MFS Prudent Wealth Review – that will be the topic of today’s article.
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MFS Investment Management (MFS) is a global US investment manager formerly known as Massachusetts Financial Services. Founded in 1924, MFS is one of the oldest asset management companies in the world and is credited with creating mutual funds. The first mutual fund, the Massachusetts Investors Trust, is still active today. As of January 31, 2020, MFS managed assets worth $ 528.4 billion.
The company was founded in 1924 by Leeroy and Ashton L. Carr. The company’s oldest fund is the Massachusetts Investors Trust, a $ 50,000 mutual fund billed as “the world’s first publicly traded investment fund.” The company used “brokerage channels” to sell its shares to the public and then expanded its assets to $ 14 million over the next five years. During the stock market crash in 1929, the fund suffered an 83% loss and in 1934 created a second fund. By 1959, the Massachusetts Investors Trust had become the largest mutual fund in the United States.
In 1969, MIT was reorganized into Massachusetts Financial Services (MFS) to reflect the expansion of the firm’s product and service portfolio.
In 1976, MFS offered one of the country’s first Managed Municipal Bond Trust, and in 1981, MFS launched the country’s first globally diversified fixed-income fund (Massachusetts Financial International Trust-Bond Portfolio). In 1986, MFS offered the first closed-end fund of high-yield municipal bonds to trade on the New York Stock Exchange.
In 1982, the company was acquired by Sun Life Financial of Canada. In 1998, MFS Chairman and Chief Executive Officer A. Keith Brodkin died, leading to major changes in senior management. MFS assets under management grew from $ 55 billion to $ 90 billion between 1997 and 1998, and it was reportedly the fastest-growing company among the twenty largest companies that sold funds through brokers.
In the early 2000s, regulators in Massachusetts and New Hampshire investigated MFS and five other mutual fund companies in the Boston area. In the same year, the Securities and Exchange Commission said that MFS had made “false and misleading” statements in its fund’s prospectus about its policies regarding market trading and market time. MFS paid $ 350 million to settle state and federal fraud charges. MFS appointed Robert Posen as non-executive chairman from 2004 to 2010. MFS then undertook a series of company reforms to educate investors about fees, preserve the independence of fund boards, and create disincentives for time-to-market.
The changes were designed to address the concerns of regulators and legislators and were praised by stock industry analysts and consumer advocates. These reforms ended soft dollar arrangements that allowed brokerage fees to be traded for market research and data. From 2010 to 2020, assets under management grew from $ 253 billion to $ 528.4 billion.
MFS Prudent Wealth Fund
A global equity fund that manages market presence and looks for undervalued quality companies. The investment objective of the fund is to achieve capital gains measured in US dollars.
- Concentrated portfolio of global stocks with the ability to invest without restrictions on debt securities.
- Can use cash, derivatives and other fixed income instruments to manage risks in the stock market and
- risk of loss
- Seeks to invest in undervalued, quality companies based on a fundamental bottom-up approach.
Important risk factors
The fund may not achieve its goal and/or you may lose money on your investments in the fund.
- Stocks: stock markets and investments in stocks are volatile and may decline significantly in response to investor perceptions of the issuer, market, economy, industry, politics, regulatory, geopolitical and other conditions.
- Bonds: Investments in debt instruments may decline in value as the result or perception of a decline in the credit quality of the issuer, borrower, counterpart or other person responsible for payment, underlying collateral, or changes in economic, political, issuer-specific or other conditions. Certain types of debt instruments can be more sensitive to these factors and therefore more volatile. In addition, debt instruments carry interest rate risk (prices tend to fall as interest rates rise). Therefore, the value of the portfolio may decline as rates rise. Portfolios with longer duration debt tend to be more sensitive to higher interest rates than shorter duration portfolios. Sometimes, especially during periods of market turmoil, all or most of the segments the market may not have an active trading market. As a result, it may be difficult to value these investments and it may not be possible to sell a particular investment or type of investment at any particular time or at an affordable price. The price of an instrument traded with a negative interest rate reacts to changes in the interest rate just like other debt instruments; however, an instrument purchased with a negative interest rate is expected to yield negative returns if held to maturity.
- Derivatives: investments in derivatives can be used to open both long and short positions, they can be very volatile, include leverage (which can increase losses) and, in addition, carry the risks of the underlying indicator (s) on which the derivative is based, such as counterpart risk and liquidity risk.
- Value: A portfolio investment may remain undervalued for long periods of time, may not realize expected value, and be more volatile than the stock market as a whole.
Benchmark and Vendor Disclosure
The MSCI World Index (net div) is a market capitalization-weighted index designed to measure the performance of the stock market in global developed markets. It is not possible to invest directly in the index.
Index data source: MSCI. MSCI makes no warranties or representations of any kind, either express or implied and assumes no responsibility in relation to any MSCI data contained in this document. MSCI data should not be further distributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed, or generated by MSCI.
The Global Industry Classification Standard (GICS®) was developed and/or
is the exclusive property of MSCI, Inc. and S&P Global Market Intelligence Inc. (“S&P Global Market Intelligence”). GICS is a service mark of MSCI and S&P Global Market Intelligence and is licensed for use by MFS.
Pros of investing in mutual funds
Professional portfolio management
The customized portfolio is managed by seasoned industry professionals with expertise in the field. They continually manage your portfolio to help you get the most out of your investment.
You can buy mutual funds of smaller denominations, ranging from $ 100 to $ 1000. Smaller mutual fund denominations allow investors to make recurring investments as part of their regular monthly buying plans. Instead of waiting for enough money to buy more expensive investments, you can invest in mutual funds right away.
Mutual funds can invest in securities of various asset classes such as bonds, commodities, or cash. This helps to diversify the portfolio. If one sector is performing poorly, there is a high likelihood that other sectors will make up for the loss.
Investing in mutual funds is very affordable as an individual can invest from as little as $10 every month to a mutual fund. There is no fixed amount that can be invested. Thus, even a small investor can participate in the market by investing in mutual funds.
All it takes to exit a mutual fund is one instruction to your broker/agent to sell it. Funds are returned to your account within 48 hours.
Cons of investing in a mutual fund
Fees and expenses
Mutual funds charge their clients an annual fee, known as the expense ratio, regardless of the fund’s performance. This can be defined as the cost of running a business. In addition, there is an exit load on mutual fund schemes if an investor wishes to buy back investments before a certain period of time.
There are two types of mutual fund schemes: one that allows you to enter and exit at any time is known as an open scheme, and the other has a blocking period of 3-5 years that is closed. ended the scheme. If an investor wishes to buy back the investment before the blocking period, he needs to pay a certain amount as an output load.
There is no guarantee that your mutual fund will be performing well, and it could technically drop to $ 0 if all underlying assets drop to zero.
Mutual funds can experience market fluctuations and sometimes generate returns below the general market. The level of risk and return depends on what the fund is investing in.
When you sell an investment for a profit, you must pay capital gains taxes. With most investments, you are in control of when you sell them, so you are in control of when you have to pay taxes. Mutual funds must regularly distribute the capital gains they earn, which gives you less control over when you pay capital gains taxes. This can make it difficult to use tax minimization strategies such as collecting tax losses.
It is always advisable to consult with a financial advisor and understand all points before investing in mutual funds. That is why you are always welcomed with any kind of questions, we will give you the right advice, strategies, and tips on how to make your first investment.
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