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When Funds Collide: Name Change Is a Shortcut to a New Image

Last year, more than 1,000 funds changed their names. Some were also hoping to change their fortunes.

Any good con artist knows you don't have to change your ways to rewrite your past. You can just change your name.

Mutual fund companies know this too. Because when it comes to name changes, the industry has more akas than convicts at

Rikers Island


In 1998, 1,212 of the 6,829 equity funds tracked by


changed their names. And in the first half of 1999, the rebranding continued, with 711 funds giving themselves a new handle.

A fund doesn't need to get

Securities and Exchange Commission

-- or shareholder -- approval to change its name. It simply needs to file the right papers for its DBA, or Doing Business As, title in the state in which it's incorporated.

Most of the name changes are simple rebranding moves caused by the rapid consolidation in the financial services. And some firms, like the

Vanguard Group

, have been on a binge to simplify their names by removing confusing, tired terms, like "trust," or awkward punctuation, like slashes, from their fund names.

Then there's the reason many others are picking new names: It's called marketing.

As with any consumer-oriented business -- whether designer shoes or designer soft drinks -- the mutual fund industry needs to stress the right buzzwords to keep the attention of its customers.

Take, for instance, a recent massaging of a name at

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Fidelity Investments

. In January, the

Fidelity Emerging Growth

fund became Fidelity

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Aggressive Growth.

Why? "Basically, some investors had interpreted the name Emerging Growth to imply small-cap," says Jessica Catino, a Fidelity spokeswoman. "However, the fund's prospectus all along had defined eligible securities as those that are in the developing stages of their life cycles."

John Markese, president of the

American Association of Individual Investors

, has a different explanation.

"They don't want to be confused with emerging markets, which everybody of course jumped off of," he says.

Either way, he says, the name Aggressive Growth tells little more about what the fund invests in than does Emerging Growth.

As growth stocks have dominated the market in recent years, the term has taken on increasing emphasis in fund names. For instance, Ron Baron dropped the word income from the name of his

Growth & Income

fund when he decided to emphasize the more voguish aspect of its investment objective.

Other funds added the term to their names. Last year, the

AARP Diversified Income Portfolio

took on a racier persona when it suddenly became


AARP Diversified Income With Growth. Hey, just because you're retired doesn't mean your dead, right?

An AARP funds spokesperson says the change is intended to make sure that income-seeking investors know the fund also has a growth component.

Sometimes, a little too much marketing can get a fund in trouble. Earlier this year, the


fund had to change its name after a run-in with another investor who liked (and had) that name already,

Berkshire Hathaway's

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Warren Buffett

. David Davenport, the fund's manager, had marketed the fund as an investment vehicle that tried to replicate Buffett's returns by investing in the same stocks Berkshire Hathaway owned.

Not a bad investment strategy. But after getting a less-than-friendly letter (OK, it was a

lawsuit) from Buffett's lawyers, the Berkshire fund's founders thought better of their chosen namesake. Maybe it was that lesson that led him to choose the fund's new name --



While changing a name can't erase a shameful fund's track record -- that's what mergers are for (See

When Funds Collide, Survivors Often Suffer) -- it might help hide some skeletons in a fund's closet.

Take, for instance, the


funds. Even before founder Charles Steadman's death in late 1997, the funds were derisively known throughout the industry as the "Deadman" funds for their sickly returns. The

Steadman American Industry

fund, now

Ameritor Industry

, still is saddled with a 10-year average loss of 9%. In 1994, a particularly bad year, the fund lost 37.2%, according to



But that fund, along with two others in its family, can put its unfortunate nickname behind it. In fact, two of the three Ameritor funds had 50%-plus returns in 1998.

Of course, some funds can change names for reasons that have little to do with marketing -- or even business. The


fund recently changed its name to


Midas Magic. Ostensibly, the name change came when the Rockwood fund's adviser decided to bring its various funds under the single Midas name. But the Magic part?

"You got me. It was kind of geeky," says Ray Burke, director of institutional sales for

Midas Funds

. "I don't know if I want to call it a whim, but the name doesn't have any particular meaning."

In the end, the great mutual fund name shuffle may not have any particular meaning either. Because a fund is just as good -- or bad -- as the stocks in its portfolio, no matter what its often-changing label may say.