Josh Barton

MFS Investment Management is pleased to announce that Josh Barton, Managing Director, Relationship Manager and Head of Institutional Sales will become the new Managing Director and Head of Australia and New Zealand, effective 1 September 2023.

He succeeds Marian Poirier, Senior Managing Director and Head of Australia and New Zealand, who will retire from MFS in April 2024.

Commenting on this organisational change, MFS Global Head of Distribution Carol Geremia said, ‘We thank Marian for her many contributions to MFS and wish her all the best in her retirement. I have worked closely with her for many years, and she has been a great asset to the firm and the wider investment community.

‘As part of MFS’ thoughtful and transparent approach to long-term succession planning, Marian has been working closely with Josh on the transition and will continue to do so through until Q1 2024. We feel it is important to provide a lengthy transition period as it ensures both a smooth transition of responsibilities and an uninterrupted continuity of services to our clients,’ she added.

Commenting on her retirement, Marian said, ‘I am privileged to have worked with MFS for over 20 years. I feel proud of our accomplishments and happy to be handing over the reins at such an exciting point in MFS’ journey in Australia and New Zealand.

‘The diversification into fixed income is well under way, and the team headed up by Josh is well prepared for the next phase. Josh has played a key role in solidifying our presence across the region and helping to foster our local culture. He is more than ready to lead the team in the years’ ahead. Playing the long game at MFS extends beyond how we invest and how we manage the business, but importantly, it also has to do with how we manage our people, and this transition is a further example of this,’ she concluded.

Josh has more than 22 years of industry experience. He joined MFS in 2012 and is currently responsible for leading the firm’s sales efforts involving institutional investors in Australia and New Zealand. Before joining the firm, he spent 11 years at BlackRock, holding several roles, including director and senior account manager in the global client group. He started his career in the financial services industry in 2001.

Commenting on his appointment, Josh said, ‘I am proud to have been chosen to lead MFS’ business in Australia and New Zealand. I am committed to being a strong leader for the team and continuing to serve our clients with what I believe to be best-in-class investment solutions

MFS has a long history of working with clients in Australia and New Zealand and services approximately AUD$29.1 billion of client assets. Its global assets under management as at 30 June 2023 stand at AUD$896.2 billion.

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Marian Poirier

After decades of stimulus, consumption and cheap debt, investors are being urged to reassess the nature and purpose of passive and active investing and how they support portfolios in a dramatically changing world, according to three global investment managers.

Addressing the challenges involved in building long-term-focused portfolios, three global investment firms, Baillie Gifford, MFS Investment Management and Orbis Investments are jointly hosting a series of events for institutional and wholesale investment communities next week in Melbourne and Sydney.

Featuring presentations from leading portfolio managers and investment officers from each of the firms, with a keynote address from finance professor Hendrik Bessembinder, renowned for his research into stockpicking, the program will focus on what matters most for the creation of long-term capital at a time of once-in-a-generation economic change and global reform.

Reversing trends

Against a global backdrop of structural change for markets, the three investment managers say many of the market tailwinds and trends that have long prevailed have run their course or are reversing — offshoring to onshoring, globalisation to nationalism, minimal capex spending to mandated capex, technology driving revenue not cutting costs. These are seismic shifts that are giving life to new trends, opportunities and ideas and where active investing has the advantage through early discovery.

‘Active management comes in to its own when you consider big shifts in society over the next decade or more and how innovation is supporting long-term change, whether that’s the transition to clean energy, the future of transport or food, or breakthroughs in biology that could cure cancers and disease’, Rosemary Shannon, Client Director at Baillie Gifford, said.

‘Academic research and other sources of intelligence can tell us a lot about what’s changing in the world and where to look for successful companies. It is these opportunities that investors vulnerable to short- term sentiment and market noise can miss out on.’

Fertile ground for stockpickers

The trio believe the current environment of change is creating headwinds for even the best of companies, and while some won’t survive, there will be those that emerge or transform to offer differentiated value, retain pricing power and grow market share. Each regard that the next market cycle will be a reckoning where fundamentals will reveal a growing spread between responsible winners and unsustainable losers.

‘While every boom–bust cycle follows a similar pattern, they are also different from each other’, Jason Ciccolallo, Managing Director at Orbis Australia, said.

