Posted inHead To Head

HEAD-TO-HEAD: Franklin versus MFS

FSA compares two European equities products: the Franklin Mutual European Fund and the MFS Meridian European Research Fund.
by Rupert Walker

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Conclusion

Morningstar has awarded the Franklin fund one star based on historical returns, and a neutral analyst rating. The firm rates the MFS product higher with five stars, and also a forward-looking analyst rating of bronze.

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 Franklin fund one crown, and also rates the MFS fund higher with three crowns.

“The Franklin fund’s value approach has been challenged, but it remains appealing thanks to an experienced management team supported by a cohesive group of like-minded investors,” said Caquineau.

The MFS fund’s analyst-driven approach has “worked very well but recent changes in this close-knit group bear watching though,” he warned. “On the other hand, the firm’s strong research framework facilitates smooth handovers.”

“Overall, I think MFS will better suit investors looking for a broad exposure to European stocks, and not looking to take a strong style bet,” Caquineau concluded.  “Also its performance pattern (less volatility, more consistent returns) will make it easier to own.”

The Franklin fund will “suit patient investors, who are willing to weather periods of severe underperformance when value underperforms”.

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