2 ETFs Where Quantitative and Fundamental Worlds Blend

When developing research strategies to achieve positive alpha, there are typically two methodologies: quantitative and fundamental. Discerning investors who have a predilection for one or the other no longer have to choose with the MFS Blended Research Core Equity ETF (BRCE) and the MFS Blended Research International Equity ETF (BRIE). Both funds utilize complementary quantitative and fundamental approaches across different geographical targets to suit an investor’s portfolio.

Quantitative strategies can provide an unbiased screening methodology for processing large amounts of data and identifying market opportunities using various metrics. However, it doesn’t take into account qualitative factors like management quality and organizational culture, which are typically identified through fundamental research. When siloed into separate strategies across different funds, opportunities might be missed that quantitative research identifies while fundamental research does not, and vice versa. This is where a blended approach can be beneficial.

Blending Research Worlds

As mentioned, both BRCE and BRIE actively identify potential investments using an active, disciplined, bottom-up approach that melds the depth of fundamental research with the breadth of quantitative analysis. The difference lies in their geographic targets: the BRCE focuses on U.S. equities, with the S&P 500 as the benchmark. On the other hand, BRIE seeks opportunities outside the U.S. by comparing its holdings to the MSCI All Country World (ex-US) Index.

BRCE’s primary focus is on large cap U.S. equities across different industries and sectors. BRIE’s international focus is also large cap equities, but it can also spread allocations across various industries, sectors, countries, and regions. Given this, both could be used in tandem, with BRCE serving as an investor’s core U.S. equities exposure and BRIE adding international diversification. BRCE has a cost-effective 0.24% expense ratio, while BRIE has a 0.34% expense ratio.

A Disciplined Approach With Active

With potentially frothy valuations in the U.S. tech sector, geopolitical tensions, tariffs, interest rate policy, and other factors, uncertainty continues to loom over the capital markets. That said, having active management is almost imperative in today’s market landscape. That’s especially true for BRIE, as international markets have their own unique nuances and complexities.

Fortunately, both BRCE and BRIE draw on the industry knowledge and expertise of the MFS team when selecting each fund’s holdings. With an average industry experience of over 21 years, MFS portfolio managers can identify systematic and idiosyncratic risks prevalent in today’s market and adjust holdings as necessary. This rings true for all of their active ETFs.

“We believe these ETFs are distinguished by their disciplined integration of MFS’ proprietary blend of quantitative and fundamental signals, helping the ETFs to deliver a differentiated return potential for investors,” said Emile Dupre, MFS National Sales Manager. “We believe that our investment edge — a unique and transparent blending of independent research perspectives — differentiates these two ETFs for benchmark-sensitive investors.”

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