‘An environment of loose money stimulates the economy and fuels rising asset prices, sometimes to the point where it’s unhealthy and dislocations occur. As the cycle matures, these ever-rising asset prices can distort behaviour, leading to undisciplined capital allocation decisions. This has seen some eye wateringly high company valuations in certain sectors that are now reversing, although the valuation dispersion between the expensive and cheap stocks is about as wide as we have seen it.

‘Investing’, Ciccolallo continued, ‘in a more complex landscape will demand an increased focus on fundamentals and the price of an earnings stream. Increased discipline will be particularly critical in a world where central bank stimulus has dried up. Every environment produces opportunities, and the one we’re in today is ripe with possibilities — it’s fertile ground for stockpickers.’

Moving to a three-dimensional investment model

The trio say the evolution of investing from a two-dimensional risk and return model to a more complex responsibility-centred model is placing a greater onus on investors, including those in passive strategies, to become more actively engaged.

‘Just as active managers place tremendous pressure on issuers to demonstrate sustainable business models, so should investors, active and passive, apply scrutiny to what they own’, Marian Poirier, Senior Managing Director at MFS Investment Management, said

‘As an industry that funds 80% of the world’s public markets, we have the responsibility to ensure that not all companies receive financing all the time. Active investing is about a bigger, longer game that aligns portfolios with where long-term, financial and societal value is. The days of easy finance are behind us, and active management can ensure client funds are allocated to companies whose balance sheet affords them the luxury of investing in their business for the long term as responsible winners.’

Exposure versus responsible ownership

The collective believe that passive strategies certainly have had a place in portfolios for their low-cost beta exposure, but they also that their limitations, in a world embarking on changes unprecedented in scale and number, need to be better understood.

‘While passive capital allocation has supported portfolios during past growth-dominated decades, its hands off nature and limited ability to engage and hold companies to account have inadvertently contributed to mounting risks in markets that are now reversing through active engagement’, Poirier said.

‘An index is not a fiduciary; indices can’t think and don’t care’, she added.

‘Alpha’ and ‘ESG’ losing meaning in an era of complexity

The trio highlight the dangers of ‘alpha’ and ‘beta’ exposure descriptions having evolved into convenient ways of holding the industry to account and in so doing embedding agency risk and short-termism in markets.

‘As an industry we need to do a better job of defining what alpha is, in a holistic sense’, Poirier said.

‘If an investment chosen for its long-term earnings resilience outperforms a benchmark representing the winners of the day, can we really call that alpha? Likewise, if that long-term investment underperforms a benchmark comprising companies that have optimised profits today at the expense of future earnings, should that indicate failed alpha? The question becomes alpha against what?’

The trio see similar flaws in the way products are labelled.

‘Company and fund-led actions designed to appease current investor enthusiasm by ‘greening’ investments and operations may actually be at complete odds with ESG objectives, which may be more aligned with transforming assets for a low-carbon economy’, Poirier said.

‘While ESG objectives won’t become any less important, we think a better term could be ‘stakeholder capital’ because building a more sustainable future for companies and investors needs long-term partners and allies. We believe metrics need to better engage stakeholders such as investee company boards, executives, policy leaders, think tanks, academics, market regulators, legislators and not least clients to support genuine ESG objectives. Each has a stake in the process of change, and, importantly, all have a stake in achieving desired change and the prosperity that comes with it.’

‘Growth at any cost’ is dead

The trio argue that the highest-return-at-any-cost approach to investing is not in the best interest of investors, nor has it ever been, given its destructive effect on markets, societies and environments.

‘Long-term investing is about generating strong returns for our clients, but our choices also affect society and the environment. We take that responsibility seriously — because it’s the right thing to do and it makes us better investors’, Shannon said.

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Marian Poirier

Australian investors are regaining confidence in their retirement wealth after the economic impacts of COVID and are more certain about when they can retire, according to the 2022 MFS Global Defined Contribution Survey. 

The annual study, which surveyed over 4,000 people globally, including more than 1,000 who contribute to an Australian superannuation fund, shows that while concerns around retirement adequacy and time frames have abated, they continue to weigh heavily on younger investors. 

More than half (52%) of younger Australians aged under 45 believe they will need to work longer than expected (down from 58% year prior) due to the economic fallout of COVID, and nearly one in three (30%) ‘no longer’ think they’ll be able to retire compared to 21% of over-45s. Anxiety levels have noticeably abated from last year, when 39% of under-45s and 27% of over-45s held this view.

