UPDATE 2-Janus profit below expectations but shares firm

(Recasts with analyst, CEO comments, byline)

By Muralikumar Anantharaman

BOSTON, April 24 (Reuters) - U.S. money manager Janus Capital Group Inc (JNS.N: Quote, Profile, Research) on Thursday posted a 5 percent rise in first-quarter profit, below Wall Street expectations, but its shares recovered from early losses and soared 6.6 percent as the broader market rose.

The turmoil in the stock market hurt Janus, leading to outflows of $1.5 billion from its core funds and subsidiary Intech's products in the first quarter.

The once-fabled firm came back strongly in 2007 after being ditched by investors for six years following the 2000-2002 bear market and its involvement in an industry-wide mutual fund trading scandal.

Janus said it is poised to perform well in the quarters ahead as markets had now stabilized. And the strong performance put up by its funds in the quarter, where 85 percent of its mutual funds outperformed their peer group medians, as calculated by Lipper Inc, continued in April, it said.

"Investment performance is very strong," said D.J. Neiman, an analyst at William Blair & Co.

"The market is up decently today and people look at Janus as a higher beta name, a good bounce-back name, so we are seeing some of that too," Neiman said of the stock's gains.

Its first-quarter net income rose to $37.4 million, or 23 cents a share, from $35.6 million, or 19 cents a share, in the year-earlier quarter. First-quarter income was cut by 3 cents a share due to a $9.5 million nonoperating loss it suffered as it marked to market values of seed capital investments.