Performance evaluation of the MFS International Growth Fund
Except for the one- and three-month periods ended June 17, the MFS International Growth Fund – Class A (MGRAX) has been the best performer in its peer group of 12 funds.
It has seen the smallest decline in the YTD 2016, six-month, and one-year periods. We have graphed its performance against two ETFs: the iShares MSCI ACWI Ex-US ETF (ACWX) and the Vanguard FTSE All-World Ex-US ETF (VEU). Let’s look at what has contributed to this stellar performance by the fund in YTD 2016.
Portfolio composition and contribution to returns
Stock picks from the industrials sector are primarily responsible for capping the fund’s negative returns in YTD 2016. Scotland-based The Weir Group and Canadian National Railway Company (CNI) are among the positive contributors from the sector. There are no major negative contributors.
Consumer staples, the biggest sectoral bet, has paid off so far. This sector has the second-highest contribution to reducing the fund’s negative returns. Japan’s Sundrug Co. has led the sector, which includes gainers like Ambev S.A. (ABEV) and L’Oreal SA (LRLCY). There are a few detractors, though, like Pernod-Ricard SA and Diageo (DEO), which have chipped away some of the gains.
Accenture (ACN) and Taiwan Semiconductor Manufacturing (TSM) have led the tech stocks. However, the sector has been held back by negative contributions from stocks like LM Ericsson (ERIC) and Baidu (BIDU).
There has been help for the sector from some stocks, such as Japan’s Terumo Corporation and the US’s Mettler-Toledo International (MTD), but it has not turned around the negative contribution.
The MFS International Growth Fund – Class A (MGRAX) has preferred tech stocks over financials if the financial markets stabilize and turn around from this point. However, its high exposure to staples shows that it is not banking on an upturn in consumer spending.
Given that most of its assets are invested in foreign shores, and Europe and Japan have their own major problems to solve, the fund’s position has a chance of being vindicated. However, an upturn in consumer spending in Europe may find the fund in a some turbulence.
The fund has outperformed the passively managed ACWX. Stock picks from the consumer staples have done exceedingly well. MGRAX can be one of the funds on your short list on international mutual funds.
Let’s now move on to the Nuveen International Growth Fund – Class A (NBQAX).