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SICAV

Global Aggregate Bond Fund

Risk-aware investing, exploiting inefficiencies in global bond markets.

ISIN LU0133095660 Bloomberg TRPGLBI:LX

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

3.84%
$383.2m

1YR Return
(View Total Returns)

Manager Tenure

7.05%
6yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

0.05
1.40%

Inception Date 25-Jan-2006

Performance figures calculated in USD

Other Literature

31-May-2020 - Arif Husain, Portfolio Manager,
We have reduced the overall duration level in our portfolio given the prospect of a fast recovery. However, continued easing from major central banks and uncertainty over the length and extent of a post-coronavirus rebound mean we remain overweight. We have added to credit where we see value yet are mindful that default risk is still elevated. Accordingly, we continue to hold some credit protection, particularly in the investment grade space.
Arif Husain
Arif Husain, Co-Portfolio Manager

Arif Husain is head of International Fixed Income at T. Rowe Price. He is lead portfolio manager for the Dynamic Global Bond Strategies. Mr. Husain is also co-portfolio manager for the firm's International Bond, Global Aggregate Bond and Institutional International Bond Strategies. He is a vice president of T. Rowe Price Group, Inc. and T. Rowe Price International Ltd.

Click for Manager Outlook
 

Strategy

Manager's Outlook

The spread of the coronavirus from a regional concern to a worldwide crisis led to a global slowdown in economic activity, as countries imposed severe restrictions in a bid to limit the spread of the disease. Governments also implemented large fiscal programs to support domestic businesses, while central banks announced massive monetary stimulus packages to help improve confidence and support economies.

The huge amount of government spending could lead to rising fiscal deficits and even inflation, two traditionally bond-negative developments. Despite this, however, we believe that, for the time being, the action of the major central banks is likely to be a more important driver for bond markets. Therefore, we have maintained an overweight duration stance in our portfolio for the time being to benefit from the prospect of continued low rates for longer.

In the credit sphere, corporate bond-buying programs in the U.S. and Europe should be supportive for these markets. As a result, we tentatively added risk back into the portfolio. Going forward, we believe that a specific emphasis on diversification within individual names will be important as defaults are likely to increase this year. Rating downgrades could also dominate headlines, particularly in the BBB part of the credit markets. Against this backdrop, bottom-up fundamental research is essential when adding new corporate exposures into the portfolio.�

Investment Objective

To maximise the value of its shares through both growth in the value of, and income from, its investments. The fund invests mainly in a diversified portfolio of bonds of all types from issuers around the world.

Investment Approach

  • To generate a consistent performance over benchmark by exploiting inefficiencies in the full universe of the global fixed income and currency markets:
    • Focus on successful alpha generation.
    • Importance of effective risk management.
  • Target average tracking error: Between 150 basis points and 300 basis points per annum.
  • Alpha generation classified under three main performance activities:
    • Currency Management: 35% Expected contribution to value added
    • Country/Duration Management: 35% Expected contribution to value added
    • Sector Allocation/Security Selection: 30% Expected contribution to value added
    • Sub investment Grade Allocation: 20% Expected contribution to value added
    • Sector/Security Selection: 10% Expected contribution to value added

Portfolio Construction

  • Currency limit: maximum +/- 40% relative to benchmark
  • Weighted duration limit: maximum +/- 3 years relative to benchmark
  • Sub-investment grade: maximum 20%
  • Above investment grade: not restricted (includes corporates and emerging markets)
  • Portfolio holdings: between 400 and 600 issuers
  • Average credit quality: A- or better

Performance (Class I)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Since Manager Inception
Annualised
Fund % 7.05% 3.84% 3.35% 3.13% 3.38%
Indicative Benchmark % 5.59% 3.46% 3.28% 2.88% 3.12%
Excess Return % 1.46% 0.38% 0.07% 0.25% 0.26%

Inception Date 25-Jan-2006

Manager Inception Date 13-Mar-2016

Indicative Benchmark: Bloomberg Barclays Global Aggregate Bond Index

Data as of  31-May-2020

Performance figures calculated in USD

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Fund % 5.58% 3.84% 2.78% 2.62%
Indicative Benchmark % 4.20% 3.55% 2.64% 2.47%
Excess Return % 1.38% 0.29% 0.14% 0.15%

