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MFS launches emerging markets equity research strategy

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MFS Investment Management (MFS) has launched the MFS Meridian Funds – Emerging Markets Equity Research Fund, a research-driven emerging market equity strategy based on a bottom-up investment approach and fundamental stock selection. 

The launch of the fund underscores the firm’s ongoing strategic effort to grow its business outside the United States. This includes the expansion of its family of funds, with over forty investment strategies now available to non-US investors to help meet their long-term investment needs.

The fund seeks stocks of high-quality emerging market companies with sustainable, above-average earnings growth potential and/or are trading at below their intrinsic value. Given its objective of long- term capital appreciation, the portfolio seeks to outperform the MSCI Emerging Markets Index over full market cycles. The fund is high conviction, generally holding between fifty and sixty securities.

The portfolio follows a disciplined, repeatable process that utilises the full capabilities of MFS’ integrated global research platform, which includes fundamental equity, credit and quantitative analysis aimed at developing unique, proprietary insights into a company’s fundamentals and valuation metrics. The investment team use this process to determine the appropriate level of active risk and identify the most attractive return opportunities. Each security is screened by a dedicated team of global analysts familiar with the businesses and industries involved.

The portfolio is managed in a sector-neutral style versus the MSCI Emerging Markets Index according to four ‘super-sectors’: capital goods/energy, consumer cyclical/consumer staples/health care, financial services and technology/telecom. They are grouped as such to ensure that there is a quorum of analysts within each team to collaborate and discuss stocks ideas. This structure also allows the opportunity set of the four super-sectors to be relatively balanced.

Matt Weisser, MFS Managing Director – Europe says: “The present environment undoubtedly creates opportunities in emerging markets for long-term investors and active managers who are able to successfully differentiate between winners and weak performers. We believe our long-term, quality-biased approach, which also considers downside risk, is the most consistent method for generating alpha. Furthermore, it allows us to capitalise on opportunities created by investors with shorter-term investment horizons, particularly in this historically volatile and inefficient asset class.”
 
The launch of this fund extends MFS’ emerging market product range, which includes emerging market equity, Latin American equity and emerging market debt strategies. MFS has a significant history and deep expertise in emerging market investing, with USD44.0 billion in emerging market assets managed globally. The fund is co-managed by two portfolio managers Sanjay Natarajan and Deividas Seferis, who oversee cross-sector discussions and manage overall portfolio risk, and a team of eight sector leaders, who lead fundamental research sector team discussions and make final buy and sell decisions.

MFS Meridian Funds – Emerging Markets Equity Research Fund is domiciled and regulated in Luxembourg, structured as a SICAV SA and registered in 15 countries across Europe.

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