'We Are All In on Active' Investing, MFS CEO Says | At Barron's
Summary
Company Culture: Ted Maloney emphasizes the importance of MFS's culture, focusing on teamwork and long-term client trust, which has been cultivated over the firm's 101-year history.
Investment Strategy: MFS is committed to active management, particularly in the fixed income sector, viewing it as a strategic area for growth despite the trend towards passive investing.
Long-Term Focus: The firm prioritizes long-term investment strategies, countering the market's increasing short-term focus, and believes this approach will yield better client outcomes.
Active vs. Passive: MFS acknowledges the current dominance of passive strategies but anticipates a shift where active management will again prove valuable as market concentration decreases.
Product Offerings: MFS has launched active ETFs, recognizing their tax efficiency and appeal, while maintaining a strong presence in mutual funds, which they originally pioneered.
Global Presence: The firm operates investment offices in eight countries, emphasizing the importance of global expertise in both investment and client service roles.
Market Sentiment: MFS notes a significant amount of cash on the sidelines, suggesting investors are cautious, and advises staying invested in risk assets for long-term gains.
Ownership and Partnership: MFS is majority-owned by Sunlife of Canada, which provides strategic support while allowing MFS operational independence to focus on client-centric investment solutions.
Transcript
[Music] Hello everyone and welcome to At Barrens. I'm Andy Sir and welcome to our guest Ted Maloney, CEO of MFS. Ted, great to see you. It >> is really great to be here. >> I want to ask you about um your role, your new role. You came in as CEO. You've been at the company for a very long time. We'll get to that, but you became CEO in January. What are you looking to continue to do at the company the company's been doing for a long time? And what are you looking to do differently? >> Well, the most important thing in my job and really at our company is our culture. Uh, so we're a collection of individuals working together as teams to deliver excellent results for our clients. And the culture is one that we're very proud of that we've curated carefully over more than a hundred years as a firm. And uh while we will continue to evolve that culture, keeping the real foundational pillars of it is something that will never change in terms of laser focus on delivering for clients over the long term um with rocksolid ethics. Uh we understand at the end of the day we're in the business of earning our clients trust every day. We can lose it in one day. All that we've built over 101 years. So that's something that will never change for us. As we think about what will change um again we're continually evolving. Markets evolve, the marketplace evolves. Uh and so as it does, we'll look at where we see opportunities for our clients and try to take advantage of market volatility and the like to to deliver that. And one real opportunity we see is that um we we think the fixed income is a pretty interesting asset class for our clients and one where we can do a lot more for our clients over time. So that's a real strategic focus for us at a firm is to scale up our fixed income business. >> Yeah. And you have worked at the firm for what how many years? >> 20 years. 20 years. >> 20 years recently, >> right? and you were um on the research side, you know, on the stock picking side as opposed to the tech side or the man pure management side. What does that bring to the job as CEO? How does that inform your thinking? >> It's interesting. In our 101 years as a company, the CEO has always come up through the investment side, which is not a rule. Um but we do think that among the things that it allows us to do is always keep that client focused. Not selling to the next client, but delivering for the clients that we have. And so I think that's actually the most important thing it brings to me uh in the role. Also uh it allows us to take more of a longer term view perhaps uh we get trained as investors as long-term investors to understand that if the whole market is moving in one direction um that maybe the thing to think about is to move in in the opposite direction and that's really hard to do. Um but being trained as an investor maybe gives me a slightly better chance of leading the team in that direction. >> Yeah. Yeah, I saw there was a Morning Star report, Ted, that said that you guys play the long game, but you walk that talk, >> right? And and so maybe drill down into that a little bit more. What does it mean to actually play the long game in terms of investing? >> What it means is to think multiple years into the future in terms of what's best for our clients, which also means what's going to happen in markets, in securities, uh over long term. over the short term as markets actually have become extremely short-term focused, more and more short-term focused every day. Um that actually we think increases the value of of thinking long term, but it also makes it much harder because um we're trained we've evolved over millions of years as as human beings to survive in the jungle. And that doesn't serve you very well when the blinky lights look like a lion. And so um we work together. Our most powerful tool in that is to work as collectives, is to work as um teams. um to be there to support each other uh to help us understand that your brain wants to be short-term um but we need to be longterm in order to deliver for our clients. >> Now, you mentioned you celebrated your 100th anniversary not long ago. Um you have about what 600 billion plus in assets, the old Massachusetts Financial Services. I remember the old name. Um but you you know your legacy is in active management and equities. Yes. And there's kind of, you know, not necessarily wins at your back >> with both of those things. Um, in terms of well, with the equities, I mean that there's ETFs and these new products out there. So, how are you sort of like growing the firm um and addressing those challenges right now? >> Well, we are all in on active and and we believe that there will be a meaningful place for active management over the long term. That's another area where increasingly perhaps it feels like we're standing alone where uh there's been tremendous amount of trends towards passive over time. Um we think the passive plays a role in a client portfolio. Um but we also think that the last number of years have really supercharged that in the form of really concentrated equity indices where um as the indices get more and more concentrated um and the fewer and fewer stocks and the stock market indices