Why So Many Trees in Fund Names? It’s a way to convey an image of security and the promise of growth

October 6, 2013, 4:50 p.m. ET

Why So Many Trees in Fund Names?

It’s a way to convey an image of security and the promise of growth

JONNELLE MARTE

In the mutual-fund business, it seems, every day is Arbor Day. Dozens of mutual funds and exchange-traded funds are named after trees. There are red oaks, black oaks and white oaks, along with sequoias, aspens, sandalwood and pine—even a whole forest of WisdomTree ETFs. Why are so many fund companies tying themselves to trees? The most obvious answer is that portfolios—like trees—don’t grow overnight, but can reach substantial heights. Companies are looking to evoke thoughts of “firmly rooted” funds capable of “long-term growth and the ability to withstand the elements,” says Catherine Weigel, senior vice president and editorial director for Carpenter Group, a marketing and creative agency specializing in the financial-services industry. The sense of long-term security that tree names convey may be particularly appealing to people saving for retirement, says Howard Breindel, co-chief executive of DeSantis Breindel, a branding and marketing firm that has experience with financial-services companies. Long-term-oriented portfolio managers will often use the tree theme to attract buy-and-hold investors instead of those who are looking “to ride a wave,” Mr. Breindel says.Acorns to Oaks

 

The funds themselves offer a variety of explanations. Take the Longleaf Partners funds, managed by Southeastern Asset Management Inc. “The name ‘Longleaf,’ derived from the longleaf pine, a majestic, sturdy tree…represents the qualities of strength and endurance,” the firm explains on its website. Southeastern declined to comment for this article.

When asked about the origins of the Acorn Fund (now Columbia Acorn ), retired portfolio manager Ralph Wanger jokes that he figured choosing a name that starts with the first letter of the alphabet would put him at the top of many lists. But the name, he says, is also fitting for a growth fund that aims to invest in small companies that could mature into giants.

“The idea of an acorn and growth are completely intertwined,” says Mr. Wanger, who launched the fund in 1970 and ran it until 2003. “From a small acorn grows a mighty oak.”

The fund has spawned several offshoots. John Park, who worked under Mr. Wanger as the manager of Columbia Acorn Select, a fund that invests in midcap stocks, pulled together $3 million in seed money with a partner to launch Oakseed Opportunity in January. His co-manager, Greg Jackson, also has botanical roots, having been one of the managers of Oakmark Global when he was at Harris Associates, where Mr. Wanger got his start.

The name Oakseed is meant in part to pay tribute to the funds the two managers came from, says Mr. Park. “The idea is that we are planting seeds—or stocks—that over time will grow and grow,” he says.

Height and Breadth

Sequoia Fund‘s name suggests a different approach. The fund, which is advised by Ruane, Cunniff & Goldfarb Inc., is named after one of the tallest families of trees in the world—about as far from an acorn as you can get. Like the sequoia tree, the fund’s strategy of finding strong companies that it can hold for the long run is becoming increasingly rare, says Morningstar Inc. analyst Kevin McDevitt. “The metaphor certainly is very fitting,” he says. “There’s a very strong foundation to what they do.” The fund’s managers didn’t respond to requests for comment.

A tree can also be a symbol of breadth.

When Marc Griffin was tasked with renaming the Quant Funds group two years ago—at the time, only one of the then five funds used a quantitative investment strategy—he found inspiration in the pear trees outside the firm’s office. Naming the funds after a tree, with all its branches, would encompass not only the various strategies of the funds but also the multiple subadvisers that help manage them, says Mr. Griffiin, who decided on Pear Tree Funds.

Of course, more-mundane considerations sometimes come into play. Mr. Wanger, the Acorn Fund founder, says the fund got its name in part because Acorn is easy to spell and remember.

“There would be a lot of marketing you can do about a chrysanthemum fund,” says Mr. Wanger. “But nobody can spell chrysanthemum.”

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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