The $19 billion Janus fund has changed its ways.

Always known for its refusal to buy expensive stocks, even while seeking growth - and for letting cash build up when bargains weren't available - Janus is now a bolder fund.Why? Because Janus hasn't beaten the Standard & Poor's 500-stock index since 1993, a fact that weighed heavily on James Craig, its manager since 1986. Craig, 41, believed a stock was overvalued when its price-earnings ratio was higher than its estimated rate of future earnings growth.

"That is the rule that has hurt me the most," he says. "I can point to it as the cause of my decline in the mutual-fund rankings."

With stocks selling higher and higher in recent years, Craig watched stocks he'd sold continue to climb. Unable to find growth stocks at reasonable prices, he held about 15 percent of assets in cash most of the past three years.

His fund's performance has been worse than 60 percent of other long-term-growth funds over the past three and five years.

Finally, Craig had enough. Declaring that stocks now merit higher P/E ratios because of "the improving profitability of companies," Craig says his old rule "has just been blown away." But he says he is "bending the rules a bit," rather than abandoning his methods.

"This is a different environment, and I have to be flexible."

Janus fund now owns the likes of Microsoft, which sells at 30 times what Craig figures it will earn this year. In fact, technology is now Janus' biggest sector, at 20 percent of assets - this from the man who told us in 1993: "I'm the world's worst technology investor."

Craig says he's mastered technology stocks since then and notes that many of them are more mature, durable companies than they were in 1993.

The fund is now rising and falling more in line with the market. Janus might even return to its glory days - achieved from 1987 through 1991, when the fund was a fraction of its current size.

But investors in its 784,000 accounts are on notice that Janus is not as cautious as it once was.