um are driving all of the performance um that's going to be a the perfect actually environment for passive to outperform active. Uh we don't believe that's sustainable. We think that the level of concentration that the market's at today is beyond anything that we've seen in in history and that as the market inevitably um becomes less concentrated and we don't know when and we don't even really know exactly how or why but we know that it will uh as that happens um the ability to add value as an active manager will really come to the four. >> Yeah, it must be interesting because you sit around and you know you see this even in people who work in alts you know it's like I can't fight mag seven, >> right? And so do your fund managers kind of feel that pressure and have to find value stocks or how are they looking to mitigate that kind of pressure? Well, we do manage um equity strategies across the full spectrum of um small, mid, large cap um each region including the US but is also global and also um super regions like international which is the world minus the US and so we find different opportunities in different areas and we certainly where we have the US um core and growth indices as our benchmarks um we are very risk aware around what the MAG7 means for our exposures uh to those benchmarks because as I've just as we've just been talking about those stocks have driven all the performance so you need to manage risk around them but we think that there are tremendous opportunities outside them um and those opportunities have only increased over time as the as the concentration has has increased >> have you guys thought about you know why someone buys an ETF and I'm sure you have versus a mutual fund and for are young people buying mutual funds still or do they only buy ETFs talk to us about the distinctions between those two assets >> right well the distinction between a mutual fund and an ETF is about the package packaging of a product and that's different than uh the distinction between active and passive. So um we actually in our hundth year as a firm launched our first active ETFs. Uh so uh we think that the ETF as a package for our uh services as active asset managers um is an attractive package for a number of participants in the marketplace. Most notably we're very proud for having invented the mutual fund actually uh 101 years ago and uh we think it served the investment community extraordinarily well over that time. uh it has its imperfections uh and one of them is a is a taxable US investor. It's not the most taxefficient vehicle uh and ETFs can be far more tax efficient for the certain investors. So we think that that uh that wrapper that packaging of our services um is a valuable one for a number of our clients and we're committed to delivering on that. But that's different than active versus passive. And so uh we we do think that people of all generations uh will own mutual funds and ETFs in active and passive. Um, we do feel confidently that active will will have its day in the sun again and that we'll be leaders of that. >> I mean, speaking to that point though, maybe a little bit, Ted, there are so many choices out there. How do you help investors manage through all the clutter? I mean, you're faced basically with an infinite amount of choices. Yes. When it comes to investing vehicles, >> yes. Well, it comes back to really time horizon, right? So, the the average investor has a very long time horizon for their needs, right? I mean, they're accumulating capital throughout the course of their life, usually with gearing towards a retirement date or a college funding date for for kids or or something that's typically decades in the future. And yet, uh, the focus tends to be what happened last quarter. And so, um, we think the thing we can help our investors with most is to just stay invested in, um, risk assets over the long term, particularly when their horizons is long. We approach that as a company a little bit differently than a number of our competitors, which is that we don't sell directly to the end investor. Uh we are all in on advice and so we partner with really strong advisor firms that um that deliver our capabilities to their end clients and they add tremendous value in many ways. One of the most critical ways is that they help to keep their clients invested in the equity markets and the fixed income markets and the right balance of of capital for for that investor. And who are some of the partners that you uh have as distributors? I guess really >> well we love all of our partners. So I'd be a little bit loathed to start naming names but really anyone in the in the wealth management and the um and the vice. So you know um yeah I'm going to if you don't mind I'm going to I'm going to pass on all the big names. Name a big name that that you could um that could manage your money and provide you advice and and we are very happy to uh to provide them our services. >> Fair enough. Um there's a lot of talk these days about what's coming out of Washington in terms of tariff policy, tax tax plans come the tax bill. >> What are the issues that you're looking at in Washington that are affecting the mutual fund business and your company specifically and what's on your wish list when it comes to Washington? >> Sure. Um, so most importantly when it comes to Washington, we've got a team of 300 plus investment professionals that are working all day in their areas of expertise to understand how even the slightest change on the margin of policies both in the US and around the world can affect the long-term cash flow generation of the companies whose stocks and bonds we invest in. and and that's actually what's most critical and the one where I'm probably the least equipped in the company to to opine on because fortunately we've got this great team that can look at the constantly changing environment and make sure we're positioned for our clients. As we think about our industry though, it actually does come back to um what we were talking about before. The tax treatment of mutual funds is something that could be fixed at the congressional level and and there isn't a lot of appetite for that at the moment. Um but but we think it would be a really great service to the end investor if um mutual funds could be taxed on par with with other strategies. We're fine if it doesn't. We're delivering ETFs, separately managed accounts, other ways to help our clients um work through the the tax structures, but that that would be one thing that would be very near the top of our of our wish list. >> Are there forces on the other side maybe looking to have that not happen? >> Sure. It's just it's um in in the early stages of it, it would be revenue negative for