21 Jan

Industrials and Financials Held Back the MFS Growth Fund in 2015

WRITTEN BY David Ashworth FEATURED IN Company News, Insights, & Analysis

Performance evaluation

The MFS Growth Fund – Class A (MFEGX) fell 1.0% in December 2015 in comparison to the previous month. In the three-month and six-month periods ended December 31, the fund has risen 8.3% and 3.3%, respectively. In the one-year period, the fund is up 7.1%. Meanwhile, from the end of December until the end of January 20, the fund is down 8.2%, the least among the 11 funds in this review.

The MFEGX has been an average performer across periods among the 11 funds in this review. It stood fifth in 2015. Let’s look at what has contributed to the fund’s average performance.

Industrials and Financials Held Back the MFS Growth Fund in 2015

Portfolio composition and contribution to returns

The MFEGX has witnessed several market cycles since its inception in September 1993. The latest complete portfolio declaration available for the fund is from November 2015. Thus, we will take that portfolio as our base and consider valuation changes as they stand at the end of December 2015 for our analysis. All portfolio percentages mentioned from here on refer to their weights as per changes in valuation from November to December.

Stocks from the information technology sector contributed to more than half of the fund’s returns in 2015. Class A and C shares of Alphabet (GOOGL) and Facebook (FB) were among the biggest contributors to the sector. Meanwhile, EMC (EMC) and Oracle (ORCL) dragged somewhat, though not enough to substantially hurt the sector’s contribution.

The consumer discretionary sector followed information technology in terms of positive contribution to returns. Amazon (AMZN) was mainly responsible for the sector’s contribution while Netflix (NFLX) and Starbucks (SBUX) played supporting roles. However, the sector’s contribution was reduced due to a sizable negative contribution from 21st Century Fox (FOXA) with Wynn Resorts (WYNN) and Time Warner (TWX) also hurting the sector.

While Constellation Brands (STZ) shined in the consumer staples sector, Allergan (AGN) helped healthcare. Intercontinental Exchange (ICE) was the biggest positive contributor from the financial sector, but it was not enough to pull the overall contribution of the sector out of the negative territory.

Reasons for the fund’s average performance

Some stock picks among its top positive contributing sectors, along with industrials and financials, were responsible for the average showing by the fund in 2015. Fund managers’ picks from the healthcare sector also disappointed. These stocks’ lackluster outing and large allocation in the fund’s portfolio hurt the fund’s overall returns.

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

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