More Australians expect a longer working life with a sharper end

Among those surveyed the expected age of retirement has been revised to 66 years, considerably more than the 60.7 years envisioned last year. This aligns with more people expecting a hard stop in their working life, up to 18% from 13% last year. 

When questioned about their post-retirement intentions, 34% of over-45s said they will seek advice from a financial advisor; 32% will set up an account-based pension with My Super; 25% will begin a transition to retirement income stream with My Super while still working; 22% expect to rely on the age pension partially or fully; and only 16% will take a lump sum. 

Australians are leading in the global push to see more ESG options in retirement plans

Eighty-one percent of Australians want to see ESG investments offered in their retirement plans, up from 74% the year prior and exceeding the interest shown in global markets. Demand for ESG options in plans is also high in the United Stated at 78%. In Canada its 72% and 80% in the United Kingdom.

While the survey globally showed a correlation between age and demand for ESG in all regions, Australian baby boomers (aged 55 to 73) displayed the greatest sentiment change of all ages and regions, with 71% wanting ESG in their super offerings, up from 65% last year.

Regarding the consideration of ESG issues in the allocation of investments, an integration approach was favored by Australians (41%) over an exclusionary approach (38%), with one in five preferring their fund not take ESG into consideration when investing in companies. Forty-nine percent believe their superannuation fund does an adequate job of considering ESG issues when making investment decisions on their behalf; however, just 43% of women agreed with this compared with 54% of men.

Huge shift in sentiment toward advice, especially via superannuation funds

Local investors appear marginally more receptive to receiving advice from an advisor, with 30% receiving formal advice, up from 29%. However, this contrasts sharply with the 52% (up from 32%) of respondents who now point to their superannuation fund as a source of advice. 

Just 9% said they receive ‘no advice’ compared to 24% last year. 61% indicated that they would use an advisor if one was offered by their super fund, up from 48% the year prior. In-person remains the preferred way to receive advice, but investors are increasingly turning to financial publications (15%, up from 7%) and robo-advisors (11%, up from 8%).

Marian Poirier, Senior Managing Director and Head of Australia and New Zealand at MFS Investment Management, commented on the survey findings: ‘Though planning a comfortable retirement with certainty remains difficult, it is encouraging to see confidence and conviction levels return after the destabilising effects of COVID.

‘Investors appear much more receptive to receiving advice as they increasingly assert their investment preferences, and trusted superannuation funds are poised to build out advice models.

‘Our survey once again reinforces the idiosyncratic nature of retirement planning and the inadequacy of the “one size fits all” approach. Confidence around retiring is affected by global and economic events, but it is encouraging to see there is a growing understanding of how to better meet retirement goals.’

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James Langlands

MFS Investment Management (MFS) has announced the appointment of James Langlands as Head of Wholesale, Australia and New Zealand.

James will assume the responsibilities formerly managed by Ross Cartwright, who joined MFS’ Investment Solutions Group in London in October 2021.

James will be responsible for driving the growth of MFS’ Australia and New Zealand wholesale business. He will focus on promoting MFS’ broad range of fixed income and equity capabilities to key accounts, independent financial advisors, private wealth, and research relationships as the firm continues to bring its suite of products and extensive insights to the local market.

With 20 years industry experience, James joins from BNP Paribas Asset Management where he served as Head of Wholesale Distribution. He was responsible for the business development and relationship management activities of that firm’s wholesale client business. Prior to that, he worked at BlackRock as Director, Head of Wealth Advisory, Wholesale. He held several other positions at the same firm over a 15-year period including Director, Institutional Client Business, Co-Head of BlackRock’s Managed Account Service, and other Senior Account Manager roles.

Based in Melbourne, he reports to Marian Poirier, Senior Managing Director, Australia. He will be supported by Anna Martin, who recently took on the role of Associate Director within the client relationship team. The two will work with MFS’ local relationship management and client service team to bolster the firm’s wholesale distribution services and capabilities.

Ms Poirier said, ’James’ knowledge and understanding of the distribution landscape evolving across the region is exceptional, and we are thrilled to welcome him to the team. This is an important hire for our business and reinforces our commitment to serving wholesale clients across the region with best-in-class investment solutions. This is underpinned by our company-wide focus on sustainability.’