the federal government. So in the environment where we're in where that's you know people the only re revenue negative people are looking for is sort of headline tax cuts to have sort of this subtle tax cut that people don't see the direct benefit of on the day that it happens it it's not a good it's not a good headline. So >> you mentioned your uh global footprint and I'm wondering is that for distribution partnerships or just for investing research or both? How do why are you overseas? All of the above. I mean, we're overseas because uh it is a global world and even we we had many decades where the world was becoming, you know, more globalized. Um arguably, we're a few years into the reverse of that. Perhaps we are, perhaps we're not. Either way, understanding how those pieces are either coming together or pulling apart is going to be really important to identifying value in equity and fixed income markets for our clients. So we believe strongly that you need to be on the ground both as investors and in client-f facing roles in order to service what is a global client base that expects global expertise. >> How many countries are you in? >> We have investment offices uh in eight countries. Um uh we have distribution teams in I actually don't even know the number of countries but anywhere we where there's wealth and clients >> because that's through the partnership. So you >> Exactly. Well, and and and our direct team working with those partners in those regions. >> Got it. Got it. Got it. Um so you must have all kinds of data >> um from your investors and I'm just wondering what that data is signaling to you right now about how your clients are feeling about the markets, optimistic, pessimistic, etc. >> Sure. Uh we do uh and actually the most important data point is a pretty simple one. The amount of cash on the sidelines uh is enormous, right? So the the average end investor is sitting on a tremendous amount of cash, which you can understand when times are uncertain for all the reasons that times are uncertain today. Um you can understand folks wanting to sit on the sideline. We also think over the long term that's not in their best interest. So, we're working with our advisor partners and ourselves um to try to help the investing public understand that um actually when times are the most scary, that's when you want to make sure that you're invested in risk markets, especially if you've got a very long-term um time horizon. >> And this cash is high versus historical levels, right? >> Yes. >> That's very interesting. >> I I know your company um has been owned for a number of years, a number of decades, I guess, by Sunlife of Canada. Yes. >> What how does that relationship work? um how handson are they? How stable is that relationship? Um tell us about that please. >> Sure. It's a great relationship and and honestly it is one that we get asked a lot about by our clients and actually recruits uh and employees as we're working because it is it is different than a lot of ownership structures uh in our industry or really any other industry. Um so Sunlife of Canada owns the vast majority of our company. Uh we as employees own the rest of the company. Um and uh we work with we work as a partnership for MFS um with a great majority owner in Sunlife who plays the perfect role in that respect which is um they provide us and me in particular with tremendous advice, tremendous insights in all the businesses that they're in around the world. We haven't needed to rely on it, but if for whatever reason we ever did, um they have a balance sheet. We're extremely capital light. which one of the things that we like about our business, but um you know, if there were ever the need, they have a balance sheet. We we try to operate the business in a way that we'll never need to call on that need. Um but they've been a really great partner for us uh in all ways, including uh they understand that we're in our business and they're in their business and and for the most part um they let us operate uh as we think is best for our clients and then ultimately our shareholders of which they're the biggest one and and the beneficiary of. You talked a little bit about culture, Ted, and I wonder if you could drill down a little bit more because my understanding is you have pretty low attrition rates. You were there for a long time. You really like to bring people up internally. You talked about some ownership capabilities by employees. That sounds like a positive in terms of retention, >> but but what else really works there and keeps people there? And how do you look to attract people in as well? >> Yes. Well, the attract people in part is a really important component. It's not the only component of the retention part. Um because we're extremely focused on bringing in the right folks for MFS. Uh and so actually one of my mentors used to say, you might be the best stock picker in the world. Um but if you're not going to be focused on adding back to the team, you're going to have a great career. It's just not going to be here. Um and he would actually say that to people who were interviewing as he was explaining to them why um we weren't going to move them on to the to the next round of the interview process. So, at the very front end, we're looking for folks who first and foremost are great investors, but just as importantly are committed to working in a team structure um to add back to the team and knowing that they're not doing that purely selflessly. That it's a virtuous cycle when we're operating things as as we know that we can and it's adding back. It's making them better at what they do, which makes their colleagues better at what they do. And so, it leads to really great investment results. And so, people like to win and they like to have great investment results. But really importantly and and um not in a tright way, it's just more fun to be working with people that you genuinely love to be with. I recently came back from our global distribution round table and it's in our entire distribution team from around the world comes together for a couple of days and perhaps the most notable thing about it um is that everyone really enjoys being with each other and we have investment versions of that as well. Um we there we do all of those at actually enormous expense to the company but we don't see as an expense. We see as an investment in our culture which is an investment in delivering for our clients. Uh and it's part of the multiaceted uh mosaic that makes it a really great place to work that makes people stay for a really long time. >> Talked about playing a longer game. Uh I know >> um I guess it's your president Carol Jeremiah wrote about playing a bigger game. Yes. What does