Active risk management is one of the three pillars that make up the Sun Life MFS Funds investment formula.
This formula is one of the basis for MFS Investment Management’s1 success over time. MFS is also the company who created the first U.S. open-end mutual fund in 1924.
Rigorous selection and continuous review
Every member of the investment team is responsible for ongoing risk assessment. Because it’s impossible to cancel risk, MFS employs a rigorous process to watch it every step of the way.
In particular, it focuses on analyzing the fundamentals, so it can assess risk from all angles. Research teams examine each stock under consideration.
And each selected fund undergoes a continuous risk review process – every day, every month and every six months.
Risk-aware culture
Why is MFS so thorough in its risk analysis? It’s to understand any hidden risks in a company and its securities. In doing so, MFS tries to create long-term value by allocating capital responsibly.
MFS believes it is important to foster a risk-aware culture on its investment teams. They want to understand every material risk to that company. Each risk assessment must convince the teams of a company’s durability.
Picking the right titles to add value is the first key element in the MFS formula. The second is managing downside risks, which is the likelihood that your investment's value will lower. For MFS, it matters as much as capturing the upside risk, which is the likelihood that it will increase. By taking advantage of opportunities, Sun Life MFS Funds may reap the rewards when markets are at their peak. In that case, they don’t overpay for a title.
In its long and storied existence, MFS not only survived the Great Depression. It provided its investors with steady income during one of the worst financial and social crises in history. MFS did not miss paying a company dividend between the years 1929 and 1940. All through a total collapse and partial recovery of stock prices.
Sustainability matters
MFS also looks at sustainability factors as part of its active risk management process. Before selecting securities for the funds, MFS integrates ESG factors into their investment research. They do that to understand any company-specific risks within the portfolios.
Sustainability is a key part of MFS’s active risk management formula. When risks are reduced, the return potential increases. By applying its rigorous formula, MFS seeks to provide investors with long term growth potential. All in line with the investment objective and risk rating of each Sun Life MFS Fund.
With a vast range of global expertise, long-term discipline and active risk management, Sun Life MFS Funds can help you seize opportunities from selected asset classes around the world.
1MFS Investment Management Canada Limited is the sub-advisor to the Sun Life MFS Funds; SLGI Asset Management Inc. is the registered portfolio manager. MFS Investment Management Canada Limited has appointed MFS Institutional Advisors, Inc. to provide additional sub-advisory services.
The views expressed in this commentary are those of the authors and are subject to change at any time. Views expressed regarding a particular company, security, industry or market sector should not be considered an indication of trading intent of any mutual funds managed by SLGI Asset Management Inc. or sub-advised by MFS Investment Management. These views are subject to change and are not to be considered as investment advice nor should they be considered a recommendation to buy or sell.
The information provided is not intended to be investment advice. Investors should consult their own professional advisor for specific investment and/or tax advice tailored to their needs when planning to implement an investment strategy to ensure that individual circumstances are considered properly, and action is taken based on the latest available information.