Inception Date 25-Jan-2006

Indicative Benchmark: Bloomberg Barclays Global Aggregate Bond Index

Data as of  31-Mar-2020

Performance figures calculated in USD

Recent Performance

  Month to DateData as of 02-Jul-2020 Quarter to DateData as of 02-Jul-2020 Year to DateData as of 02-Jul-2020 1 MonthData as of 31-May-2020 3 MonthsData as of 31-May-2020
Fund % 0.34% 0.34% 6.90% 0.82% 2.19%
Indicative Benchmark % 0.10% 0.10% 3.09% 0.44% 0.12%
Excess Return % 0.24% 0.24% 3.81% 0.38% 2.07%

Inception Date 25-Jan-2006

Indicative Benchmark: Bloomberg Barclays Global Aggregate Bond Index

Indicative Benchmark: Bloomberg Barclays Global Aggregate Bond Index

Performance figures calculated in USD

Past performance is not a reliable indicator of future performance.  Source for fund performance: T. Rowe Price. Fund performance is calculated using the official NAV with dividends reinvested, if any. The value of an investment and any income from it can go down as well as up. Investors may get back less than the amount invested. It will be affected by changes in the exchange rate between the base currency of the fund and the subscription currency, if different. Sales charges (up to a maximum of 5% for the A Class), taxes and other locally applied costs have not been deducted and if applicable, they will reduce the performance figures. 

Where the base currency of the fund differs from the share class currency, exchange rate movements may affect returns.

31-May-2020 - Arif Husain, Portfolio Manager,
Core government bond yields were mixed in May. Curves steepened in most developed markets, with longer-term yields rising on optimism surrounding the easing of coronavirus lockdown measures and the potential for a recovery. In terms of country/duration positioning, our underweight duration bias toward the eurozone contributed positively to relative returns. Expectations that the worst of the coronavirus crisis was over, and fresh economic support packages announced by the European Union, pushed core eurozone yields higher during the period. However, our steepening bias toward the Czech yield curve held back relative gains. In currencies, our overweight position in the Czech koruna added to relative returns, supported by a more risk-friendly market environment. Our overweight exposure to the British pound hurt, however. In sector allocation and security selection, our choice of securities within euro-denominated government-related bonds as well as European corporate bonds was beneficial, outperforming the wider risk rally.

Holdings

Issuers

Top
Issuers
10
Top 10 Issuers 41.73% Was (30-Apr-2020) 39.49%
Other View Top 10 Issuers

Monthly data as of 31-May-2020

Holdings

Total
Holdings
541
Largest Holding Japan Government Five Year Bond 13.60% Was (31-Dec-2019) 13.63%
Top 10 Holdings 35.05%
Other View Full Holdings Quarterly data as of 31-Mar-2020

Quality Rating View quality analysis

  Largest Overweight Largest Underweight
Quality Rating Below Investment Grade AAA
By % 10.37% -12.22%
Fund 10.77% 14.51%
Indicative Benchmark 0.39% 26.73%

Average Credit Quality

A+

Monthly Data as of 31-May-2020
Indicative Benchmark:  Bloomberg Barclays Global Aggregate Bond Index

Sources for Credit Quality Diversification: Moody's Investors Service and Standard & Poor's (S&P) split ratings (i.e. BB/B and B/CCC) are assigned when the Moody's and S&P ratings differ. Short-Term holdings are not rated.