playing a bigger game mean in your business? >> It means setting aside your personal agenda to come together to deliver for the teams and deliver for the clients. Carol will probably say it a lot better than I just did and and I know you've had a chance to talk to her about it, but that really summarizes our culture, right, which is that uh we come in every day uh as individuals and we check our individual agendas at the door and we work together uh with this laser focus on delivering excellence for our clients and it's really important. We have buyin, but it's harder than you might think to sort of make sure that that individual actors are focused on the team and the client before themselves. >> I mentioned the 600 billion plus in assets under management. Are you targeting a number uh for yourself or for the firm say for the next 5 years and what are the benchmarks that you're looking to set um in terms of measuring how successful you are? >> So we think actually we're differentiated from a number of our competitors in a number of ways and one of them was the question you just asked. So we very explicitly do not set asset targets because asset targets we assets will be an outcome of delivering excellence for our clients. And so because we focus everything on our client first knowing that that will be what's best for our business. We are focused on what does our client need? How can we can how can we deliver something excellent for them. We we're very careful with how we structure the business and the cost structure of the business to make sure that we're not reliant on growth beyond what we can deliver for the business. Um, and if we can just keep focused on that and we do keep focused on that, then we'll grow assets over time. We'll have a nice business because we've delivered excellence for our clients. >> And what do you consider your competitive set to be? I mean, it can be anything, but but what who do you benchmark against then? >> Sure. It's evolved a lot, right? because uh the the world of investment management has uh consolidated uh in all the ways, right? So there's been a number there's been a decent amount of mergers and acquisitions in the industry over time as well as uh competitors that used to be purely in the private and alternative space coming more into our space. Um competitors that used to be purely in our space which is public equity and fixed income moving into more of the private and alternative space. Um, and so it's really anyone who manages money on behalf of a client, um, is a competitor for us. Uh, but what's really nice, one of the many things that's really nice about our business is that we don't need to compete against the competitors. Uh, we have this much harder competitor which is called the market. Uh, and as we compete against the market over time, if we can deliver results for our clients against that competitor, we're very confident that we'll get our more than our fair share of the marketplace as our competitors attempt to do the same thing but discover as we do every day how difficult that is. >> And what do you think about this notion of private investment, private market, private equity, private credit, etc. being sold to or being bought by retail investors? increasingly are going from you know um family office to high net worth to ordinary Joe's. >> Yeah, it is the dominant trend in our industry and one that we are not participating in. Um so uh we think it serves a very uh important place in um a number of of portfolios and we're very happy to work with our clients to advise them on how they should structure their their total portfolio. Uh and we're here to provide the public equity and fixed income component of it. I actually just recently spoke to that distribution team and and I had a couple of concepts that I worked through with them and one was um no is powerful but we also never say never. Never is dangerous. So I don't know if it's never. In fact I know nothing is never but uh we sort of at this point we pretty much stand alone in being a large asset manager who is not leaning into the private space. Not because we have major problems with the private space, but because we have so many great opportunities in what we do. So much confidence in what we do for our clients and a real humbleness that that's hard work and we're going to need to marshall all of our efforts to continue to be excellent for our clients in the spaces where we're world class and we'll let other competitors approach that space. >> Yeah, it seems like you guys don't like to be on the bleeding edge of things necessarily, right? >> Well, we're willing to be if we think there's a real client need, but yes, for the most part, I mean, we were on the bleeding edge in the beginning of the industry. We invented it. Um but um but uh since then uh we've been happy to focus on what's caught us and understand be able to sit back and watch how markets are evolving, what client needs are evolving and make sure that before we go deliver something to a client that we're extremely confident we can deliver them something excellent. >> And final question, Ted, um especially now that you're the CEO, what do you like to do to relax? How do you kick off steam? Work life balance? What do you do outside of work? >> Yes. Well, I have um an amazing wife and two relatively young daughters. They're 10 and seven. And so spending time with them is is definitely my number one priority. Um uh the things we like to do together. Uh we love to ski. It's been um my my goal since the girls were born to get them hooked on skiing and we've we've succeeded in that. So uh we spend a lot of time on the weekends in the winter skiing. And then um I love music and um I don't get to listen to live music as nearly as much as I used to and I'd like and I don't get to play nearly as much as I used to. I'd like but it's another area where um I'm working very hard and making sure that my daughters love it as much as I do so that we can start going to more concerts as they as they get older. >> Is there an MFS band? >> You know, there is. There's a it's a really long story if we have time to talk about it sometime, but it's one of my favorite things that's happened at the company in the last couple years. talk about our launching of ETFs and that's really exciting but the formation of the MFS band which we call the infinite M's which is what we call our our logo is an infinite M and so the band is the infinite M it came together uh during the pandemic and we did a fundraising concert as a as a band coming out of that and I'm very careful to say that there's the band and they're as as talented as they are as investment professionals they're just as talented as musicians um I sit in with them on occasion I am not at their talent level I play the are excellent. So, I' I've had the fortune to be able to sit in with them a couple times and it's a blast to just get to work with people from across the company on something, you know, different than investing. And it really speaks, I think, to our culture that we enjoy spending time with each other. We enjoy uh creating, whether it's results for clients or whether we're playing music. >> All right, maybe next time we'll have to get the MFS band in here. >> There you go. They'd love to do it. >> Ted Maloney, CEO of MFS. Thank you so much for joining us. >> Thank you. It was a real pleasure. >> This is at Barren. I'm Andy Ser. We'll catch you next time. [Music]
