MFS Meridian Global Total Ret A1 EUR

Analyst Report
Morningstar's Take
|20/08/2021

by Matias Möttölä, CFA
Effective Jan. 3, 2022, David Shindler will join the current nine-person portfolio management team of MFS Global Total Return. As a contributor focused on the fundamental equity sleeve (roughly 30% of the portfolio), he'll work alongside Steve Gorham, Johnathan Munko, and Vipin Narula. The announcement does not alter our view of the team or the strategy's Morningstar Analyst Ratings of Bronze and Neutral across share classes.

Shindler, who brings a wealth of experience to this offering, will have ample time to settle in with the fundamental equity sleeve managers before Narula retires in September 2022. Shindler joined MFS in 2006 as an equity research analyst and served as director of research in Canada and Europe before his 2020 promotion to co-chief investment officer. Currently, he oversees two other international-equity funds, one of which he has comanaged with Gorham since its June 2020 inception.

MFS Meridian Global Total Return benefits from a straightforward asset-allocation process and robust analyst cohorts. Despite leadership turnover, which is somewhat mitigated by smooth and thoughtful transitions, this offering remains compelling. The fund’s cheapest share classes maintain a Morningstar Analyst Rating of Bronze, while the rest stay Neutral.MFS’ characteristic patient manager hand-offs limit turnover concerns. Though six managers will have exited this strategy from 2018 to 2022, well-paced transitions ensure that responsibilities are handed over with care. The most recent announcement arrived in October 2020, when Vipin Narula shared his intent to retire on 30 Sept 2022. Narula has co-run 50% of the strategy’s stock portfolio since 2017, partnering with MFS veteran Steve Gorham, a portfolio manager since this fund's launch in 2005. MFS promoted Jonathan Munko to comanager in January 2021, giving Munko ample time to learn the ropes before Narula’s departure.Unlike other allocation groups that give managers agency to hire and fire the underlying mandates, ultimately shifting the strategy’s contours, MFS dictates a static allocation of 60% equity/40% fixed income, splitting the equity sleeve in half between the large-cap value strategy and a hybrid, income-oriented quantitative strategy added in 2014. The resulting portfolio cuts a distinctive profile in the USD moderate allocation Morningstar Category, with a distinct value bent relative to the category index consisting of 50% FTSE World Index and 50% Bloomberg Barclays US Aggregate Bond Index. The fixed-income portfolio isn’t a typical ballast, diverging from its category peers by holding mostly non-US fixed-income and an eye-popping 52% allocation to BBB rated bonds, more than double the category‘s 21% average as of June 2021. While the fund is ahead of its category, in risk-adjusted terms it has lagged the category benchmark slightly through end-July 2021.

Morningstar Analyst Rating™
To find out how Morningstar rates a fund click here.
Portfolio RoleThe fund invests globally with a diversified portfolio.
Morningstar Pillars
PeopleAbove Average
Smooth turnover is a hallmark of MFS.
ParentAbove Average
MFS walks the walk on long-term investing.
ProcessAverage
Straightforward, but some shifting elements give pause.
Performance
Decent long-term risk-adjusted returns.
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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