AUT

Global Equity Fund

High-conviction, global equity portfolio targeting companies throughout the world.

APIR ETL0071AU

3YR Return Annualised (Net)
(View Total Returns)

Total Assets
(AUD)

19.71%
$4.1b

1YR Return (Net)
(View Total Returns)

Manager Tenure

24.97%
11yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

1.35
4.71%

Inception Date 15-Sep-2006

Performance figures calculated in AUD

Other Literature

30-Sep-2020 - Scott Berg, Portfolio Manager,
Given the increasing difficulty in navigating markets, we are maintaining a broadly balanced portfolio with sector exposures relatively neutral to our core benchmark. We still own a mix of structural winners, durable compounders, and higher yielding companies that held up well during the March sell-off but have levelled off since. While we are more cautious near-term for global equities, we like what we own and remain more constructive over the medium term.
Scott Berg
Scott Berg, Portfolio Manager

Scott Berg is the portfolio manager for the T. Rowe Price Global Growth Equity Strategy and a vice president of T. Rowe Price Group, Inc.

 

Strategy

Investment Objective

The fund’s objective is to provide long-term capital appreciation by investing primarily in a portfolio of securities of companies which are traded, listed or due to be listed, on recognised exchanges and/or markets throughout the world. The portfolio may include investments in the securities of companies traded, listed or due to be listed, on recognised exchanges and/or markets of developing countries.

Investment Approach

  • Single decision maker provides clear accountability.
  • Identify "best ideas" by assessing companies in a global sector context, using bottom-up approach to create focused, high-conviction portfolio.
  • Global research platform uses fundamental analysis to identify companies with superior and sustainable growth prospects, and improving fundamentals.
  • Macroeconomic and local market factors are integrated in stock selection decisions.
  • Valuation appeal is measured against local market and broad sector opportunity set.
  • Broad range of large-cap stocks, incorporating developed and emerging markets.

Portfolio Construction

  • Number of holdings: Typically around 90-145 holdings.
  • Individual positions: Typically 0.3%-3.0%, maximum 5%.
  • Emerging markets exposure: +/- 15% of benchmark.
  • Broad sector ranges: +/- 10% of benchmark.
  • Country ranges: +/- 10% of benchmark (USA is +/- 20%).
  • Currency hedging: Currency views incorporated in stock selection.
  • Cash target range: Typically less than 5%.
  • Expected tracking error: 300 to 700 basis points.

Performance - Net of Fees 

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Since Manager Inception
Annualised
Fund % 24.97% 19.71% 16.25% 14.84% 12.42%
Benchmark % 4.29% 10.53% 9.91% 12.00% N/A
Excess Return % 20.68% 9.18% 6.34% 2.84% N/A

Inception Date 15-Sep-2006

Manager Inception Date 26-Oct-2008

Benchmark: MSCI All Country World Index ex Australia Net

Data as of  30-Sep-2020

Performance figures calculated in AUD

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Fund % 24.97% 19.71% 16.25% 14.84%
Benchmark % 4.29% 10.53% 9.91% 12.00%
Excess Return % 20.68% 9.18% 6.34% 2.84%

Inception Date 15-Sep-2006

Benchmark: MSCI All Country World Index ex Australia Net

Data as of  30-Sep-2020

Performance figures calculated in AUD

Recent Performance

  Month to DateData as of 22-Oct-2020 Quarter to DateData as of 22-Oct-2020 Year to DateData as of 22-Oct-2020 1 MonthData as of 30-Sep-2020 3 MonthsData as of 30-Sep-2020
Fund % 5.71% 5.71% 26.39% 1.03% 6.95%
Benchmark % 3.46% 3.46% 3.12% -0.08% 3.96%
Excess Return % 2.25% 2.25% 23.27% 1.11% 2.99%

Inception Date 15-Sep-2006

Benchmark: MSCI All Country World Index ex Australia Net

Benchmark: MSCI All Country World Index ex Australia Net

Performance figures calculated in AUD

Past performance is not a reliable indicator of future performance.

Source for performance: T Rowe Price. Net of fees performance is based on end of month redemption prices after the deduction of fees and expenses and the reinvestment of all distributions. Figures include changes in principal value. Investment return and principal value will vary, and an account may be worth more or less at termination than at inception.

Daily performance (MTD, QTD, and YTD) data is based on the latest available NAV minus one business day.

