MFS targets high end of wholesale market

Clive Crowe, who recently moved from French bank Natixis to head up distribution for MFS in London, where the US house employs 60 people, has a stark marketing problem to face. Despite 15 years of activity and having secured $8bn (€6bn) in predominantly institutional assets, the American funds group has failed to achieve any real brand recognition in the UK.

With top US brass often flown in to sort out any perceived problems, a period of calm and a distribution programme fashioned in London rather than Boston must be close to the top of his wish-list. As things stand, selling funds through the traditional independent financial adviser (IFA) route, to a lucrative, trend-led, commission driven UK market is not feasible.

“We don’t have a brand in the UK, so we are promoting to the top end of the wholesale market,” says Mr Crowe, responsible for marketing the 36-strong MFS Meridian range of Luxembourg-registered sub-funds.

“A lot of the IFA segment like to do their own asset allocation, so they are invested in strategies like US equities, European equities, Latin America and emerging market debt, rather than global equities, because they want to put together their own building blocks.”

The global equity strategies MFS prefers to promote play more into the hands of their global account relationships – running assets for 75 key clients – including banks such as Merrill Lynch and Standard Chartered.

While MFS has managed to get funds onto platforms of selected, high-profile discretionary advisers such as Hargreaves Lansdowne, whose preferred provider list acts like something of a sentiment barometer in the fragmented UK funds industry, retail distribution is perhaps a distraction for Mr Crowe.

“We don’t really want to be on platforms with distribution through IFAs,” he says.

“Unless you have seven regional sales managers playing golf with IFAs every week to establish the brand, then forget it.” Rather than this low-level bonding, Mr Crowe prefers to concentrate on spreading research to wholesale buyers, generally private banks, wealth managers and multi-managers with a strong UK presence, the likes of Credit Suisse and Deutsche Bank.

He claims 2009 brought “record net sales” for MFS in line with 2 per cent outperformance of the index by the global equity strategy. Gross sales last year amounted to $48.5bn across the group, although the firm is cagey about supplying net new money figures.

“That has cemented perception of us in the market,” he says. “That conservative mindset, where you choose stocks and look at the downside as well as upside, showed up really well in returns.”

The simple life

MFS, managing $189bn globally, differentiates itself from rivals such as Mellon, Natixis and Legg Mason, which promote “multi-boutique” models, with a large number of investment strategies. “We have a unified structure; life is more simple that way, as you can speak to a wider client base with a narrower product set,” says Mr Crowe.

“It’s nice to have a meeting with a client to talk about our global research platform. You would need 20 of these lunches to discuss every asset manager in a multi-boutique model.”

The group prides itself on stock research and buying on evidence and conviction, with analysts getting equal treatment to fund managers in the hierarchy, rather than being seen as some kind of lower paid assistants.

“We have never had a discussion at MFS with someone saying you should own this stock because it is 4 per cent of the benchmark,” he says. “You would be laughed out of the room. You own it if you believe in it, if not then don’t buy it.”

Clive Crowe, MFS