Of course, there are plenty of investors without active management who do just fine. People become millionaires this way. But people who become richer than that almost always employ active investment managers. This practice is controversial because there are some bad investment managers out there. But the best ones are really good, and their funds outperform the market year after year. It’s all about picking stocks with enormous growth potential. There are hundreds of these every year, stocks that well outperform the market at large. But these stocks are flighty. Some drop when we think they’re going to rise, and others soar when we thought they’d stay stagnant. Picking winners is part art, part science. It takes a lot of experience as well as an intimate knowledge of the global financial machine. It takes a great team, and you can see why more people aren’t successful at it.
MFS is one of the successful ones. They manage to create funds which do very well in the marketplace, outpacing the market by many points almost every year. But how does MFS succeed where so many others fail? The answer is very detailed and we don’t have time for it all, but they have reduced their success to three succinct points:
- A Global Perspective. MFS is a big company. They employ analysts all around the world to catch up with global events that influence the world economic ecosystem. Lots of investment managers have an America-first mindset. By cultivating a global focus, MFS can make stock decisions that are sophisticated and pointed. Other investment managers often fail in this regard.
- Risk Management. MFS does a lot of work before recommending an investment. They won’t tell you to buy until its sure that you’ll get paid.
- Long Term Thinking. Sometimes the best investment strategy is just to wait, but there’s a lot of pressure to act. MFS understands this and can help you wait when its appropriate to wait, not listen to industry noise.