After years of underperformance, European equities are finally stepping out of the shadow of their U.S. counterparts in 2025. Investors began the year skeptical about Europe, but sentiment shifted—thanks in part to a German proposal to invest heavily in infrastructure and defense.
The Morningstar Europe Index delivered a return of 5.1 percent in euros over the first four months of the year, a full 18.8 percentage points higher than its U.S. counterpart. For comparison: in 2024, European equities lagged behind by nearly 23 percentage points. So far this year, 38.2 billion euros have flowed into European large-cap equity funds and ETFs, compared to 17.6 billion euros for U.S. funds.
Against this backdrop, we take a closer look at two funds in the Morningstar Global Large-Cap Value Equity category that are qualitatively rated by Morningstar analysts: MFS Meridian Contrarian Value and Maj Invest Global Value Equities. We examine their similarities and differences, including their exposure to European equities.
People
The MFS fund benefits from managers with an independent mindset. Anne-Christine Farstad has led the MFS strategy since its 2016 launch and was joined by Zahid Kassam in 2021. Although their portfolio management experience is largely limited to this strategy, both are deeply rooted in MFS’s investment culture. They previously worked for years as analysts, which is an advantage given their strong reliance on collaboration with the firm’s broader investment platform for both idea generation and fundamental research.
Seasoned managers Kurt Kara and Ulrik Jensen have co-managed Maj Invest Global Value Equities since its inception in 2005. In 2015, Rasmus Quist Pedersen joined the team as an analyst and became a portfolio manager in 2019. However, Pedersen left the firm in September 2024 and was replaced by Andreas Johan Lindtner. The trio operates as a close-knit team, albeit relatively autonomously, as there is limited overlap with other equity strategies within the firm.
Process
While resources are limited, Maj Invest uses an extensive quantitative screening process to help managers focus their research efforts. The model applies a broad set of criteria, emphasizing stability, profitability, return prospects, balance sheet quality, and valuation. This yields about 100 names eligible for further analysis. Despite the name, the strategy does not follow a strictly value-oriented approach. The managers prefer quality stocks but require a valuation margin of safety before considering a position.
MFS delivers on its promise. In their search for unpopular stocks, the managers are willing to go against the grain. Like Maj Invest, their contrarian approach requires that stocks offer a margin of safety, which they consider more important than moats. They invest where they see the steepest discount to intrinsic value, without placing excessive weight on traditional valuation multiples.
Portfolio
Maj Invest’s approach—which also involves investing in temporarily pressured stocks—requires patience, discipline, and perseverance, qualities the managers clearly possess. The MFS team also follows a long-term vision but acts decisively when stock prices move sharply. They increase or reduce positions based on pre-determined price targets.
Both portfolios are concentrated: about 50 positions for MFS and just 25 to 35 for Maj Invest. The MFS portfolio has a significant underweight in U.S. equities compared to the Morningstar Global Value TME category index, while the managers see considerable opportunities in Europe and the United Kingdom. Maj Invest, by contrast, has just 17 percent of its assets invested in Europe—aligned with the weighting in the Morningstar Global Value TRM index, but significantly lower than MFS’s 65 percent European exposure as of the end of March.
Performance
MFS has shown that it can successfully navigate the pitfalls of a contrarian strategy, resulting in highly competitive performance since the strategy’s inception. Over the past five years, the fund has ranked in the top percentile of its category. At the same time, it is one of the riskier propositions within the Morningstar global largecap value equity category.
Maj Invest’s value-seeking strategy also comes with risks, and so-called value traps can have a substantial impact on returns. In 2022, the strategy missed the value rebound rally, in part due to a lack of exposure to high-performing energy and tobacco stocks and limited involvement in the defense sector. That episode left a noticeable dent in the track record, but the managers remained committed to their approach—a conviction that paid off in 2023 and 2024.
Thomas De Fauw is a manager research analyst at Morningstar. Morningstar analyzes and rates investment funds based on both quantitative and qualitative research. Morningstar is part of the expert panel of Investment Officer.