Additional Rate Cuts Support Case for International Equities

Core Insights - Investor interest in international equities is expected to persist following the Federal Reserve's second rate cut of the year, with recommendations for actively managed funds like MFS Active International ETF (MFSI) [1][2] - Additional rate cuts are anticipated, although the certainty of a December cut is not guaranteed, reflecting differing opinions among Federal Reserve members regarding future interest rate policies [2][3] Group 1: Federal Reserve and Interest Rates - The Federal Reserve is likely to implement more rate cuts in 2026, which may encourage investors to explore international opportunities [3] - Chairman Powell highlighted the presence of dissenting views within the Fed regarding the direction of interest rate policy, indicating uncertainty in future decisions [2][3] Group 2: Investment Strategy and Fund Characteristics - MFSI aims to create a well-diversified portfolio focused on equities that exhibit a growth-at-a-reasonable-price style, emphasizing quality and potential for strong growth [5] - MFSI's sector weightings as of October 31, 2025, show a focus on financials (23.5%), industrials (16.5%), and information technology (16.3%), providing U.S. investors with opportunities beyond domestic markets [6] Group 3: Currency Impact on International Investing - A weakening U.S. dollar, driven by further rate cuts, could enhance the investment profile for international equities, as local currency strength often correlates with the performance of international economies [7] - The divergence between the strength of international equities and the weakness of the U.S. dollar is expected to continue, positioning MFSI to capitalize on this trend [8]