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What's in a name? Why RBS and Credit Agricole get it with Coutts and Indosuez and Foreign & Colonial doesn't
08/03/2018 , Ian Orton

The 2018 annual general meeting of Foreign & Colonial Investment Trust plc (F&C), a London-listed closed-ended investment company with around £4 billion of assets under management, could be more interesting than usual.

This isn’t because F&C will be celebrating its 150th year anniversary, which possibly makes it the world’s oldest investment company. Or the fact that during 2017 F&C recorded total returns and net asset value growth of 21.0 percent and 16.9 percent respectively, thereby substantially outperforming its benchmark of 13.8 percent.

Rather it reflects that F&C’s shareholders, most of whom are private investors, will be asked to approve a change of name.

“Our anniversary year provides a natural reflection point to ensure your company continues its contribution and relevance in the modern world,” Simon Fraser, F&C’s chairman, told investors in his 2017 results statement.

“As part of this, our marketing will increasingly take place under the company’s commonly used name ‘F&C Investment Trust’; the name with which Foreign & Colonial has always been synonymous. At the AGM shareholders will be asked to approve an amendment to the articles of association to enable the directors to change the company’s corporate name to ‘F&C Investment Trust PLC’ in the year ahead.”

Given that the trust is managed by F&C Management Limited and any written correspondence related to F&C appears on F&C Investments-headed paper this may not at first appear to be a particularly onerous request.

But shareholders could argue differently.

Take the abbreviation of “Foreign & Colonial” to “F&C” for example.

The obvious inference to be taken from Mr Fraser’s statement is that the “Foreign & Colonial” moniker is no longer relevant. “Foreign” could considered to be a slightly archaic term in an increasingly globalised world.

And although it certainly was the case in 1868 when F&C launched the UK doesn’t really have any colonies any more. Besides in the popular mindset, or at least the popular liberal mindset, “colonial” would tend to be associated with terms like “exploitation” and “repression” rather than “freedom”, “growth” and prosperity”.

But this ignores the fact that reducing the F&C name to what is, to all intents and purposes, an abbreviation ignores not just 150 years of very successful investing in the financial securities issued by foreign governments and firms but the fact that it is an independent institution complete with a chairman and board of directors elected by shareholders.

The proposed name change blurs this distinction making “Foreign & Colonial” a mere adjunct of the firm that manages its investment portfolio. And F&C Management is part of the F&C Group which is owned by BMO Global Asset Management (Europe) Ltd., a wholly-owned subsidiary of the Bank of Montreal.

The point is that any name or “brand” should, at the very least, provide differentiation, especially from competitors. And it should be associated with desirable attributes and virtues.

Many banks and wealth management firms, for example, like to stress their heritage and longevity. And with good reason for these attributes would almost certainly be considered to be consistent with trust. Untrustworthy, or incompetent firms, tend not to be around for very long.

Royal Bank of Scotland Group (established 1728) may have had recent troubles. But this certainly hasn’t stopped it from flaunting its portfolio of old established brands such as Child & Co (founded 1664), Coutts (founded 1692), Drummonds (founded 1717) and Holt’s (established 1809).

Indeed some banks and wealth managers have even gone so far as to resurrect or reinstate brand names to make this connection and re-establish the aura of continuity.

Take Credit Agricole (established 1875), for example, which now provides private banking and wealth management services under the Indosuez (established 1858) moniker. 

Many firms just don’t get it, however.

Remember all those hedge fund management firms that liked to incorporate the term “alpha” in their names or the funds they managed?

If an “alpha” named firm or one of its funds failed this would invariably result in a panicked e-mail campaign to the media from other “alpha” firms. “It isn’t us” was the usual message replicated at least 50 times. 

So let’s hope the “Foreign & Colonial” moniker stays.

Otherwise many other long-established investment trusts such as British Empire Securities and General Trust plc, The Establishment Trust plc and Scottish Mortgage Investment Trust, the sector’s current darling, may have to consider changing their names as well to make themselves more "relevant" to the modern world.

And perhaps F&C Management should be thankful for small mercies. Back in 2004 Friends Provident, a UK insurance company, decided to fold ISIS Asset Management, one of its investment subsidiaries into the then F&C Management Asset Management, where it held a significant stake.

Imagine what could have happened if it had decided to call the combined firm ISIS Asset Management.

Disclosure: The author is a long standing shareholder of both Foreign & Colonial and British Empire investment trusts

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