MFS Launches Diversified Target Return Fund

The investment objective of the fund (ticker: DVRAX) is to seek a target total return that meets or exceeds the rate of inflation over a full market cycle by five percentage points. According to a press release, the fund will use an unconstrained benchmark approach, “…seeking lower correlation and lower volatility relative to the broader equity market to achieve more consistent returns through a combination of individual security selection, top down market allocation and active currency management.”

The fund will utilize a combination of fundamental and quantitative analysis for individual security selection within fourteen underlying sleeve portfolios with the flexibility to invest in equities across all market capitalizations, styles (e.g. growth, value), regions and industries. The fund also has the ability to take short positions and may invest in fixed income securities as well. In addition, MFS has engaged UBS Global Asset Management Inc. as a subadvisor to the fund to actively manage the fund’s market and currency exposures through the use of derivatives. The firm notes that, as a result, to meet its investment objective, the fund will seek to generate returns from three independent sources: individual security selection, top down market allocation and active currency management.

The fund will be available in multiple share classes from MFS through financial intermediaries at insurance companies, wirehouses, independent broker/dealers and registered investment advisers for retail, fee-based wrap, retirement and institutional accounts.

Portfolio Management

Joseph Flaherty and Natalie Shapiro, PhD., of the MFS Quantitative Solutions Team, will oversee MFS’ individual security selection process for the fund and will serve as lead portfolio managers for the fund. Flaherty is Co-Director of the MFS Quantitative Solutions Team and Portfolio Manager of the firm’s asset allocation products. He has been with MFS since 1993 and has worked in the industry for more than 20 years. Shapiro is a Portfolio Manager and Quantitative Fixed Income Research Analyst. She has been with MFS since 1997 and has worked in the field since 1986.

Neil Williams and Tom Clarke will lead the UBS Global Asset Management team responsible for managing the market and currency exposures through derivatives. Williams has investment strategy responsibility for all the firm’s multi-asset funds. He has worked in the asset management industry for 17 years, including having previously served as Chief Global Strategist at Goldman Sachs for six years. Clarke, with 17 years experience in the industry, is Managing Director and Head of Currency Analysis and Strategy for UBS Global Asset Management.