The star manager harvesting the rewards of a long-term vision

Star manager profile: Roger Morley, the Citywire AAA-rated co-manager of MFS’ $30 billion global equity strategy, explains how he shuts out market chatter to focus on his long-term strategy.

US firm MFS has its own place in investment history, as it launched the very first mutual fund in 1924. The Boston-based company proudly declares on its website ‘we invented the mutual fund’.

History can also be felt at the firm’s London office where star manager Roger Morley is based, as it sits right next to and enjoys a spectacular view of St Paul’s Cathedral, Sir Christopher Wren’s 17th century architectural masterpiece.

As co-manager on MFS’ $30 billion global equity strategy, Morley is part of a duo that straddles the Atlantic. Since 2008, Morley has been running the huge global strategy alongside US-based David Mannheim, who has been at the helm for 19 years.

The strategy includes about 100 separate accounts, of which several are pooled vehicles, including the Luxembourg domiciled MFS Meridian Funds Global Equity fund.

The duo runs all the accounts in parallel, although there are differences between them, as some institutional investors ask to exclude, for example, Australia, the UK or Japan from their universe.

Morley joined MFS in 2002, after ‘serving a five-year sentence’ in investment banking and studying at Insead Business School. Since moving into the role of portfolio manager, he has generated strong risk adjusted returns, outperforming the market and his peers steadily and consistently.

Over three years the global fund has returned 15.4% in euro terms, while the MSCI World has risen 11% and the average global equity fund has returned 3%. Morley also runs the small European Core Equity fund that has also been generating strong performance, despite being just $10 million in size.

Defining growth 

Morley describes his approach as growth at a reasonable price (Garp), and is a truly long-term, bottom-up investor. ‘By growth we don’t mean we’re looking for any crazy momentum. We want companies that can grow their earnings faster than the market,’ he explains.

He looks for companies that can ‘reliably and consistently’ deliver compounded earnings growth of 8% a year and pay a decent dividend. ‘A reasonable price is somewhat subjective, but I would say we are unlikely to ever buy or hold a stock that is trading in excess of 20 times current year’s earnings,’ he says. ‘It would have to be a very good company with very good prospects, or have very depressed earnings for us to ever pay more than that.’

Morley (pictured below) takes a genuine buy and hold approach to stock picking, with an average holding period of around nine years and an annual turnover of around 20%. ‘In other words, half the turnover is adding to positions that have been a little weak or trimming positions that have been strong, and the other half is genuinely new ideas coming in or old ideas – and those that haven’t worked – being sold,’ he explains.