Having seen its fair share of global market, economic and political crises since 1924, MFS® has relied on the three “R’s” to minimize the impact on investors: research, risk analysis and relationships. The first two — thorough bottom-up fundamental research and a clear understanding of what might be a material risk to a business — have been crucial. But both depend upon the relationships among investment team members, which drive information sharing, and a willingness to engage in what current CEO Mike Roberge calls, “respectful debate.” And throughout the firm’s history, it has led to better outcomes.
This collaborative, leave-no-stone-unturned process has been integral to MFS’ culture since the firm’s founders debated potential holdings for the first open-end mutual fund, Massachusetts Investors Trust (MIT). But it became the investment culture of collective expertise that we know today back in the late 1990s, in the aftermath of the dot-com era.
At the time, the rise of the internet opened the floodgate to new tech companies coming to market and overexuberant investors buying them without really understanding what the companies did or what they were worth. It seemed that anything with “dot-com” in its name was a hot commodity, and many did little to question the suspicious and often unfounded daily increase in value for these stocks.
But MFS Chief Sustainability Officer, Barnaby Wiener, then a young analyst new to the London office, wasn’t one of them. After watching other US equity managers from competing firms buy unproven dot-com company stocks, Wiener said, “These companies would come to market, and I didn’t even understand what they did, let alone how they were ever going to generate revenue or a profit. So, my attitude was to ignore them.”
Wiener, much like seasoned professionals David Antonelli and David Mannheim, favored the firm’s longstanding investment philosophy to prioritize careful risk management and a long-term view. Given the eventual dot-com era fallout — failure of numerous tech startups and the substantial losses suffered by investors — it was the right way to go. As Antonelli said, “Coming out of that, we sort of got back to our roots,” — meaning, know what you own. The dot-com crisis was a stark reminder of why that mattered so much, and it gave the firm further incentive to adapt the research and risk management process toward doing just that.
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