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When fund companies play the name game

Thursday May 17, 2012

When fund companies rename their funds, it can often cause some initial confusion in the marketplace. Of course, fund companies have their own reasons for doing so – getting rid of a brand with a poor reputation, for instance. Sometimes it works, sometimes it doesn’t. Back in March, for example, AGF Investments announced that it is amalgamating its fund lineup under one banner, rebranding all of its Acuity Funds with the AGF name. This is one case where I think the fund company may have gone off course.

AGF’s Acuity High Income Fund, for instance, became simply AGF High Income Fund, and so on. Most advisors I talked with feel this is the first big mistake for AGF since it purchased Acuity in February 2011.

I think that when a brand is acquired that is weak in the marketplace and the acquisition is more about asset gathering and synergies than brand purchase, then go ahead and merge the new weaker brand into the stronger acquired brand. The feeling here is that the Acuity brand name is very strong, and operating two distinct brands makes sense. Acuity managers have a different style, and keeping the brands separate makes it easy to know what style you are buying at a glance.

When Invesco Canada Ltd. acquired Trimark funds, they realized that the Trimark brand carried a lot of weight in the Canadian market and left it alone. Mackenzie Financial Corp. purchased the Cundill, Saxon, and Ivy brands, which they continue to operate alongside their own Mackenzie brand. When RBC Global Asset Management took over Phillips Hager & North, they knew the brand was strong and different, so they operate from one platform but keep the brands separate. Likewise, CI Investments runs quite a few unique but strong brands, like Signature, Synergy, Cambridge, Harbour, and Black Creek, in addition to their own brand.

Since the AGF’s purchase of Acuity and CI’s acquisition of Hartford Investments Canadian mutual funds, things have been pretty quiet on the merger/acquisition front. That often means something is just around the corner. Time will tell. In the meantime, if you own units of funds that are subject to merger, acquisition, name change, or discontinuation, speak to your financial advisor about your options and alternatives.



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The foregoing is for general information purposes only and is the opinion of the writer. This information is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting or tax advice. However, please call the author to discuss your particular circumstances.