Bringing Two Perspectives Together
AUTHOR
Pat Beksha
Sr. Strategist,
Investment Product Specialist
In today’s complex and often unpredictable economic landscape, fundamental and quantitative research each bring distinct strengths that vary with market conditions.
That’s why the MFS Meridian® Funds – Blended Research® European Equity Fund takes a different path, one that combines two proven investment processes: fundamental research and quantitative analysis.
Fundamental research brings deep, human insight into companies, industries, and economic trends. Quantitative research adds the power of data-driven models and systematic discipline. By blending these perspectives, we aim to identify stocks that score highly on both measures, giving investors an effective way to access European equities.
How Does It Work?
Our process starts with two independent approaches:
Imagine you’re the captain of a ship, sailing through the unpredictable waters of European equity markets. For years, you’ve relied on two trusted navigators.
Fundamental research
evaluates companies based on characteristics such as quality, management strength, and long-term prospects.
Quantitative analysis
uses historical data to model investment factors that are intuitive, fundamentally based, and built to endure over the long term.
Every stock receives a rating from each approach. These ratings are converted and combined into a single Blended Research score. The portfolio manager then uses these scores, alongside strict risk controls, to build a diversified portfolio focused on the most attractive opportunities, which we call “intersection stocks” (i.e., buy-rated across both fundamental and quantitative analysis).
The strategy aims to maximize exposure to these intersection stocks. As you can see above, historically, the portfolio has skewed heavily toward stocks rated “buy” by our fundamental analyst team, averaging 70% buy-rated stocks compared to 30% in the index over the life of the fund. On the other end, stocks rated “hold” or “sell” by both inputs are almost always avoided, unless we need to own them for risk purposes.
Where Does It Fit in Portfolios?
The Blended Research European Equity Fund is designed as a core holding for European equity allocations. By combining two complementary styles, the strategy aims to:
Maintain volatility at levels similar to the benchmark while seeking to add value through stock selection.
Reduce the natural cyclicality of relying on just one approach.
Aims to deliver strong returns across different market environments.
It’s a strategy for investors who want a balanced, risk-aware way to participate in European equities without having to choose between human insight and data-driven discipline.
Why Now?
Markets today are full of uncertainty. Leadership shifts between styles: sometimes fundamentals dominate, other times quantitative models shine. By using a research approach that combines fundamental and quantitative research, we aim to smooth out the natural cyclicality of research types for our clients. It’s a forward-looking approach in a world where the only constant is change.
The views expressed are those of MFS, and are subject to change at any time. These views should not be relied upon as investment advice, as securities recommendations,
or as an indication of trading intent on behalf of any MFS investment product.
Important risk considerations
The fund may not achieve its objective and/or you could lose money on your investment in the fund. Stock: Stock markets and investments in individual stocks are volatile
and can decline significantly in response to or investor perception of, issuer, market, economic, industry, political, regulatory, geopolitical, environmental, public health, and
other conditions. Geographic: Because the portfolio may invest a substantial amount of its assets in issuers located in a single country or in a limited number of countries, it
may be more volatile than a portfolio that is more geographically diversified. Strategy: There is no assurance that the portfolio’s predicted tracking error will equal its target
predicted tracking error at any point in time or consistently for any period of time, or that the portfolio’s predicted tracking error and actual tracking error will be similar. The
portfolio’s strategy to target a predicted tracking error of approximately 2% compared to the Index and to blend fundamental and quantitative research may not produce the
intended results. In addition, MFS fundamental research is not available for all issuers. Quantitative Strategy: MFS’ investment analysis, development and use of quantitative
models, and selection of investments may not produce the intended results and/or can lead to an investment focus that results in underperforming portfolios with similar
investment strategies and/or the markets in which the portfolio invests. The proprietary and third party quantitative models used by MFS may not produce the intended results
for a variety of reasons, including the factors used, the weight placed on each factor, changing sources of market return, changes from the market factors’ historical trends,
and technical issues in the development, application, and maintenance of the models (e.g., incomplete or inaccurate data, programming/software issues, coding errors and
technology failures). Please see the prospectus for further information on these and other risk considerations
Please note this is an Actively Managed Product.
For more information about MFS Meridian® Funds – Blended Research European Equity Fund, please visit www.mfs.com or contact your MFS representative.
See the fund’s offering documents for more details, including information on fund risks and expenses. For additional information, call Latin America: 416.506.8418
in Toronto or 352.46.40.10.600 in Luxembourg. U.K.: MFS International (U.K.) Ltd., 1 Carter Lane, London, EC4V 5ER UK. Tel: 44 (0)20 7429 7200. European Union: MFS
Investment Management Company (Lux) S.a r.l. 4 Rue Albert Borschette, Luxembourg L-1246. Tel: 352 2826 12800 .
MFS Meridian Funds is an investment company with a variable capital established under Luxembourg law. MFS Investment Management Company (Lux) S.ar.l. is the
management company of the Funds, having its registered office at 4, Rue Albert Borschette, L-1246 Luxembourg, Grand Duchy of Luxembourg (Company No. B.76.467).
The Management Company and the Funds have been duly authorised by the CSSF (Commission de Surveillance du Secteur Financier) in Luxembourg.
The funds are established as a “restricted foreign scheme” in Singapore. This material has not been registered as a prospectus with the Monetary Authority of Singapore.
Accordingly, this material and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the securities may not be
circulated or distributed, nor may the securities be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to
persons in Singapore other than (i) to an institutional investor (as defined in the Securities and Futures Act 2001 of Singapore, as amended or modified (the “SFA”)) pursuant
to Section 304 of the SFA, (ii) to a relevant person, or any person pursuant to Section 305(2) of the SFA, and in accordance with the conditions specified in Section 305 of the
SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA. This document has not been reviewed by The Monetary
Authority of Singapore.
This document has not been reviewed or approved by the Hong Kong Securities and Futures Commission.
MFS Meridian Funds may be registered for sale in other jurisdictions or otherwise offered where registration is not required.
MFS Meridian Funds are not available for sale in the United States or to US persons.
Unless otherwise indicated, logos, product and service names are trademarks of MFS and its affiliates and may be registered in certain countries.
Information on investors rights is made available in English and, as the case may be, in local language at meridian.mfs.com.
MFS Investment Management Company (Lux) S.à r.l. may decide to terminate the marketing arrangements of this fund in accordance with the appropriate regulation. The
offering documents (sales prospectus and Key Information Documents (KIDs), or in the U.K. Key Investor Information Documents (KIIDs)) articles of incorporation and financial
reports are available to investors at no cost in paper form or electronically at meridian.mfs.com, at the offices of the paying agent or representative in each jurisdiction or from
your financial intermediary. KIDs are available in the following languages; Danish, Dutch, English, French, German, Italian, Norwegian, Portuguese, Spanish, and Swedish. KIIDs
and the sales prospectus and other documents are available in English.
This material is for use only in Austria, Finland, France, Germany, Hong Kong, Italy, Luxembourg, Netherlands, Norway, Singapore, Spain, Sweden, Switzerland, Taiwan, United
Kingdom, North America, South America and Central America.