Maturity View maturity analysis

  Largest Overweight Largest Underweight
Maturity 3-5 Years 1-3 Years
By % 5.57% -8.61%
Fund 28.27% 17.51%
Indicative Benchmark 22.70% 26.12%

Weighted Average Maturity

8.40 Years

Monthly Data as of 31-May-2020
Indicative Benchmark:  Bloomberg Barclays Global Aggregate Bond Index

Duration View duration analysis

  Largest Overweight Largest Underweight
Duration 3-5 Years 1-3 Years
By % 6.16% -8.78%
Fund 24.89% 19.94%
Indicative Benchmark 18.73% 28.72%

Weighted Average Duration

7.68 Years

Monthly Data as of 31-May-2020
Indicative Benchmark:  Bloomberg Barclays Global Aggregate Bond Index

31-Dec-2018 - Arif Husain, Portfolio Manager,

The portfolio's overall duration was increased over the quarter driven in part by adding to high-quality countries, such as the U.S. and Australia. We also reduced the underweight duration position in the eurozone and moved the UK up to neutral. The changes reflected our expectations that slowing global growth, geopolitics, and trade tensions could fuel a flight into high-quality government bonds.

Country/duration positioning

  • Within developed markets, we began increasing the overweight duration position in the U.S. around mid-October. This was driven by expectations for growth to moderate and the Federal Reserve to slow the pace of interest rate hikes in 2019. Overall, our bias for a flattening of the Treasury yield curve stayed in place as inflation remained well behaved. In the eurozone, we added to Germany in the 7- to 10-year part of the curve and moved Italy back to neutral as budget concerns eased. The overall underweight duration position was reduced as economic growth continued to slow. Over the medium-term, we believe eurozone government bonds are potentially vulnerable as the markets have yet to price in the European Central Bank taking a key step toward monetary policy normalization at the end of 2018 when its quantitative easing program finished.
  • Among other developed market moves, we opened a new overweight duration position in Australia on anticipation that the central bank will keep interest rates unchanged for the foreseeable future, a factor we believe should be supportive for bonds. Meanwhile, in the UK, we closed the underweight duration position in mid-November on uncertainty surrounding the country's exit from the European Union. Toward the end of the period, we opened a new underweight duration position in Canada as we felt that the market was being too pessimistic on the outlook for interest rate hikes.
  • Our allocation to local emerging market bonds remained low during the quarter. In terms of moves, we reduced overweight positions in Mexico and Thailand and took profit on the off-benchmark position in Brazil. We also added modestly to our off-benchmark exposure in domestic Romania on anticipation that inflation pressures could recede. Throughout, we maintained overweight positions in Chile, and off-benchmark exposures in India and South Africa. To balance some of the risks, we maintain a negative bias in Eastern Europe through underweight duration positions expressed in Hungary and Poland.

Currency selection

  • On the currency front, we shifted to an underweight position in the U.S. dollar toward the end of the quarter. This was driven in part by adding to the overweight position in the Swiss franc and opening a new overweight position in the Swedish krona after the central bank raised interest rates for the first time since 2011 in December. Overall, we felt that with U.S. growth slowing and the Fed potentially delivering fewer hikes in 2019, the dollar could be vulnerable to a correction. In other moves, underweight positions in the euro and Australian dollar were closed. Throughout, we maintained an overweight position in the Japanese yen and underweight allocations to the Singapore dollar and Taiwanese dollar.
  • In emerging markets, we added tentatively to a select number of currencies. This included the Mexican peso, the Argentine peso, the South African rand, and the Malaysian ringgit. These complemented existing exposures in the Romania leu and the Colombian peso. The overweight position in the Czech koruna was closed.

Sector allocation and security selection

  • We maintain an allocation to hard currency emerging market sovereign debt as the income stream remains attractive. We also hold modest exposure to European high yield bonds.
  • To reduce portfolio risk, we continue to hold defensive positions in credit markets. The majority of this is expressed through short credit default swap positions in a U.S. investment-grade bond index. In emerging markets, except for Mexico, we closed the credit default swap positions at an individual country level in Turkey, South Africa, and Indonesia.

Sectors

Total
Sectors
6
Largest Sector Government 52.97% Was (30-Apr-2020) 52.47%
Other View complete Sector Diversification

Monthly Data as of 31-May-2020

Indicative Benchmark: Bloomberg Barclays Global Aggregate Bond Index

Largest Overweight

Sub Investment Grade
By6.08%
Fund 6.08%
Indicative Benchmark 0.00%

Largest Underweight

Agency/Supranationals
By-8.16%
Fund 1.12%
Indicative Benchmark 9.28%

Monthly Data as of 31-May-2020

31-May-2020 - Arif Husain, Portfolio Manager,
We added further to investment grade corporate bonds and to hard currency sovereign debt, leading to an overall overweight position in credit. This includes a modest overweight position to European high yield. Our credit overweight is partially offset by a short position to European investment grade corporate bond index.