'We Are All In on Active' Investing, MFS CEO Says | At Barron's
Summary
Transcript
[Music] Hello everyone and welcome to At Barrens. I'm Andy Sir and welcome to our guest Ted Maloney, CEO of MFS. Ted, great to see you. It >> is really great to be here. >> I want to ask you about um your role, your new role. You came in as CEO. You've been at the company for a very long time. We'll get to that, but you became CEO in January. What are you looking to continue to do at the company the company's been doing for a long time? And what are you looking to do differently? >> Well, the most important thing in my job and really at our company is our culture. Uh, so we're a collection of individuals working together as teams to deliver excellent results for our clients. And the culture is one that we're very proud of that we've curated carefully over more than a hundred years as a firm. And uh while we will continue to evolve that culture, keeping the real foundational pillars of it is something that will never change in terms of laser focus on delivering for clients over the long term um with rocksolid ethics. Uh we understand at the end of the day we're in the business of earning our clients trust every day. We can lose it in one day. All that we've built over 101 years. So that's something that will never change for us. As we think about what will change um again we're continually evolving. Markets evolve, the marketplace evolves. Uh and so as it does, we'll look at where we see opportunities for our clients and try to take advantage of market volatility and the like to to deliver that. And one real opportunity we see is that um we we think the fixed income is a pretty interesting asset class for our clients and one where we can do a lot more for our clients over time. So that's a real strategic focus for us at a firm is to scale up our fixed income business. >> Yeah. And you have worked at the firm for what how many years? >> 20 years. 20 years. >> 20 years recently, >> right? and you were um on the research side, you know, on the stock picking side as opposed to the tech side or the man pure management side. What does that bring to the job as CEO? How does that inform your thinking? >> It's interesting. In our 101 years as a company, the CEO has always come up through the investment side, which is not a rule. Um but we do think that among the things that it allows us to do is always keep that client focused. Not selling to the next client, but delivering for the clients that we have. And so I think that's actually the most important thing it brings to me uh in the role. Also uh it allows us to take more of a longer term view perhaps uh we get trained as investors as long-term investors to understand that if the whole market is moving in one direction um that maybe the thing to think about is to move in in the opposite direction and that's really hard to do. Um but being trained as an investor maybe gives me a slightly better chance of leading the team in that direction. >> Yeah. Yeah, I saw there was a Morning Star report, Ted, that said that you guys play the long game, but you walk that talk, >> right? And and so maybe drill down into that a little bit more. What does it mean to actually play the long game in terms of investing? >> What it means is to think multiple years into the future in terms of what's best for our clients, which also means what's going to happen in markets, in securities, uh over long term. over the short term as markets actually have become extremely short-term focused, more and more short-term focused every day. Um that actually we think increases the value of of thinking long term, but it also makes it much harder because um we're trained we've evolved over millions of years as as human beings to survive in the jungle. And that doesn't serve you very well when the blinky lights look like a lion. And so um we work together. Our most powerful tool in that is to work as collectives, is to work as um teams. um to be there to support each other uh to help us understand that your brain wants to be short-term um but we need to be longterm in order to deliver for our clients. >> Now, you mentioned you celebrated your 100th anniversary not long ago. Um you have about what 600 billion plus in assets, the old Massachusetts Financial Services. I remember the old name. Um but you you know your legacy is in active management and equities. Yes. And there's kind of, you know, not necessarily wins at your back >> with both of those things. Um, in terms of well, with the equities, I mean that there's ETFs and these new products out there. So, how are you sort of like growing the firm um and addressing those challenges right now? >> Well, we are all in on active and and we believe that there will be a meaningful place for active management over the long term. That's another area where increasingly perhaps it feels like we're standing alone where uh there's been tremendous amount of trends towards passive over time. Um we think the passive plays a role in a client portfolio. Um but we also think that the last number of years have really supercharged that in the form of really concentrated equity indices where um as the indices get more and more concentrated um and the fewer and fewer stocks and the stock market indices um are driving all of the performance um that's going to be a the perfect actually environment for passive to outperform active. Uh we don't believe that's sustainable. We think that the level of concentration that the market's at today is beyond anything that we've seen in in history and that as the market inevitably um becomes less concentrated and we don't know when and we don't even really know exactly how or why but we know that it will uh as that happens um the ability to add value as an active manager will really come to the four. >> Yeah, it must be interesting because you sit around and you know you see this even in people who work in alts you know it's like I can't fight mag seven, >> right? And so do your fund