MFS adopts unique contrarian investing approach
How contrarian investing goes beyond traditional value investing for MFS MFS Investment Management’s approach to contrarian investing extends beyond mere value screening, focusing instead on identifying opportunities others may overlook. The firm’s Global Contrarian Equity Trust, launched in 2025, gives Australian investors access to its Contrarian Capital strategy (established in 2023) alongside its sister strategy, Contrarian Value, which has operated since 2016. Led by portfolio managers Anne-Christine Farstad and Zahid Kassam, the trust aims to achieve capital appreciation while outperforming the MSCI World Value Index.
By adopting a contrarian approach, the managers prioritize asymmetric risk-reward opportunities with a strong emphasis on downside protection. This strategy hinges on identifying a margin of safety, the gap between a stock’s intrinsic value and its market price, and purchasing shares only when they trade well below their true worth.
Contrarian Investing Strategy
Kassam explained that paying a low price relative to a company’s intrinsic value is essential for safeguarding capital in downturns. “The lower the price paid, the less certain you have to be about the future,” he said. Sentiment-driven price dislocations, whether from large market swings, special situations like spin-offs or IPOs, or once-great companies fallen on hard times, create opportunities for patient, long-term investors.
Both managers agree that markets frequently overreact to short-term news, with human emotion driving extreme fear or greed, behaviors that contrarians exploit.
Differentiating Contrarian Investing from Traditional Value Investing
Farstad clarified that contrarian investing differs from traditional value approaches by rejecting a purely “cheapest stock” screen. Instead, the strategy evaluates quality, return on invested capital, and valuation. “We avoid that trap by seeking opportunities that are cheap relative to their fundamentals, not just in absolute terms.”
Kassam expanded on the trust’s opportunistic focus, highlighting three key areas: capital cycle investing, restructuring plays, and “distrusted compounders” with controversies. These strategies generate idiosyncratic, risk-adjusted returns across market cycles. While contrarian investing may underperform in stable markets, its strength lies in dislocations and crises.
The Global Contrarian Equity Trust is managed by MFS International Australia Pty Ltd (ABN 68 607 579 537, AFSL 485343), regulated by the Australian Securities and Investments Commission. For detailed risk considerations, investors should review the Product Disclosure Statement and Target Market Determination on the respective websites.
Farstad has managed the strategy since 2016, while Kassam joined in 2021, bringing expertise from his role as an airlines analyst during the COVID-19 pandemic, a period that sharpened his contrarian instincts, according to MFS.
Investment Risks and Disclosures
All investments carry risks, including potential underperformance in certain market conditions. The Global Contrarian Equity Trust’s strategy may be less effective in prolonged periods of stability. Investors should consult the Product Disclosure Statement and Reference Guide for full risk disclosures.
