Targeted to mislead?

Last week, the Investment Management Association (IMA) announced it was renaming a particular type of investment.

From now on, says the trade association for investment managers, the “Absolute Returns Sector” will be known as the “Targeted Absolute Returns Sector”.

The reason for the rename? With rumblings of another mis-selling scandal in the works, the IMA wanted to make it absolutely clear that if you put your money in these investments, you might lose some of your dosh.

In what sensible person’s head does “Targeted Absolute Returns Sector” say “you might lose some of your dosh”?

In what sensible person’s head does “Targeted Absolute Returns Sector” not suggest precision, focus and guaranteed profits?

A less disingenuous approach would have been to avoid the “Targeted” and ditch the “Absolute”. I suggest “Attempted Returns Sector”.

You can see what’s happened here. The marketing bod who came up with the new name was told the managers of these funds try their best to make profits for investors but can’t guarantee they’ll succeed.

But a word like “try” doesn’t sound positive, dynamic and businesslike enough. It smacks too much of failure. So instead we get “Targeted”.

In a press release, Daniel Godfrey, IMA Chief Executive, was quoted as saying:

“One key purpose of the Absolute Return Sector review was to make sure that consumers do not inadvertently perceive there to be some implicit guarantee of positive returns due to the name of the sector. Adding the ‘targeted’ description to the sector name fulfils this purpose.”

No, it doesn’t, said several financial journalists and industry players. I quite agree. If anything, the rename has increased the chances of mis-selling. Target your eyes on this space.

See the BBC’s original report on the rename.

5 comments so far . . . come and pitch in!

  1. Brad Shorr says:

    Hi Clare, I actually feel sorry for financial services marketers. There must be more than 10 million funds in the world, and each one pitches a “secret sauce” that’s so nuanced and arcane that no investor could grasp it without doing an hour of research. How do you name something like that? They probably ran out of legitimate names about 100,000 funds ago and are now reduced to grasping at straws. In my opinion they’d be better off not even attempting to be descriptive. Instead, why not use automobile brands as a naming convention? A global precious metal funds could be called Land Rover. If you want something speculative, buy into the Explorer fund. Energy’s hot — get yourself a piece of Volt, or if you’re old school, some Electra 225.

  2. Tony says:

    I’d never heard of the ‘Absolute Returns Sector’ and so I looked up some of the funds on Every one of the fund managers in this sector have 4 or 5% initial charges and take 1 – 1.5% of your fund each year as management charges. All of that with no gaurantee of an ‘absolute return’ or even a ‘targeted absolute return’. They need to make 5% above the FTSE every year to make it worthwhile investing in them rather than a bog standard tracker.

    They need all of those additional fees to pay for their marketing activities to find more suckers to invest in their doubtful products.

    Stay clear of people who wrap their obscure products in fancy jargon. They will destroy your wealth.

  3. Paul Eveleigh says:

    Financial literacy is abysmal in Australia. It’s not on school curriculums. I guess it’s the same in England. But people need to know how money markets work. How to invest. How to decode bank-speak.

    Face it. If you don’t take care of your money, someone else will. Someone like IMA.

    Anyone in Australia who invests in the top ten listed companies makes more money than they would with managed funds. It’s been like that for years.

  4. Thank you for this! Working in the financial sector, I slap my hand to my forehead 99% of the time when I read financial ad copy.

    Paul–It’s the same here in the U.S. My friends and I wonder why physical education classes are required in high school but basic financial education classes are not. Especially considering that credit card companies here specifically and aggressively target college kids who know next to nothing about credit cards, fees, APR, etc. Even as a financial services professional, I’m still amazed at how much I have to learn and de-code everyday!

  5. Inadvertently perceive? Surely that should be misperceive since misperception is what this sort of gobbledegook is all about,

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