Market pullbacks unsettle some investors, but Chris Hedges, head of RIA and Bank Trust at MFS Investment Management, views them as timely reminders that diversification remains effective.
“Markets have been carried by a narrow group of companies, especially in the U.S.,” Mr. Hedges said during Schwab IMPACT in Denver. “If there’s an earnings hiccup among the ‘Mag 7,’ that could drive a significant correction. That’s why we continue to stress diversification, including internationally.”
While U.S. growth equities have led in recent years, 2025 has seen international equities outperform. For advisors willing to look beyond domestic borders, Mr. Hedges believes the payoff is finally materializing.
“Many advisors had reduced or eliminated international exposure, and that worked for a while,” he said. “But this year has proven why staying globally diversified is still a long-term win.”
MFS builds positions based on company-level fundamentals rather than geography. The firm is overweight in regions such as Japan and Europe because it has identified durable businesses with long-term prospects there. “If we’re overweight Japan or Europe, it’s because we’ve found strong companies in those regions,” Mr. Hedges said. “We’ve seen good opportunities in both markets.”
The bull market has persisted despite mixed economic signals and political uncertainty. It has also prompted many to predict and prepare for a major correction; after all, all bull markets must end eventually.
In this environment, many advisors seek more control and ways to differentiate themselves from index-hugging funds. Mr. Hedges believes active strategies perform better in down markets because managers can react more quickly than benchmark-tracking funds. “We can reduce exposures or shift styles within a portfolio more nimbly than a benchmark can,” he said. This flexibility becomes critical in highly concentrated markets like today’s tech-driven environment. “Benchmarks can take time to adjust. We’re not constrained that way.”
MFS entered the ETF space in December 2024, launching five unique ETFs similar to some of its top-performing strategies. The move reflects advisor preferences, particularly in taxable accounts, where ETFs offer advantages.
“Clients told us they wanted the same strategies they trust, but in ETF form,” Mr. Hedges said. “Especially for taxable accounts, the ETF structure offers efficiency.”
MFS aims to provide a wrapper-agnostic experience. “Not every strategy fits an ETF, but we’re making our offerings available as mutual funds, ETFs, SMAs, or CITs based on advisor needs,” he said.
Partnership, not just product, remains the firm’s emphasis. MFS supports advisory practices with resources ranging from practice management to macro insights.
“We only distribute through advisors, so we focus on helping them grow and serve clients better,” Mr. Hedges said. “That includes market insights, tools for communicating complex topics, and operational support.”
His parting advice focused on what matters most to clients. “Client satisfaction often hinges more on service than short-term performance. Be a great partner to your clients, and we aim to be a great partner to you.”
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