underperformed the remaining 490 by 2.4% annually. That was the rule. But the last decade shattered it—the mega-cap giants have crushed everything else, delivering outsized returns of 4.9% per year. This extreme concentration has created what Janus Henderson sees as a genuine opportunity for active managers to make a meaningful difference.

Enter JXX, the firm’s new fundamental active equity ETF, marking the Denver Equities team’s expansion into the ETF space after building a four-decade track record in growth investing.

The Strategy: Focused Conviction with a Vision for Tomorrow

JXX isn’t trying to be everything to everyone. The fund maintains a concentrated portfolio of just 20-30 equity holdings, each selected with intention and conviction. Portfolio managers Nick Schommer, CFA, and Brian Recht apply a rigorous bottom-up research approach, hunting for companies with sustainable competitive advantages and long-term growth potential.

What sets this fund apart is its thematic lens. Rather than chasing whatever’s hot today, the managers anchor their stock picks to major secular shifts reshaping the economy:

• Artificial intelligence and automation
• Cloud migration and digital infrastructure
• Healthcare innovation and biotechnology advances
• E-commerce and the broader digitization of commerce
• Deglobalization and supply chain restructuring
• Other transformational long-term trends

This isn’t just a clever marketing angle—it’s a disciplined framework that connects stock selection to investable megatrends likely to create winners over the next decade or more.

Why Now? The Case for Active Management

Janus Henderson’s thesis is straightforward: when 10 stocks drive most index returns, passive indexing becomes increasingly concentrated. That creates inefficiency and opportunity. A thoughtfully constructed active portfolio that diversifies away from this extreme concentration has genuine potential to outperform, particularly when combined with high-quality business selection and thematic conviction.

The fund’s fundamental research philosophy—examining a company’s competitive moat, growth runway, and ability to create shareholder value—seeks to identify securities that can deliver what the fund calls “transformational growth.” In simpler terms: companies that will surprise on the upside over time.

The Team Behind the Strategy

Schommer and Recht bring serious pedigree to this launch. They’re drawing from Janus Henderson’s deep bench in growth equity investing, anchored by strategies dating back to 1985. The firm manages approximately $379 billion in assets under management globally, with 2,000+ employees across 25 cities worldwide.

The Denver Equities team is essentially bringing their proven bottom-up discipline to the ETF structure—a more efficient and accessible vehicle for investors seeking their growth philosophy.

What to Know Before Investing

JXX comes with inherent risks common to growth-focused, concentrated funds:

• Growth stocks carry higher volatility and loss potential
• Concentrated sector/regional exposure amplifies sensitivity to specific industries
• Nondiversified funds can take larger positions, increasing volatility
• No guarantee that the stated investment objective will be achieved

Past performance doesn’t predict future results. Investors should carefully review prospectus materials, understand the risks, and align the fund with their investment timeline and risk tolerance before committing capital.

The takeaway: In a market dominated by mega-cap concentration, JXX offers investors a contrarian tool—a fundamentally-driven, conviction-based approach that bets on quality compounders tied to authentic long-term transformational themes.