The global markets in 2026 have been marked by geopolitical shifts that are pushing more investors toward international opportunities, including emerging markets (EM). Combined with greater demand for active ETFs, the timing for MFS Investment Management to launch the MFS Blended Research Emerging Markets Equity ETF (BREE) couldn’t be better.
The launch of BREE is a strategic expansion of MFS’s presence in the active ETF space. The firm already has the MFS Blended Research International Equity ETF (BRIE), which has a greater emphasis on developed markets. For investors looking to diversify their current equities portfolio to include international equities with a greater growth footprint that EM can provide, BREE is worthy of consideration.
The Blended Approach
A discerning feature of the fund is the melding of both fundamental and quantitative analyses. MFS’s foray into the world of ETFs began in December 2024 with the launch of five new active funds. However, the firm is no stranger to managing money, with the launch of the first U.S. open-end mutual fund over 100 years ago.
Quantitative strategies can provide an unbiased screening methodology for processing copious amounts of data. That data can be used to quantitatively identify market opportunities using various metrics. However, it doesn’t account for qualitative factors, like management quality and organizational culture. Those are common pillars of fundamental research. When these research strategies are siloed into separate funds, opportunities might be missed. Hence, a blended approach, which accounts for potential investment opportunities.
By looking at EM equities through these two research lenses, BREE aims to build a portfolio of high-conviction ideas. Based on the summary prospectus in its SEC filing, the fund’s active strategy is designed to outperform the MSCI Emerging Markets Index using this blended approach.
Under normal conditions, the fund will invest at least 80% of its net assets in equity securities economically tied to emerging markets. That includes regions such as Latin America, Asia, Africa, the Middle East, and Eastern Europe. Compared to a passive index fund focused on EM equities, BREE’s active managers can take into account sector weightings, market capitalization, and volatility when constructing its portfolio.
Strategically Positioned for 2026
As mentioned, the timing for the launch of BREE is auspicious. Global de-dollarization and potentially overstretched valuations in mega-cap companies in the U.S. are diverting investors to opportunities in EM. Greater inflows into EM ETFs provide this tangible evidence.
Furthermore, the MSCI Emerging Market Index outpaced the S&P 500 and the MSCI World Index in the past 12 months. This is further evidence of the upside potential for EM and more specifically, BREE, in 2026.
BREE’s active bottom-up approach provides the nimbleness required to pivot toward quality and mitigate risk from overextended sectors. Best of all, it comes with the cost-efficiency, transparency, and intraday liquidity of an ETF wrapper, combined with the deep well of management experience from MFS.
Click here to learn more about BREE.
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