managers kind of feel that pressure and have to find value stocks or how are they looking to mitigate that kind of pressure? Well, we do manage um equity strategies across the full spectrum of um small, mid, large cap um each region including the US but is also global and also um super regions like international which is the world minus the US and so we find different opportunities in different areas and we certainly where we have the US um core and growth indices as our benchmarks um we are very risk aware around what the MAG7 means for our exposures uh to those benchmarks because as I've just as we've just been talking about those stocks have driven all the performance so you need to manage risk around them but we think that there are tremendous opportunities outside them um and those opportunities have only increased over time as the as the concentration has has increased >> have you guys thought about you know why someone buys an ETF and I'm sure you have versus a mutual fund and for are young people buying mutual funds still or do they only buy ETFs talk to us about the distinctions between those two assets >> right well the distinction between a mutual fund and an ETF is about the package packaging of a product and that's different than uh the distinction between active and passive. So um we actually in our hundth year as a firm launched our first active ETFs. Uh so uh we think that the ETF as a package for our uh services as active asset managers um is an attractive package for a number of participants in the marketplace. Most notably we're very proud for having invented the mutual fund actually uh 101 years ago and uh we think it served the investment community extraordinarily well over that time. uh it has its imperfections uh and one of them is a is a taxable US investor. It's not the most taxefficient vehicle uh and ETFs can be far more tax efficient for the certain investors. So we think that that uh that wrapper that packaging of our services um is a valuable one for a number of our clients and we're committed to delivering on that. But that's different than active versus passive. And so uh we we do think that people of all generations uh will own mutual funds and ETFs in active and passive. Um, we do feel confidently that active will will have its day in the sun again and that we'll be leaders of that. >> I mean, speaking to that point though, maybe a little bit, Ted, there are so many choices out there. How do you help investors manage through all the clutter? I mean, you're faced basically with an infinite amount of choices. Yes. When it comes to investing vehicles, >> yes. Well, it comes back to really time horizon, right? So, the the average investor has a very long time horizon for their needs, right? I mean, they're accumulating capital throughout the course of their life, usually with gearing towards a retirement date or a college funding date for for kids or or something that's typically decades in the future. And yet, uh, the focus tends to be what happened last quarter. And so, um, we think the thing we can help our investors with most is to just stay invested in, um, risk assets over the long term, particularly when their horizons is long. We approach that as a company a little bit differently than a number of our competitors, which is that we don't sell directly to the end investor. Uh we are all in on advice and so we partner with really strong advisor firms that um that deliver our capabilities to their end clients and they add tremendous value in many ways. One of the most critical ways is that they help to keep their clients invested in the equity markets and the fixed income markets and the right balance of of capital for for that investor. And who are some of the partners that you uh have as distributors? I guess really >> well we love all of our partners. So I'd be a little bit loathed to start naming names but really anyone in the in the wealth management and the um and the vice. So you know um yeah I'm going to if you don't mind I'm going to I'm going to pass on all the big names. Name a big name that that you could um that could manage your money and provide you advice and and we are very happy to uh to provide them our services. >> Fair enough. Um there's a lot of talk these days about what's coming out of Washington in terms of tariff policy, tax tax plans come the tax bill. >> What are the issues that you're looking at in Washington that are affecting the mutual fund business and your company specifically and what's on your wish list when it comes to Washington? >> Sure. Um, so most importantly when it comes to Washington, we've got a team of 300 plus investment professionals that are working all day in their areas of expertise to understand how even the slightest change on the margin of policies both in the US and around the world can affect the long-term cash flow generation of the companies whose stocks and bonds we invest in. and and that's actually what's most critical and the one where I'm probably the least equipped in the company to to opine on because fortunately we've got this great team that can look at the constantly changing environment and make sure we're positioned for our clients. As we think about our industry though, it actually does come back to um what we were talking about before. The tax treatment of mutual funds is something that could be fixed at the congressional level and and there isn't a lot of appetite for that at the moment. Um but but we think it would be a really great service to the end investor if um mutual funds could be taxed on par with with other strategies. We're fine if it doesn't. We're delivering ETFs, separately managed accounts, other ways to help our clients um work through the the tax structures, but that that would be one thing that would be very near the top of our of our wish list. >> Are there forces on the other side maybe looking to have that not happen? >> Sure. It's just it's um in in the early stages of it, it would be revenue negative for the federal government. So in the environment where we're in where that's you know people the only re revenue negative people are looking for is sort of headline tax cuts to have sort of this subtle tax cut that people don't see the direct benefit of on the day that it happens it it's not a good it's not a good headline. So >> you mentioned your uh global footprint and I'm wondering is that for distribution partnerships or just for investing research or both? How do why are you overseas? All of the above. I mean, we're overseas because uh it is a global world and even we we had many decades where the world was becoming, you know, more globalized. Um arguably, we're a few years into the reverse of that. Perhaps we are, perhaps