MFS UK Equity will be managed by a team of analysts headed up by anthony kingsley
The upcoming launch of the four sub-fund Oeic from US asset management giant Massachusetts Financial Services (MFS) will see one of the first research-run equity funds offered to UK intermediaries.
The concept of a research-run fund, which is managed by a team of analysts, was pioneered in the US by MFS in 1989. The MFS UK Equity fund, to be launched on 17 December, introduces it to the UK.
The fund will be headed up by analyst Anthony Kingsley. Decisions on stocks to be included in the tight portfolio of 30 to 35 stocks are made by a committee of the contributing analysts, with majority voting carrying the rule.
The MFS Continental European fund, to be launched on the same date, uses the same process and will also be headed up by Kingsley.
It has a wider portfolio of holdings and mirrors the Europe ex-UK elements of the MFS European Equity fund, a Sicav launched in March 1999.
Kingsley points to returns of around 18% more on the Sicav than its MSCI Europe benchmark and only marginally higher volatility.
As well as the two research-run funds, MFS is planning two other sub-funds: the US Growth and High Income Bond funds. The plan includes a no front-end load share class paying 4% intermediary commission.
The group aims to launch the portfolios around the beginning of December.
Kingsley said: 'In the late 1980s, a group of US analysts approached some of the portfolio managers within MFS and said they could do just as good a job of running a fund as they did. They were given the chance in a fund seeded by the company. After several years, the track record was so good MFS decided to market it to the outside world.'
That fund, the MFS Research Fund, has now reached $10bn in size, according to Kingsley. In 1997, the group launched a global ex-US version of the product, to which Kingsley has contributed from launch.
Kingsley said: 'The UK Equity fund is a totally new fund but uses the same analyst-driven research process, comprising the best ideas of each analyst.'
Eight European sector analysts will contribute to the fund, including Kingsley. They are split between seven sectors: financial services, technology, utilities and telecommunications, industrial goods and services, energy and basic materials, healthcare and consumer, including media, leisure and retailing.
The Oeic will offer three share classes with the no-load retail B-shares, a concept common in the US, which have a falling scale of exit charges to promote investor loyalty. The group plans to offer higher IFA commission than either Henderson or M&G, two UK asset managers offering no-load funds.
The retail B-shares pay 0.5% trail commission and charge 5% if the investor leaves in the first six months, 4% in the 12 months after that and then 3%, 2%, 1% and finally 0% in the following years.
MFS allows free switching between the Oeic sub-funds and initial intermediary commission does not come out of the client's allocation.
The Oeic has a retail A share class with 3.5% commission, trail of 0.5% and an annual management charge of 1.5%, 1.25% on the high yield corporate bond fund.
The funds are available through the A and B share classes in an Isa with a minimum investment of £1,000.
There is also an institutional share class with an annual management charge of 0.75%.
The High Income Bond fund is managed by Dave Cobey and Rob Manning, MFS' head of high yield.
The US fund is a clone of a fund on offer in the US to retail investors.
For intermediary information contact 0207 950 1700.
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