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Massachusetts Financial Services (MFS) ROTH IRA Review


In this article, we will look at a Roth IRA that is made up of three mutual funds developed and managed by the Massachusetts Financial Services Company (MFS). The screen shots provided are from a Roth that was started in 2006 by a young, married couple from the Midwest. The purpose of the account is for long-term gains over the working life of the couple, with a moderate to moderately-aggressive risk approach.

Is Massachusetts Financial Services Safe and Legitimate Company or a Scam?

With all the information in this article and from the internet it is obvious that Massachusetts Financial Services is definitely not a scam. It is safe and legitimate retirement plans provider.

Advisors, Massachusetts Financial Services Company, and the Active Approach

Before we get into fund specifics, it’s important to point out a couple of things about specific to the was MFS accounts work. As you invest, keep in mind that MFS is an investment management firm. Your financial advisor gains insight and information from the investment work provided by MFS, and MFS offers funds in varying groups form which your financial advisor can make selections based on individual needs.

MFS uses a fairly typical active management approach. In active management, investment professionals are regularly looking at the makeup of individual funds to provide the best makeup for the fund to be most lucrative. This is notably different than the passive approach to investment management. There are hosts of opinions about the pros and cons of each, and we simply note which approach MFS takes so that you can be informed.

Massachusetts Financial Services IRA review

Roth IRA Basics and Yearly Limits

Simply put, a Roth IRA is an individual retirement account that differs from a traditional IRA in that it allows an investor to set aside a certain amount of income, post-tax, to be invested each year. Then, the account’s earnings, and withdrawals after the age of 59½ years old, are free of taxes. Additionally, you can withdrawal from contributions any time you would like with no tax fees. The Roth in this article is made up of three different MFS mutual funds.

Contributions to a Roth IRA are capped, and the number has changed a bit over the last 30 years. However, for 2018, and for the last few years, the limits are $5,500. If you are 50 or older, you may contribute $6,500. If you also have a traditional IRA, you must take the total of contributions to both. Over contribution receives a penalty of 6% on the excess.

Flexible Pricing and Other Fees

MFS has a number of fund categories. The sales charge for each fund is based on a sliding scale that varies depending on fund categorization. The three mutual funds featured in the Roth IRA we are looking at today come from U.S. Equity (one fund) and Global/International Equity (the other two), thus, the sales charge for all funds referenced here is the same. The cart given to investors replicates it like this:

Purchase Amount Sales Charge
% of Offering Price
Less than $50,000 5.75%
$50,000 to < $100,000 4.75%
$100,000 to < $250,000 3.75%
$250,000 to < $500,000 2.75%
$500,000 to < $1M 2.00%
Greater than $1M None

Depending on purchase amount rounding, figures could be slightly different than figuring with these percentages. However, this gives investors a good idea of what they are in for regarding MFS pricing. The MFS website provides various downloads that cover the other fund categories and other fees and service charges.

Massachusetts Financial IRA review

MFS Research Fund 14(A)

This fund is categorized under U.S. Equity. Commencement and inception of this fund was in October of 1971. As of the end of March 31, 2018, this fund has net assets of $5.0 billion. MFS notes the objective of the fund is to seek capital appreciation and that key components are that it is an analyst run account that is diversified by sector. Investment sector breakdown is as follows:

Technology 20.11%
Financial Services 16.92%
Health Care 13.99%
Capital Goods 13.60%
Consumer Cyclicals 12.84%
Energy 9.54%
Consumer Staples 7.72%

Class A shares at NAV have performed at a 9.97% rate for the life of the fund.

MFS Research International Fund 99(A)

The research international fund is categorized in Global/International Equity. Its inception was in January of 1997. As of March 31, 2018, its total assets were $6.6 billion. MFS notes that it also seeks capital appreciation, and is differentiated by a broadly diversified sector approach, is analyst-run, and follows a multi-capitalization strategy. Class A shares at NAV over the life of the fund have averaged 6.06%. The fund diversification breaks down like this:

Financial Services 23.97%
Capital Goods 23.75%
Health Care 10.53%
Consumer Staples 9.63%
Technology 9.11%
Energy 8.34%
Consumer Cyclicals 8.31%

MFS International Diversification FD 1032(A) (Symbol: MDIDX)

This fund is also categorized by MFS as Global/International Equity. The fund was started in September of 2004 and had net assets of $6.6 billion as of March 31, 2018. Again, this is a fund that seeks capital appreciation. Keys of this fund, as noted by MFS, are that it is diversified portfolio of five international stock funds, which includes emerging markets, it combines styles, geographies and market capitalizations, and is a strategic, risk-based approach to portfolio construction. Class A shares at NAV have averaged 6.92% for the life of the fund. The fund’s diversification over sectors breaks down in this way:

Financial Services 18.19%
Consumer Staples 17.13%
Technology 12.06%
Health Care 8.87%
Special Products & Services 8.55%
Basic Materials 8.04%
Industrial Goods & Services 7.21%

Massachusetts Financial Services ROTH IRA reviewed by Rating: 3.5