we're not. Either way, understanding how those pieces are either coming together or pulling apart is going to be really important to identifying value in equity and fixed income markets for our clients. So we believe strongly that you need to be on the ground both as investors and in client-f facing roles in order to service what is a global client base that expects global expertise. >> How many countries are you in? >> We have investment offices uh in eight countries. Um uh we have distribution teams in I actually don't even know the number of countries but anywhere we where there's wealth and clients >> because that's through the partnership. So you >> Exactly. Well, and and and our direct team working with those partners in those regions. >> Got it. Got it. Got it. Um so you must have all kinds of data >> um from your investors and I'm just wondering what that data is signaling to you right now about how your clients are feeling about the markets, optimistic, pessimistic, etc. >> Sure. Uh we do uh and actually the most important data point is a pretty simple one. The amount of cash on the sidelines uh is enormous, right? So the the average end investor is sitting on a tremendous amount of cash, which you can understand when times are uncertain for all the reasons that times are uncertain today. Um you can understand folks wanting to sit on the sideline. We also think over the long term that's not in their best interest. So, we're working with our advisor partners and ourselves um to try to help the investing public understand that um actually when times are the most scary, that's when you want to make sure that you're invested in risk markets, especially if you've got a very long-term um time horizon. >> And this cash is high versus historical levels, right? >> Yes. >> That's very interesting. >> I I know your company um has been owned for a number of years, a number of decades, I guess, by Sunlife of Canada. Yes. >> What how does that relationship work? um how handson are they? How stable is that relationship? Um tell us about that please. >> Sure. It's a great relationship and and honestly it is one that we get asked a lot about by our clients and actually recruits uh and employees as we're working because it is it is different than a lot of ownership structures uh in our industry or really any other industry. Um so Sunlife of Canada owns the vast majority of our company. Uh we as employees own the rest of the company. Um and uh we work with we work as a partnership for MFS um with a great majority owner in Sunlife who plays the perfect role in that respect which is um they provide us and me in particular with tremendous advice, tremendous insights in all the businesses that they're in around the world. We haven't needed to rely on it, but if for whatever reason we ever did, um they have a balance sheet. We're extremely capital light. which one of the things that we like about our business, but um you know, if there were ever the need, they have a balance sheet. We we try to operate the business in a way that we'll never need to call on that need. Um but they've been a really great partner for us uh in all ways, including uh they understand that we're in our business and they're in their business and and for the most part um they let us operate uh as we think is best for our clients and then ultimately our shareholders of which they're the biggest one and and the beneficiary of. You talked a little bit about culture, Ted, and I wonder if you could drill down a little bit more because my understanding is you have pretty low attrition rates. You were there for a long time. You really like to bring people up internally. You talked about some ownership capabilities by employees. That sounds like a positive in terms of retention, >> but but what else really works there and keeps people there? And how do you look to attract people in as well? >> Yes. Well, the attract people in part is a really important component. It's not the only component of the retention part. Um because we're extremely focused on bringing in the right folks for MFS. Uh and so actually one of my mentors used to say, you might be the best stock picker in the world. Um but if you're not going to be focused on adding back to the team, you're going to have a great career. It's just not going to be here. Um and he would actually say that to people who were interviewing as he was explaining to them why um we weren't going to move them on to the to the next round of the interview process. So, at the very front end, we're looking for folks who first and foremost are great investors, but just as importantly are committed to working in a team structure um to add back to the team and knowing that they're not doing that purely selflessly. That it's a virtuous cycle when we're operating things as as we know that we can and it's adding back. It's making them better at what they do, which makes their colleagues better at what they do. And so, it leads to really great investment results. And so, people like to win and they like to have great investment results. But really importantly and and um not in a tright way, it's just more fun to be working with people that you genuinely love to be with. I recently came back from our global distribution round table and it's in our entire distribution team from around the world comes together for a couple of days and perhaps the most notable thing about it um is that everyone really enjoys being with each other and we have investment versions of that as well. Um we there we do all of those at actually enormous expense to the company but we don't see as an expense. We see as an investment in our culture which is an investment in delivering for our clients. Uh and it's part of the multiaceted uh mosaic that makes it a really great place to work that makes people stay for a really long time. >> Talked about playing a longer game. Uh I know >> um I guess it's your president Carol Jeremiah wrote about playing a bigger game. Yes. What does playing a bigger game mean in your business? >> It means setting aside your personal agenda to come together to deliver for the teams and deliver for the clients. Carol will probably say it a lot better than I just did and and I know you've had a chance to talk to her about it, but that really summarizes our culture, right, which is that uh we come in every day uh as individuals and we check our individual agendas at the door and we work together uh with this laser focus on delivering excellence for our clients and it's really important. We have buyin, but it's harder than you might think to sort of make sure that that individual actors are focused on the team and the client before themselves. >> I mentioned the 600 billion