Countries

Total
Countries
57
Largest Country United States 32.92% Was (30-Apr-2020) 31.03%
Other View complete Country Diversification

Monthly Data as of 31-May-2020

Indicative Benchmark: Bloomberg Barclays Global Aggregate Bond Index

Largest Overweight

SNAT (Supe Natl Wrld Global)
By3.11%
Fund 5.19%
Indicative Benchmark 2.08%

Largest Underweight

United States
By-5.27%
Fund 32.92%
Indicative Benchmark 38.18%

Monthly Data as of 31-May-2020

31-May-2020 - Arif Husain, Portfolio Manager,
We reduced the portfolio’s overall overweight duration level in May. In developed markets, expectations of a rebound in growth led us to increase our underweight duration stance to the eurozone and move to a slight underweight in the UK, with significant fiscal packages also expected to put upward pressure on bond yields. We maintained our overweight duration stance in U.S. Treasuries, however. We moderately added duration to emerging markets, meanwhile, most notably increasing our Indonesian overweight.

Currency

Total
Currencies
30
Largest Currency U.S. dollar 39.10% Was (30-Apr-2020) 45.68%
Other View complete Currency Diversification

Monthly Data as of 31-May-2020

Indicative Benchmark : Bloomberg Barclays Global Aggregate Bond Index

Largest Overweight

Czech koruna
By 2.08%
Fund 2.17%
Indicative Benchmark 0.09%

Largest Underweight

U.S. dollar
By -4.81%
Fund 39.10%
Indicative Benchmark 43.91%

Monthly Data as of 31-May-2020

31-May-2020 - Arif Husain, Portfolio Manager,
We shifted from a mild overweight position in the U.S. dollar to a significant underweight by the end of the month. While we are aware that a stall in the global rebound and possible U.S.-China tensions ahead could support dollar strength, expectations of a pronounced global recovery and the potential for the U.S. to lag other countries will likely be negative for the dollar. Correspondingly, we added exposure to a number of emerging market currencies, including the Brazilian real. In developed markets, we moved from an underweight to the euro to an overweight, on expectations of a recovery and fiscal and monetary support. We reduced our overweight stance to the British pound, however, as rising fears of a no-deal Brexit resurfaced, putting pressure on the currency.

Team (As of 02-Jul-2020)

Arif Husain

Arif Husain is head of International Fixed Income at T. Rowe Price. He is lead portfolio manager for the Dynamic Global Bond Strategies. Mr. Husain is also co-portfolio manager for the firm's International Bond, Global Aggregate Bond and Institutional International Bond Strategies. He is a vice president of T. Rowe Price Group, Inc. and T. Rowe Price International Ltd.

Mr. Husain has 24 years of investment experience, six of which have been with T. Rowe Price. Prior to joining the firm in 2013, he spent 14 years as director of both European Fixed Income and Euro Portfolio Management at AllianceBernstein. He was also a member of the global fixed income and absolute return portfolio management teams. Mr. Husain previously worked as assistant director of European Derivatives Trading at Greenwich NatWest and also traded interest rate swaps at Bank of America National Trust & Savings Association.

Mr. Husain received a B.Sc. (hons.) in banking and international finance from the City University, London Business School. He also has earned the Chartered Financial Analyst designation.

  • Fund manager
    since
    2014
  • Years at
    T. Rowe Price
    6
  • Years investment
    experience
    24
Quentin S. Fitzsimmons

Quentin Fitzsimmons is a senior portfolio manager in the Fixed Income Division of T. Rowe Price and a member of the global fixed income investment team. He is co-portfolio manager for the Global Aggregate Bond Strategy. He is actively involved in the discussion around country and duration positioning, currency management and sector allocation, with a particular expertise in interest rate management.

