MFs Use Snazzy Names To Sell Plans

A Tiger is no different from a Lion which is similar to the BeES - at least in the mutual fund jungle.
Fund houses are churning up fancy names to grab investors' attention but the portfolios managed by these funds are hardly different from the existing schemes from the same fund house.

Comparing the T.I.G.E.R (The Infrastructure Growth and Economic Reforms) fund launched by DSP Merrill Lynch (DSPML) with DSPML Opportunities and DSPML Top 100 funds reveals that all three funds are similar versions of DSPML Equity Fund - the original fund offered by the company in 1997. An analysis of the last declared portfolios of these schemes shows that most of the top holdings in these schemes are similar. All four funds have invested mostly in stocks such as Reliance, L&T, Grasim, SBI, Bhel and ONGC, an analyst said.

"ING Vysya's L.I..N fund - aimed at investing in large caps, intermediate caps, opportunities and new offerings - is no different from any other diversified equity fund available in the market," said Siddharth Khemka, mutual fund analyst with ICICIdirect.com. Fidelity MF's International Opportunities Fund proposes to invest 65 per cent of the total corpus in Indian stocks and only 35 per cent in international equities.

Some funds that are termed as global have nothing to do with investments in international equities. These include Bank of Baroda's Baroda Global Fund and SBI MF's Magnum Global. Both schemes invest in Indian equities and in the domestic money market. "If you read the fine print, such schemes state that they invest in stocks of companies with a global perspective or firms which generate some percentage of their revenues from global operations," said Krishnan Sitaraman, financial analyst at Crisil.

These names do not provide a clear picture of the investment objective of the fund. Khemka said the scheme names should reflect the investment pattern. "Fund names that do not clearly state the investment objective could mislead an investor, but no one has complained as yet," said Khemka. Sitaraman said fancy nomenclature has become the norm to catch the attention of investors from among the clutter of 500-odd schemes doing the rounds today.

"A fund wants to generate as much asset under management as possible. Investors are going for new fund offers with flashy names, and, therefore, fund houses are coming up with more such names," said Khemka.

There are at least 23 'fancy' schemes that are available today. So you have the Bees (Benchmark Bank BeES fund) and an 'ATM' (ING Vysya's against the market fund). There are 'HI FI' mutual funds (housing, infrastructure, finance fund by JM Mutual Fund) that are meant to make you S.M.I.L.E (small medium Indian leading equities fund by Sundaram Mutual Fund) but only end up leaving the investor confused.