Performance evaluation of the MFS International Growth Fund
Except for the six-month period until August 19, the MFS International Growth Fund – Class A (MGRAX) has been among the top three funds in its peer group of 12 funds. In the YTD period, the fund is the second-best performer. We have graphed its performance against two ETFs: the iShares MSCI ACWI ex U.S. ETF (ACWX) and the iShares MSCI EAFE ETF (EFA).
Let’s look at what has contributed to this superior performance by the fund in YTD 2016.
Contribution to returns
Consumer staples, the largest sector in the MGRAX, has been the most beneficial to the fund in 2016 YTD in terms of positive contribution to returns. Danone (DANOY) and Nestlé (NSRGY) have led the sector. Japan’s Sundrug, Ambev (ABEV), and L’Oréal (LRLCY) are also among the major positive contributors.
Closely tailing the staples sector is the tech sector. Taiwan Semiconductor Manufacturing (TSM) towers above other positively contributing stocks like Accenture (ACN) and Alibaba Group Holding Limited (BABA). LM Ericsson (ERIC) has weighed on the sector’s returns a little bit.
Industrials have been led by Canadian National Railway (CNI) and Schneider Electric with Rolls-Royce Holdings (RYCEY) also chipping in. There are no negative contributors from the sector. Meanwhile, Compass Group and LVMH Moët Hennessy Louis Vuitton S.E. (LVMUY) have led the consumer discretionary sector into positive territory.
Financials was the only sector with a sizable negative contribution. UBS Group (UBS) is the sole major negative contributor. Positive contributions from Credicorp (BAP) and HDFC Bank Limited (HDB) have been quite helpful in reducing the drag from the sector.
The relatively unique positioning of the MFEGX has been helpful to the fund. This reflects the superior stock picking ability of fund managers. Its portfolio turnover is lower than it peers, showing the conviction of fund managers in their stock picks. There has been a slight dip in the fund’s performance since we last reviewed it, but such a short-term timeframe should not be a cause of worry.
The fund’s unique positioning makes it a contender for investors, especially in conjunction with another fund that is differently positioned. Let’s now move on to the Nuveen International Growth Fund – Class A (NBQAX).