Does the MFS International Growth Fund Deserve Your Attention?

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MFS International Growth Fund’s performance

In this article, we’ll outline the performance of the MFS International Growth Fund – Class A (MGRAX), which is one of the classes available for retail investors. The fund is invested in companies like Roche Holdings (RHHBY), Carlsberg A/S (CABGY), Smith & Nephew (SNN), SoftBank Group (SFTBY), and Suncor Energy (SU), among others.

From a purely NAV (net asset value) return standpoint, the MGRAX was a below-average performer for the one-year period until February 29, 2016, but stood second in 2015 among its peers chosen for this series. For return comparison, we have chosen two ETFs: the iShares MSCI ACWI ex U.S. ETF (ACWX) and the Vanguard FTSE All-World ex-US ETF (VEU). For evaluating benchmark-related metrics, we’ve chosen ACWX as the benchmark for all funds in this review, as it tracks the MSCI All Country World ex-U.S. Index.

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Other metrics

The MGRAX’s standard deviation, or the volatility of returns, in the one-year period until February 29 was 15.3%. This is lower than both the ACWX’s 15.4% and the peer group’s average of 15.7%.

The fund’s risk-adjusted returns, calculated via the Sharpe Ratio, were negative for the one-year period ended February 29. Evaluating a negative Sharpe Ratio may be misleading, so we’ll avoid that. The ratio stood at 0.18 for 2015, placing it eighth among its peers.

The information ratio, calculated with ACWX as the benchmark, was 1.72 for the one-year period ended February 29, placing it third among its peers. The information ratio shows the consistency of fund managers and their ability to generate excess returns over a benchmark. The higher the reading, the better the consistency. For 2015, the fund’s information ratio had placed it fifth among its peers.

A note to investors

The MGRAX’s alpha was the second best among the 12 funds in this review for the one-year period until February 29, 2016. However, it disappointed in 2015, coming in at the ninth spot. One thing that is clear from this analysis is that 2015 was a bad year for MGRAX while 2016 has been great. Potential investors will be well served to see how this fund has performed in volatile markets. If the performance has been good, then this fund could be a compelling choice for 2016.

In the next article, we’ll look at the Nuveen International Growth Fund – Class A (NBQAX).

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