Effective 1 June 2019, the "net" version of the benchmark replaced the "gross" version of the benchmark. The "net" version of the benchmark assumes the reinvestment of dividends after the deduction of withholding taxes applicable to the country where the dividend is paid; as such, the returns of the new benchmark are more representative of the returns experienced by investors in foreign issuers. Historical benchmark performance has been restated accordingly.

Returns for time periods greater than one year are annualised.

30-Sep-2020 - Scott Berg, Portfolio Manager,
In Australian dollar terms, global equities fell modestly in September amid a risk-averse environment in stark contrast to the previous few months. Within the portfolio, our holdings in information technology contributed the most to relative returns, led by our underweight position in Apple. The stock fell as investors shied away from many of the traditional, larger technology companies that had been strong performers since the start of the pandemic. While we like Apple’s strong free cash flow, innovative products, and massive research and development programme, our underweight position illustrates our efforts to manage our position size in light of near-term risks from slowing iPhone demand and U.S.-China trade tensions. Conversely, stock selection and an underweight to utilities modestly held back relative performance. Sempra Energy declined slightly as forest fires continued to rage in California and wide-spread blackouts were employed. In our view, Sempra has taken meaningful action to mitigate the risk of wildfires and an advocate for better action state-wide, as well. We think the diversified infrastructure company is levered to a variety of attractive long-cycle energy trends. In addition to having a strong history of capital allocation, the firm’s management team has one of the best track records of cost-cutting among California utilities.

Holdings

Total
Holdings
149
Largest Holding Alibaba Group Holding 3.54% Was (30-Jun-2020) 2.97%
Other View Full Holdings Quarterly data as of 30-Sep-2020
Top 10 Holdings 18.99% View Top 10 Holdings Monthly data as of 30-Sep-2020

Largest Top Contributor^

Alibaba Group Holding
By 0.11%
% of fund 3.54%

Largest Top Detractor^

Evotec
By -0.22%
% of fund 1.38%

^Absolute

Quarterly Data as of 30-Sep-2020

Top Purchase

FedEx (N)
1.46%
Was (30-Jun-2020) 0.00%

Top Sale

AbbVie (E)
0.00%
Was (30-Jun-2020) 0.85%

Quarterly Data as of 30-Sep-2020

30-Jun-2020 - Scott Berg, Portfolio Manager,

The portfolio remains largely sector neutral. We were presented with a bigger change in fundamental data points and with wildly different valuation data points at different times during the quarter, which resulted in higher turnover than normal. Given the striking volatility and massive dislocations we experienced at various times, we would expect to see more trading as we take advantage of anomalies. We are becoming more cautious, but not defensive, as we move back to a much more balanced posture.

Sector-wise, we are overweight consumer discretionary and financials, and these are also areas that we added meaningfully to over the period. We reduced our exposure to health care and information technology, areas that performed well of late. From a regional perspective, our emerging markets weighting has come down as we trimmed some of our Chinese names and the negative impact from currency moves hurt Indian and Indonesian stocks. Within emerging markets, we continue to have a favorable medium-term outlook for the structural growth prospects in India, Indonesia, the Philippines, Peru, and Vietnam.

Consumer Discretionary

The consumer discretionary sector has become increasingly challenged as market disruption, driven in part by rapid changes in consumer behavior and e-commerce, has led to a more dramatic demarcation between winners and losers. Given the polarized structure of the sector, our focus is on high-quality names that are on the right side of change and have dominant market positions. Our holdings are tilted toward online and e-commerce.

  • We trimmed our position in European online apparel retailer Zalando on strength following strong earnings results in May. We have high conviction in Zalando given the firm's dominant position in the European online fashion segment, with substantial advantages over peers in terms of scale, distribution network, brand relationships, consumer traffic, technology, operational efficiency, and strategy.

Financials

With leading central banks having cut rates and ramped up quantitative easing measures to help counteract the negative economic impact from the coronavirus, we think we have been in a lower rate environment for longer than we had anticipated. While we remain underweight developed market banks due to the challenging rate environment, we have found idiosyncratic ideas in the U.S., Europe, and Canada to add to the portfolio. Our bets within the sector are largely concentrated in capital markets names and emerging markets banks. We also have exposure to high-quality insurance companies that were trading at extremely attractive valuations.

