Analysis: Teamwork, controls yield rare comeback for MFS

Tue Jun 26, 2012 5:37pm EDT
 
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By Ross Kerber

BOSTON (Reuters) - For the rare comeback story among money managers, look to MFS Investment Management, one of the oldest names in the mutual fund business but also one of the most battered after the Internet bubble popped in 2000. Getting caught up in the industry's trading scandals just as stocks recovered only made matters worse.

Yet unlike other firms that crashed and remain on the outs a decade later -- a list that includes Janus Capital Group JNS.N and AllianceBernstein Holding (AB.N: Quote) -- MFS is decidedly back.

The firm posted three years of inflows from 2009 to 2011, according to Lipper, a unit of Thomson Reuters. With $7 billion taken in through the end of May, its 2012 flows are on track to break its 1998 record haul of $13 billion. In May alone Morningstar ranked MFS inflows of $2.6 billion third in the entire industry.

The quiet shop in Boston's Back Bay neighborhood avoided the fate of so many others by improving and sustaining its investment performance while avoiding the worst of the financial crisis.

MFS Chief Executive Robert Manning, a onetime junk bond fund specialist who took over in 2004 after the market timing scandal, points to his emphasis on cooperation across stock and bond teams, plus an aggressive expansion of overseas offices that helped bring in institutional customers. His background also led him to install one of the industry's strongest risk management systems.

"If you grow up as a junk bond analyst and manager, there are nothing but bad things that can happen to you," Manning said in an interview.

TOUGHER TURNAROUNDS

Financial advisers said the firm's recent performance has gotten their attention.   Continued...