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Tuesday, September 04, 2012

Loomis Rebrands a Fund Post-Lawsuit

Reported by Chris Cumming

The market for absolute return funds has gotten crowded in the last few years, and now fund firms have started stepping on each others' toes. Loomis Sayles appears to have made a misstep in branding its recently-launched, $553-million absolute return fund, and is renaming it following a lawsuit from a much smaller fund shop.

This summer, Loomis settled a suit that Absolute Investment Advisors (AIA) filed last December, which also named Loomis' parent, Natixis. AIA alleged that the Loomis Sayles Absolute Strategies Fund name infringed on AIA's own Absolute Strategies Fund.

Neither Loomis Sayles nor AIA provided any comment to MFWire, and the financial terms of the settlement were not disclosed. But last month Loomis filed the paperwork with the SEC to change the name of its fund to the Loomis Sayles Strategic Alpha Fund, effective September 28.

AIA's original complaint was filed in federal court in Colorado on December 23, 2011. The complaint states that AIA began using the Absolute Strategies Fund name in 2005 and trademarked it in 2006.

One wrinkle in the case is that Loomis Sayles had been a subadvisor on the AIA fund from May of 2005 through at least October 31, 2007, the last time Loomis is mentioned in the SEC filings for the AIA fund. As part of this subadvisory agreement, Loomis Sayles agreed not to use the name of the fund in public without AIA's approval.

In December 2010, apparently several years after ending its subadvisory contract with AIA, Loomis Sayles launched the Loomis Sayles Absolute Strategies fund. AIA's complaint states that the following February, AIA sent Loomis and Natixis a letter demanding that they cease using the "Absolute Strategies" name for their fund. The compaint alleged that Loomis' use of the phrase "Absolute Strategies" confused consumers, and demanded that Loomis pay unspecified damages.

Loomis countersued on March 5, 2012, challenging the validity of AIA's trademark. Loomis claimed that the phrase "absolute strategies fund" is a "generic name for services" that Loomis was using and said that the firm's marketing team was unaware that AIA owned the trademark when Loomis launched its own fund in 2010.

The counterclaim further stated that "absolute strategies fund" is "an expression that is widely used in the field of financial management to identify a class of investment strategies," and therefore AIA cannot legally claim the exclusive right to it.

And yet for now it appears that AIA has the only fund with "Absolute Strategies" in the name.

AIA is a money manager based in Hingam, Massachusetts. Its $4.3 billion Absolute Strategies fund, launched in 2005 and part of the Forum Funds trust, is one of two the firm's two mutual funds. An information sheet from the AIA website says that the company has eight employees and subadvises eleven strategies with a total of $4.6 billion in AUM.

Loomis' absolute return fund holds $553 million in AUM, according to Morningstar. 

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