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Mutual fund woos youth where they live and play

New York City-based Thrasher Capital has a YouTube video and a MySpace page

There aren't many mutual fund companies hip enough to warrant their own MySpace page, but James Perkins is the chief executive officer of one that believes it is.

As the brains behind New York-based Thrasher Capital Management, Mr. Perkins and his long-time business partner, Khalid Reede Jones, are taking aim at an investment-challenged demographic typically overlooked by the big fund companies; namely young people in their 20s and 30s.

Through a combination of new media marketing and a fund portfolio stocked with recognizable brand-name companies, Thrasher is hoping young people will "get the money out of the shoe box" and invest it in the market.

While Canadians can't invest in the U.S.-based fund, Canadian mutual fund companies looking to attract young investors might want to steal a page from Thrasher's approach to reaching a largely untapped group of potential investors.

Already the Thrasher MySpace page lists more than 250 friends while Thrasher TV, the company's YouTube channel, has been seen by more than 2,000 viewers. The channel features videos of Mr. Perkins and Mr. Jones traipsing through New York City to a soft hip-hop beat explaining how the stock market works.

"You don't have to be losing your hair and sitting on a couch thinking about the retirement red zone in order to participate in the financial market," Mr. Perkins said from New York. "We want this demographic to know and understand they don't have to sacrifice things they do on a daily basis to have investing be just as much a part of their lives as it is a part of their parents' lives."

At the centre of their strategy is the GendeX Fund, which includes holdings in flashy youth-oriented companies including Apple Inc., Nike Inc. and Microsoft Corp.

Described as a mutual fund for "hipsters," the idea is to get young people interested in investing by allowing them to invest in the brands they patronize. It turns their wardrobes and spending habits into a so-called "Walking Portfolio."

"We wanted to make things that look and feel accessible to this demographic," Mr. Perkins said.

"They have the ability to make money from these companies as much as they make money for these companies."

The GendeX fund began trading at $10 when it was launched on Oct. 15 and has slipped to $9.76 since.

Canadian mutual fund companies have dabbled with similar niche marketing in the past. Various companies offer socially responsible investing (SRI) funds such as those offered by the Ethical Funds Company, while a number of banks and firms such as frontierAlt All Terrain Bond Fund have experimented with Islamic or Sharia-compliant funds.

In the 1990s, many banks and financial institutions in Canada experimented with so-called Boomer Funds, which were designed to capitalize on trends in the market resulting from the coming of age of the baby boomer generation. However, it was a strategy that didn't last long, according to Dan Hallett of the investment research firm Dan Hallett & Associates Inc., based in Windsor, Ont.

"After the tech boom and bust - post-2000 - a lot of those funds ended up dying or getting merged into other non-specialty funds," Mr. Hallett said.

"Although they didn't target a specific generation as buyers, they were playing on the investment themes that were impacted by a particular generation."

Because the U.S. mutual fund market is larger and more competitive than Canada's, quirky and often gimmicky products are more common, he said.

"In Canada there's a lot less direct selling of mutual funds as compared to the U.S."

It's more likely that Canadian fund companies would tailor their marketing to the younger demographic than actually create a specific fund comprised of companies with youth appeal, he said. Still, Canadian mutual fund companies are not extensively targeting young people with their marketing.

"Fund companies aren't doing it, although some advisers who are in that age group might be," he said.

'Hipster' holdings

Top holdings of the GendeX

Mutual Fund (as of Oct. 25, 2007)

Apple Inc.

Louis Vuitton

Toyota

Polo Ralph Lauren

Xerox

Unilever

Archer Daniels Midland

Nordstrom

Alliant Techsystems

Bank of America

Coca Cola

Walgreen

Nike

Microsoft

Chevron

Garmin

Gucci

NutriSystem

Uniqlo

Lululemon

Burberry

China Mobile

Volkswagen

Diageo

H&M

Adidas

American Apparel

Google

Sanofi-Aventis

© 2007 The Globe and Mail. All rights reserved.

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