MFS launches small cap fund

MFS Investment Management has launched the MFS Global New Discovery Trust, which actively invests in global small- and mid-cap equities.

It would now be available for investors in Australia and New Zealand after being available in the US since 2011 and had already been rated as ‘recommended’ by Zenith.

The trust sought to generate alpha by selectively investing in high-quality small and mid-cap companies with consistent earnings growth and durable franchises, typically early in their life cycle.

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The trust aimed to deliver above-average returns relative to the MSCI All Country World Small Mid Cap Index (net return).

The team’s portfolio managers included Peter Fruzzetti and Sandheep Mehta in London, and Eric Braz and Michael Grossman in Boston.

Marian Poirier, MFS senior managing director, said the trust offered exposure to sectors underrepresented in the Australian market and new areas of growth and long-term alpha.

“Considerable inefficiencies and opportunities reside in the small mid-cap equity sector due to its depth,” Poirier said.

“The MSCI All Country World Small Mid Cap Index comprises 7500 names. Narrow this to 100 securities using a disciplined, repeatable process that draws on the broad capabilities of MFS' integrated global research platform and you have a unique and active portfolio that is distinctly different from the benchmark.

“Stock selection is key, with a focus on finding companies that are attractively valued relative to their fundamental strengths and growth prospects.

“This is particularly important as economic headwinds and tailwinds vary across company sizes, sectors and regions.”

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