Eric Fischman, manager of the $2.5 billion MFS Growth Fund, beat 95 percent of his rivals this year by relying more on technology and energy...
Eric Fischman, manager of the $2.5 billion MFS Growth Fund, beat 95 percent of his rivals this year by relying more on technology and energy stocks.
The increasing market for Web-linked smartphones, including the BlackBerry model he fiddled with during an interview in Boston, influenced his top two picks: Google, the world’s most popular search engine and developer of the Android mobile-phone software, and BlackBerry maker Research In Motion.
“I’m looking for growth areas and trying to find who the beneficiaries are within that,” Fischman said.
MFS Growth fell 7.7 percent this year, through July 10, while its benchmark Russell 3000 Growth Index fell 11 percent, data compiled by Bloomberg show.
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That’s good enough to top all but 6 percent of funds that invest in large companies whose sales and earnings are growing faster than the overall market, according to Morningstar, the Chicago-based research firm.
The fund, run by Boston-based MFS Investment Management, had a three-year Sharpe ratio of 0.57 through June 30, compared with 0.18 for competing funds, according to Morningstar. A higher ratio means a fund has a better risk-adjusted return.
Morningstar gives MFS Growth three out of five stars.
Fischman had 23 percent of the fund’s assets in technology stocks and 14 percent in energy companies as of May 31.
As a percentage of assets, his telecommunications holdings are more than double those of peers, while software and energy are 40 percent bigger.
MFS Growth suffered in the first quarter when Google fell 37 percent. Fischman raised his stake in April and the Mountain View, Calif., company bounced back with a 23 percent advance since March 31.
Google plans to deliver its Android operating system this year, enabling mobile-phone users to download thousands of programs, from games to social networks to videos.
Whatever happens with Android, Google will gain from the use of smartphones because they’ll drive Internet traffic, Fischman said.
“You’re going to see a reacceleration of Internet search driven by phones, and who’s going to win from that?” he said. “Google wins if our smartphone thesis plays out.”
Fischman also looks for companies with pricing power, pointing to Apple as an example. The company increased its average sales price while unit prices declined at Dell and Hewlett-Packard, he said.
“It’s the Apple brand,” he said. “People pay more to have an Apple on their desk than a Dell.” While bullish on energy because of high global demand, Fischman said he has steered mostly clear of oil and gas producers that need to invest heavily to increase supplies.
“Who wins? The picks and shovels,” he said. “The guys that build the rigs, the guys that service the rigs.”
Fischman increased his stake in National Oilwell Varco in April and May, making it his fifth-biggest holding.