Skip to Content
US Videos

Similar Processes but Different Roles for These Two Funds

Though run by the same team, Silver-rated MFS Growth is a suitable core holding while Bronze-rated MFS Mid Cap Growth plays a supporting role.

Mentioned: ,

Andrew Daniels: Silver-rated MFS Growth and Bronze-rated MFS Mid Cap Growth have some similarities. Eric Fischman became lead manager of MFS Growth in 2004 and implemented a new process there; he then joined MFS Mid Cap Growth in 2008 and implemented the same process used at MFS Growth, albeit focused on smaller-cap firms. 

The process at both funds is focused on finding companies with underestimated earnings and cash flow growth prospects to hold for the next three to five years. The team seeks firms with pricing power, strong secular growth outlooks, and solid management teams. The managers want stock selection to drive the majority of returns, so they tend to keep sector weightings in line with the respective benchmarks. 

Although the team and process are similar, there are some differences to be aware of. MFS Growth is in the Large Growth Morningstar Category, and the average market cap of its holdings is $61 billion. MFS Mid Cap Growth is in the Mid Cap Growth category, and the average market cap of its holdings is $11 billion. Also, MFS Growth earns a Positive price rating because of its below average fees, while MFS Mid Cap Growth earns a Neutral price rating. While MFS Growth may serve as a suitable core holding in investors' portfolios, MFS Mid Cap Growth's focus on mid-caps makes it more appropriate as a supporting player.

Andrew Daniels does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.