Mr. Fitzsimmons has 28 years of investment experience, four of which have been with T. Rowe Price. Prior to joining the firm in 2015, Mr. Fitzsimmons was head of liquidity portfolio investment management, Treasury markets, for the Royal Bank of Scotland Group, where he managed the liquid fixed income "tier one" capital on its balance sheet on an absolute return basis. Previously, he also worked as head of rates and as executive director of fixed income for Threadneedle Investments, where he ran global fixed income portfolios from 2002 to 2012. Prior to Threadneedle he held various fixed income portfolio management and research roles with F&C Investments, the Equitable Life Assurance Society and Sun Life Assurance Company of Canada.

Mr. Fitzsimmons earned a B.Sc. in economics and economic history from the University of Bristol.

  • Fund manager
    since
    2016
  • Years at
    T. Rowe Price
    4
  • Years investment
    experience
    28
Stephane Fertat

Stephane Fertat is a portfolio specialist in the Fixed Income Division. He supports all global/international fixed income strategies. He also represents the portfolio management team in meetings and conferences, presenting strategies and market outlooks. Stephane has broad knowledge of fixed income, currency, credit, and derivative instruments, which allows him to assist in the development of customized fixed income solutions. He also has helped launch a number of new strategies. Stephane is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price International Ltd.

Stephane’s investment experience began in 1998, and he has been with T. Rowe Price since 2007, beginning in the Fixed Income Division. Prior to this, Stephane was employed by Fischer Francis Trees and Watts as a European fixed income fund manager, later moving into a product manager role. Stephane also was employed by Southern Europe as a director of client service and business development. 

Stephane earned a master’s degree in finance from Ecole Superieure de Commerce de Paris. Stephane also has earned the Chartered Financial Analyst® designation.

CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.

  • Years at
    T. Rowe Price
    13
  • Years investment
    experience
    23
Christopher Dillon, CFA

Chris Dillon is an investment specialist in the Multi-Asset Division. He is also a vice president of T. Rowe Price Group, Inc., and T. Rowe Price Associates, Inc.

Chris’s investment experience began in 1993, and he has been with T. Rowe Price since 2006, beginning in the Fixed Income Division. Prior to this, Chris was employed by PNC Advisors as an investment advisory research consultant. He also directed fixed income management research with Smith Barney Consulting Group.

Chris earned a B.A., cum laude, in history/economics from the University of Delaware and an M.B.A. from Wilmington University. He also has earned the Chartered Financial Analyst® designation.

CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.

  • Years at
    T. Rowe Price
    14
  • Years investment
    experience
    23

Fee Schedule

Share Class Minimum Initial Investment and Holding Amount (USD) Minimum Subsequent Investment (USD) Minimum Redemption Amount (USD) Sales Charge (up to) Investment Management Fee (up to) Ongoing Charges
Class A $1,000 $100 $100 5.00% 75 basis points 0.92%
Class I $2,500,000 $100,000 $0 0.00% 45 basis points 0.55%
Class Q $1,000 $100 $100 0.00% 45 basis points 0.62%
Class Sd $10,000,000 $0 $0 0.00% 0 basis points 0.10%

Please note that the Ongoing Charges figure is inclusive of the Investment Management Fee and is charged per annum.

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GIPS® Information

T. Rowe Price ("TRP") claims compliance with the Global Investment Performance Standards (GIPS®). TRP has been independently verified for the twenty one- year period ended June 30, 2017 by KPMG LLP. The verification report is available upon request. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm's policies and procedures are designed to calculate and present performance in compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite presentation.

TRP is a U.S. investment management firm with various investment advisers registered with the U.S. Securities and Exchange Commission, the U.K. Financial Conduct Authority, and other regulatory bodies in various countries and holds itself out as such to potential clients for GIPS purposes. TRP further defines itself under GIPS as a discretionary investment manager providing services primarily to institutional clients with regard to various mandates, which include U.S, international, and global strategies but excluding the services of the Private Asset Management group.

A complete list and description of all of the Firm's composites and/or a presentation that adheres to the GIPS® standards are available upon request. Additional information regarding the firm's policies and procedures for calculating and reporting performance results is available upon request

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