HEAD-TO-HEAD: Alliance Bernstein versus MFS

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Conclusion

Morningstar has awarded the MFS Meridian fund three stars based on historical returns, and a bronze analyst rating. The firm rates the AB fund the same with three stars, and a forward-looking analyst rating of neutral.

FE Fundinfo, which bases its assessment on a fund’s three-year history of delivering alpha, minimising relative volatility and producing consistent returns, awards the AB fund two crowns and three crowns for the MFS Meridian fund.

“The MFS Meridian fund’s focus on assessing and mitigating downside risk is the key to its performance. By limiting drawdowns, investors have larger capital bases preserved from which to reap gains when markets rebound,” Wolfstetter said.

The AB fund was launched in 2011, but Kurt Feuerman has been running this US equity strategy since the end of 2004 and a long-short version of the strategy since 1999 at Caxton.

Over the long term, the strategy has outperformed the S&P 500, with less risk, but its more recent track record at AB is less compelling than the results generated in earlier years when the manager was running the strategy at Caxton, according to Wolfstetter.

MFS Meridian US Value fund has exhibited a higher volatility relative to AB Select US Equity fund, which is not surprising given its value bias, however, its standard deviation has remained well below the Russell 1000 Value Index, according to Wolfstetter.

“The funds sit in different categories. MFS Meridian US Value will appeal more to investors looking for a value-oriented strategy, while AB Select US Equity offers a blended approach,” she said.

“In the context of the funds’ categories, we have more conviction in MFS Meridian US Value. Its patient approach and strong analytical support merit a Morningstar Analyst Rating of Silver for the cheapest share classes, with more-expensive shares ranging from Bronze to Neutral,” she added.

“While AB Select US Equity boasts an experienced lead manager, a high level of key-person and execution risk limits its Morningstar Analyst Rating to Neutral across its share classes,” Wolfstetter concluded.

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