MFS debuts new tax-exempt fund

Investment manager MFS has launched a new intermediate tax-exempt fund aimed at giving clients more yield and duration opportunities.

The new Municipal Intermediate Fund, which pursues total return with an emphasis on income exempt from federal income tax, aims to outperform the Bloomberg Barclays Municipal 1‐15 Year Index, the firm said.

Periodic review of its product line as well as offering a specific capability to meet strong investor demand led to the creation of the new fund, according to the firm.

“Targeting the intermediate‐term space allows for a potentially competitive yield with reasonable interest rate sensitivity over a full market cycle, giving our clients more choice in determining the appropriate balance between yield and duration in municipal bond funds managed by MFS,” Doug Bailey, senior managing director for U.S. retail sales said in a release.

The new fund complements the firm’s national short, long, and high-yield categories as well as state-specific municipal bond strategies, the firm said in the release.

While the fund has considerable flexibility, it invests primarily in investment‐grade quality debt instruments with an average effective maturity of between three and 10 years, and invests primarily in investment-grade bonds across municipal sectors.

MFS offers the fund in Class A, C, I and R6 shares.

Geoffrey Schechter and Jason Kosty will co-manage the fund, and seek to drive return through active sector, quality and security selection.

Geoffrey Schechter, co-manager of the MFS Municipal Intermediate Fund

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Schechter and Kosty are both portfolio managers on other MFS national municipal bond strategies and work closely with two additional municipal portfolio managers and the broader municipal bond team of analysts and traders.

Schechter joined MFS in 1993 as a municipal bond portfolio manager and has worked in the industry since 1989. Kosty, who has worked in the industry since 1995, joined MFS as an analyst in 2003 and added portfolio management responsibilities in 2014.

Jason Kosty, co-portfolio manager of the MFS Municipal Intermediate Fund

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The intermediate category is popular among investors and their advisors, according to the firm, which said it can’t speculate on flows, but expects the new fund to have wide distribution based on strong appetite for the product category.

The fund is positioned as an offering on platforms at major distributors who currently sell MFS’ municipal bond funds, the firm said.

As of March 31, 2021, MFS managed more than $20.1 billion globally in municipal bond strategies for institutional and retail investors across its three national municipal bond strategies — short, long and high‐yield — and 14 state‐specific strategies, in addition to four closed end funds, according to the firm.

MFS has been investing in municipal bonds since the 1970s, focusing on the maturity and credit spectrum of the market.

It launched the first U.S. open‐end mutual fund in 1924. As of April 30, 2021, MFS had about $651.5 billion in assets under management.

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