MFS Meridian Prudent Wealth AH1 EUR

Analyst Report
Morningstar's Take
|30/11/2021

by Francesco Paganelli


MFS Meridian Prudent Wealth is a strong offering in its category, thanks to a well-supported veteran portfolio manager and a robust, risk-conscious investment process but high fees on some share classes detract from its appeal. The strategy earns a Morningstar Analyst Rating of Gold on the fund’s cheapest share classes. More-expensive shares are rated Silver and Bronze.Lead manager Barnaby Wiener’s skill in stock selection is a key attraction, but this is far from a one-man show. Wiener took over sole responsibility here in February 2011, when the fund adopted its current mandate, but has been supported by Edward Dearing for research and stock selection since March 2018. Wiener’s workload has increased following his appointment as MFS’ head of sustainability and stewardship in April 2020. That may be a distraction, but we view his and Dearing’s ability to tap the firm’s large, global analyst team for ideas and research as a competitive advantage. Following the increase in assets under management across the Prudent Wealth and Prudent Capital funds run by the managers, the team will be reinforced in Jan 2022 with an experienced analyst, Shanti Das-Wermes, who covers financials, where the current management team has historically struggled to find investment opportunities.The fund seeks to beat the MSCI World Index over a full market cycle on a risk-adjusted basis through an unconstrained stock-selection process. A key value proposition is protection from permanent capital losses. Managers build the portfolio from the bottom up, selecting stocks of all market caps based on individual merits, with a strong focus on quality and valuation, in that order. The criteria help in narrowing the opportunity set. When opportunities are scarce or valuations are considered excessive, they have flexibility to reduce equity exposure and build large cash stakes--though equity weight is not expected to fall below 60%. It exhibits large deviations from the benchmark and significant small- and medium-cap stakes. It has limited capacity and has been soft-closed since August 2016. The robust, multilayered risk-management approach has served investors well. It carries some degree of key-person risk and the manager’s style can lead to stretches of underperformance when out of favour, but we consider this a compelling option for those seeking a global flexible equity strategy.

Morningstar Analyst Rating™
To find out how Morningstar rates a fund click here.
Portfolio RoleCore.
Morningstar Pillars
PeopleHigh
A veteran stock-picker with access to a strong platform of managers and analysts.
ParentAbove Average
MFS walks the walk on long-term investing.
ProcessHigh
An unconstrained, bottom-up-driven approach with strong focus on capital protection and stringent selection criteria.
Performance
Resilient.
Morningstar Analyst RatingMorningstar evaluates funds based on five key pillars, which it's analysts believe lead to funds that are most likely to outperform over the long term on a risk-adjusted basis.
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A fim de prover consistência para todos os relatórios fornecidos por diferentes Asset Managers, os data points calculados apresentados são gerados usando uma metodologia de cálculo proprietária da Morningstar, que pode ser conferida com mais detalhes em(https://www.morningstar.com/research/signature)