Investorial

One of the ways to monitor investment trends is to find out how they are marketed. Mutual fund names are often a good indication of how fund companies wish to reach their target investors. Remember those days when every mutual fund wanted to add the word “tech” into their name? For a while, everybody wanted to be involved in “nano-tech”, “real estate”. When dividend and value investing styles swung back into admiration, funds were tripping over themselves to make those two words show up.

It’s no surprise that “income trust” was also a hot naming convention for Canadian mutual funds, but the recent income trust melt-down due to new Canadian government tax law proposals have dampen those feelings. CIBC Asset Management has just renamed two of its income trust funds with a shady wolf-in-sheep’s clothing intent. The previously closed Renaissance Canadian Income Trust Fund has been renamed as the Renaissance Canadian Monthly Income Fund. The Renaissance Canadian Income Trust Fund II has also been renamed Renaissance Diversified Income Fund.

My beef with CIBC’s name “enhancement” iis with the different names used for what is supposedly the series I and series II of the same fund. Why are we suddenly calling one fund “Monthly Income” and the other “Diversified Income”? The fund objectives have remained the same. The fund’s reopening was to be expected ever since the fall of the cliff experienced by the NAV of its underlying assets. This marketing practice can only be categorized as “shady” at best, but for students of investment trends, it is a good examination of investor psychology / attitude these days towards income trusts. Has those words become taboo?

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• Income Trusts Avert Bad News … For Now