plus in assets under management. Are you targeting a number uh for yourself or for the firm say for the next 5 years and what are the benchmarks that you're looking to set um in terms of measuring how successful you are? >> So we think actually we're differentiated from a number of our competitors in a number of ways and one of them was the question you just asked. So we very explicitly do not set asset targets because asset targets we assets will be an outcome of delivering excellence for our clients. And so because we focus everything on our client first knowing that that will be what's best for our business. We are focused on what does our client need? How can we can how can we deliver something excellent for them. We we're very careful with how we structure the business and the cost structure of the business to make sure that we're not reliant on growth beyond what we can deliver for the business. Um, and if we can just keep focused on that and we do keep focused on that, then we'll grow assets over time. We'll have a nice business because we've delivered excellence for our clients. >> And what do you consider your competitive set to be? I mean, it can be anything, but but what who do you benchmark against then? >> Sure. It's evolved a lot, right? because uh the the world of investment management has uh consolidated uh in all the ways, right? So there's been a number there's been a decent amount of mergers and acquisitions in the industry over time as well as uh competitors that used to be purely in the private and alternative space coming more into our space. Um competitors that used to be purely in our space which is public equity and fixed income moving into more of the private and alternative space. Um, and so it's really anyone who manages money on behalf of a client, um, is a competitor for us. Uh, but what's really nice, one of the many things that's really nice about our business is that we don't need to compete against the competitors. Uh, we have this much harder competitor which is called the market. Uh, and as we compete against the market over time, if we can deliver results for our clients against that competitor, we're very confident that we'll get our more than our fair share of the marketplace as our competitors attempt to do the same thing but discover as we do every day how difficult that is. >> And what do you think about this notion of private investment, private market, private equity, private credit, etc. being sold to or being bought by retail investors? increasingly are going from you know um family office to high net worth to ordinary Joe's. >> Yeah, it is the dominant trend in our industry and one that we are not participating in. Um so uh we think it serves a very uh important place in um a number of of portfolios and we're very happy to work with our clients to advise them on how they should structure their their total portfolio. Uh and we're here to provide the public equity and fixed income component of it. I actually just recently spoke to that distribution team and and I had a couple of concepts that I worked through with them and one was um no is powerful but we also never say never. Never is dangerous. So I don't know if it's never. In fact I know nothing is never but uh we sort of at this point we pretty much stand alone in being a large asset manager who is not leaning into the private space. Not because we have major problems with the private space, but because we have so many great opportunities in what we do. So much confidence in what we do for our clients and a real humbleness that that's hard work and we're going to need to marshall all of our efforts to continue to be excellent for our clients in the spaces where we're world class and we'll let other competitors approach that space. >> Yeah, it seems like you guys don't like to be on the bleeding edge of things necessarily, right? >> Well, we're willing to be if we think there's a real client need, but yes, for the most part, I mean, we were on the bleeding edge in the beginning of the industry. We invented it. Um but um but uh since then uh we've been happy to focus on what's caught us and understand be able to sit back and watch how markets are evolving, what client needs are evolving and make sure that before we go deliver something to a client that we're extremely confident we can deliver them something excellent. >> And final question, Ted, um especially now that you're the CEO, what do you like to do to relax? How do you kick off steam? Work life balance? What do you do outside of work? >> Yes. Well, I have um an amazing wife and two relatively young daughters. They're 10 and seven. And so spending time with them is is definitely my number one priority. Um uh the things we like to do together. Uh we love to ski. It's been um my my goal since the girls were born to get them hooked on skiing and we've we've succeeded in that. So uh we spend a lot of time on the weekends in the winter skiing. And then um I love music and um I don't get to listen to live music as nearly as much as I used to and I'd like and I don't get to play nearly as much as I used to. I'd like but it's another area where um I'm working very hard and making sure that my daughters love it as much as I do so that we can start going to more concerts as they as they get older. >> Is there an MFS band? >> You know, there is. There's a it's a really long story if we have time to talk about it sometime, but it's one of my favorite things that's happened at the company in the last couple years. talk about our launching of ETFs and that's really exciting but the formation of the MFS band which we call the infinite M's which is what we call our our logo is an infinite M and so the band is the infinite M it came together uh during the pandemic and we did a fundraising concert as a as a band coming out of that and I'm very careful to say that there's the band and they're as as talented as they are as investment professionals they're just as talented as musicians um I sit in with them on occasion I am not at their talent level I play the are excellent. So, I' I've had the fortune to be able to sit in with them a couple times and it's a blast to just get to work with people from across the company on something, you know, different than investing. And it really speaks, I think, to our culture that we enjoy spending time with each other. We enjoy uh creating, whether it's results for clients or whether we're playing music. >> All right, maybe next time we'll have to get the MFS band in here. >> There you go. They'd love to do it. >> Ted Maloney, CEO of MFS. Thank you so much for joining us. >> Thank you. It was a real pleasure. >> This is at Barren. I'm Andy Ser. We'll catch you next time. [Music]