Posted inHead To Head

HEAD-TO-HEAD: Fidelity versus MFS

FSA compares two global mixed asset funds: the Fidelity Global Multi Asset Income Fund and the MFS Meridian Global Total Return Fund.
by Rupert Walker

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Fees

The ongoing charges fee (OCF) for the retail share class of the Fidelity fund is 1.65%, which ranks close to the median of 1.70% OCF in its peer group.

The MFS fund’s annual expenses are higher at 1.93%, which is partly explained by the way the fund separates its asset allocation process into discrete buckets, rather than centralising the function. Basically, the fees have to be spread around.

Fees matter, not just on a relative basis, but because they affect fund performance, according to Morningstar.

It published a paper in 2016 that found that “the expense ratio is the most proven predictor of future returns” for any fund.

This year, Morningstar has started using a new evaluation framework that places a greater emphasis on fees and benchmark-relative performance than previously.

“Clearly, we find the fees charged by the Fidelity fund more justified than those by the MFS product,” said Möttölä.

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