MFS has an established presence in the Australian and New Zealand wholesale market, currently offering eight Australian Unit Trust funds to wholesale and advisor-directed investors across the region, recently adding MFS Global New Discovery Trust, which targets global small-cap opportunities. The firm also offers its global range of investment strategies to institutional investors.

Commenting on his appointment, James said, ’I’m delighted to have been given the opportunity to lead and contribute to MFS’ growth in this market at this pivotal time. I look forward to working with the team, strategically expanding the client base and developing deep relationships with clients and prospects looking for long-term investment solutions.’

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Marian Poirier

MFS Investment Management (MFS^®) has expanded its equity product offering for Australian and New Zealand investors with the launch of its MFS Global New Discovery Trust, which actively invests in global small- and mid-cap equities.

The trust seeks to generate alpha by selectively investing in high-quality small- and mid-cap companies with consistent earnings growth and durable franchises, typically early in their life cycle.

Marian Poirier, senior managing director at MFS Investment Management, said the trust offers a compelling opportunity for investors seeking access to a broader opportunity set, with the potential to invest in sectors underrepresented in the Australian market, as well as offering exposure to attractive new areas of growth and long-term alpha sourced from a deep, diverse global market.

‘Considerable inefficiencies and opportunities reside in the small mid-cap equity sector due to its depth.  The MSCI All Country World Small Mid Cap Index comprises 7500 names. Narrow this to 100 securities using a disciplined, repeatable process that draws on the broad capabilities of MFS’ integrated global research platform and you have a unique and active portfolio that is distinctly different from the benchmark’, Poirier said.

‘Stock selection is key, with a focus on finding companies that are attractively valued relative to their fundamental strengths and growth prospects.  This is particularly important as economic headwinds and tailwinds vary across company sizes, sectors and regions’, she added.

MFS’ global research platform includes fundamental equity, credit and quantitative analysis aimed at developing proprietary insights into a company’s fundamentals and valuation metrics. The global investment manager has a long track record of managing assets in the small- and medium-equity-cap space, with over US$50 billion in dedicated small- and medium-cap strategies globally.

The trust aims to deliver above-average returns relative to the MSCI All Country World Small Mid Cap Index (net return) over a full market cycle (seven to nine years). Geographically flexible, the sweet spot for portfolio ideas is in the $1 billion to $15 billion US market-cap range.

At the helm of the strategy is a team of highly experienced portfolio managers with global expertise, including Peter Fruzzetti and Sandheep Mehta in London and Eric Braz and Michael Grossman in Boston.

The research-driven global strategy has been available to investors in the United States since 2011.

Australian and New Zealand advisers and wholesale investors can access the trust as Australian Unit Trust ahead of it becoming more broadly available to retail investors via platforms in Q4. Zenith Investment Partners has rated the trust as recommended.

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Based in Sydney, Daniel will be responsible for identifying, establishing and maintaining relationships within the consultant and research communities in Australia. He will advocate for and communicate key details of MFS’ investment proposition, capabilities and investment strategies to support the retention and further growth of MFS’ business in Australia. He reports to Marian Poirier, Senior Managing Director, Australia.

His appointment is part of a long-term business strategy to deepen relationships with consultants at both the global and regional level, increase the focus on MFS’ core investment strategies and continue to deliver the highest level of service to clients and consultants around the world.

Marian Poirier, Senior Managing Director, Australia said, “This is an important hire for our business in Australia. Having a dedicated consultant relations professional, especially one with Daniel’s depth of experience and wealth of knowledge, will help build our momentum and further develop our footprint across the market.

“We are delighted to welcome Dan to the team, and we are confident that his long track record of building relationships and providing excellent service to consultants will be invaluable in servicing our investors and their advisors,” she added.

Before joining MFS, Daniel was head of client relationships and service at Colonial First State Global Asset Management. He had a 19-year career with the firm, where he held a number of senior roles, including senior institutional relationship manager.

Commenting on his appointment, Daniel said, “I’m really excited to be joining MFS, and to be given the opportunity to represent its investment capabilities to the consultant and research-house communities. Consultants continue to play a crucial role in advising institutional and wholesale investors, and I look forward to strengthening our existing relationships with them.”

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