|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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is the opinion of the writer. This information is not intended
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