18 Dec

Discretionary, IT Lifted the MFS Growth Fund through November 2015

WRITTEN BY David Ashworth FEATURED IN Macroeconomic Analysis

Performance evaluation

The MFS Growth Fund – Class A (MFEGX) rose 1.1% in November 2015 from a month ago. In the three-month and six-month periods ended November 30, the fund has risen 6.1% and 3.4%, respectively. In the one-year period, it has returned 7.2% from the end of November until December 15, 2015, the fund was down 1.3%. In the YTD (year-to-date) period, which we will analyze, the fund is up by 8.2%.

MFEGX has been an above-average performer across periods among the 11 funds in this review. It was among the top three performers for November. However, it stood fifth for the YTD 2015 period ended in November. Let’s look at what has contributed to this above-average performance by the fund.

Discretionary, IT Lifted the MFS Growth Fund through November 2015

Portfolio composition and contribution to returns

Introduced in September 1993, the MFS Growth Fund (MFEGX) has witnessed several market cycles. The latest complete portfolio available for the fund is as of October 2015. We will use that portfolio as our base and consider valuation changes as they stand as of the end of November 2015 for our analysis. All portfolio percentages refer to their weights as per changes in valuation from October to November.

Stocks from the information technology sector contributed to more than half of the fund’s returns for the YTD period ended November 2015. Class A and Class C shares of Alphabet Inc. (GOOGL) and Facebook (FB) were among the biggest contributors to the sector. EMC Corporation (EMC) and Oracle Corporation (ORCL) dragged somewhat.

Amazon.com (AMZN) powered the consumer discretionary sector ahead. Netflix (NFLX) and Starbucks Corporation (SBUX) were among major contributors. However, the sector’s contribution to the fund was reduced due to a substantial negative contribution from 21st Century Fox (FOXA), with Wynn Resorts Ltd. (WYNN) also hurting the sector.

Other major positive contributors included Constellation Brands Inc. (STZ), Intercontinental Exchange, Inc. (ICE), and Allergan plc (AGN).

Reasons for above-average performance

MFEGX’s top two invested sectors were primarily responsible for its above-average performance. However, stock picks from the healthcare sector disappointed—although they formed a substantial portion of the fund’s assets, the positive contribution was quite low.

Among the smaller sectors, a few stock picks were quite detrimental to the fund in the YTD period ended November 2015, which reduced the fund’s returns.

We’ll look at the JPMorgan Large Cap Growth Fund – Class A (OLGAX) in the next article.

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