Brand names aren’t just for consumer products. A compelling product name that resonates with investors’ needs can help attract assets to your fund. The first rule of thumb: Name your product for the benefit it provides, not the technical strategy under the hood.
Are you spending too much time with your multifunction micro-personal digital device? Probably, but the fact that it’s called an “iPhone” or even, generically, a “smartphone” sure makes you feel a lot friendlier toward the device.
Naming a mutual fund for its benefits as opposed to a complex technical strategy helps to enhance the fund’s appeal and increase assets under management.
As Cathy Weigel, Carpenter Group editorial director, recently told the WSJ (“Why So Many Trees in Fund Names?”) “Companies are looking to evoke thoughts of "firmly rooted" funds capable of "long-term growth and the ability to withstand the elements."
Alternatives to Complexity
Alternative mutual funds, with their often-complex strategies, can present tough naming challenges. Take a “bond mutual fund using complex derivatives, currency trading and leverage.” Well, that sounds complicated. But what about an “income” fund? Now investors looking for the right liquid alts fund have some idea of what that fund does.
Or “a quantitatively driven macro fund using only futures to implement a risk-parity strategy.” Huh? However, the fund’s benefits can be clearly communicated by calling it a “balanced-risk” fund.
Investors Are Looking for Benefits
Rick Lake, co-founder of Lake Partners, has a theory about why investment managers prefer technical product names. “As money managers, they’re intrigued by the technical side of what they’re doing, and there’s a certain investor audience that might share that sense of excitement. But many investors are looking for straightforward benefits.”
While generic product names aren’t the end of the line, they are, as Rick says, “very simple descriptions that resonate with the benefit that investors seek. They seek income, they seek balanced risk.” He mentions industry stalwart PIMCO Total Return Fund, as an example of clearly stated benefit, coupled with the power of strong brand.
What would you put on the list of best names? Worst?