  • We initiated a position in MetLife, a high-quality, diversified insurance company with strong market positions in many countries and regions. While the firm faces headwinds due to slowing demand and business activity and lower interest rates, MetLife has a top-notch management team with a strong balance sheet that is well positioned to weather the storm and can continue to deliver solid earnings growth over the long term. The stock also has an attractive dividend yield, which is even more meaningful in a low interest rate environment.
  • We eliminated our position in MarketAxess Holdings. The electronic trading platform has performed well in recent months, so we chose to reallocate to names with greater upside potential.

Industrials and Business Services

Within the sector, the coronavirus outbreak has had the biggest negative impact on the airline industry. The recent crude oil price decline along with assumed capacity cut-driven consumption provide a great buffer, but the industry is likely to experience a dramatic decline in revenues in the near to intermediate term. When it comes to the sector broadly, we are taking a long-term approach with our investments in the space and remain focused on high-quality companies that can benefit from multiyear growth trends and increases in global trade and capital spending. We are attracted to less cyclical, durable earnings growers in industries with attractive growth dynamics and are largely avoiding companies with commodity capital expenditures exposure.

  • We eliminated our positions in Airbus and Boeing. Demand in the aerospace industry has experienced severe contraction since the coronavirus pandemic began, and we think this will persist for some time. As airlines delay and cancel fleet replacement, airplane manufacturers like Airbus and Boeing that are mostly dependent on new fleet orders face a challenging landscape in both the near and long terms.
  • We initiated a position in security lock product-maker Assa Abloy. This is a name we have owned in the past for its durable, high-single-digit revenue growth driven by the secular shift to electromechanical locks. In the short term, we think the company represents a solid cyclical growth opportunity as global purchasing managers' indexes recover and demand picks up. We are also impressed by the firm's best-in-class management team and strong free cash flow generation while operating in an industry with high barriers to entry. The stock had pulled back in recent months on industrial weakness due to the coronavirus, creating an attractive entry point.

Materials

The coronavirus-induced economic downturn has, not surprisingly, had a negative impact on the materials sector. Historically, the time to increase exposure to materials is during a recession, and we have added several high-quality names that are currently out of favor. Our focus is mainly on high-quality companies that offer particularly attractive valuations and are more highly correlated to staples-like industries and secular growth trends, but we also have exposure to metals and mining companies as well.

  • We initiated a position in Symrise, a German company that develops flavors, fragrances, and cosmetic ingredients. This is a name we have owned in the past, and we think Symrise offers a staples-like stable and durable growth with attractive end markets, strong management, and margin improvement due to better product mix from growth in higher-margin segments such as pet food and probiotics.
  • We initiated a position in International Paper, which produces and distributes paper products, including containerboard, printing and writing papers, pulp, and packaging products. While the stock has pulled back due to the coronavirus, in contrast to past economic slowdowns, demand should be somewhat buoyed by e-commerce packaging and consumer demand for household paper products. Overall, we think the company is well run, has a solid balance sheet and dividend, and should see earnings reaccelerate off of what we believe is a bottoming cycle as we move through the coronavirus pandemic and economic activity comes back online.

Sectors

Total
Sectors
11
Largest Sector Information Technology 22.27% Was (31-Aug-2020) 22.62%
Other View complete Sector Diversification

Monthly Data as of 30-Sep-2020

Benchmark: MSCI All Country World Index ex Australia (unhedged)

Top Contributor^

Consumer Discretionary
Net Contribution 1.45%
Sector
0.26%
Selection 1.19%

Top Detractor^

Consumer Staples
Net Contribution -0.28%
Sector
0.01%
Selection
-0.29%

^Relative

Quarterly Data as of 30-Sep-2020

Largest Overweight

Financials
By3.72%
Fund 15.91%
Benchmark 12.19%

Largest Underweight

Consumer Staples
By-2.17%
Fund 5.82%
Benchmark 7.99%

Monthly Data as of 30-Sep-2020

30-Sep-2020 - Scott Berg, Portfolio Manager,
In our view, there are more coronavirus beneficiaries in the consumer discretionary sector than anywhere else, but this has led to a dramatic demarcation between winners and losers. The coronavirus has pulled forward years of e-commerce share gains in the span of a few months and we have an expanded set of names levered to that trend.

Countries

Total
Countries
24
Largest Country United States 53.99% Was (31-Aug-2020) 54.16%
Other View complete Country Diversification

Monthly Data as of 30-Sep-2020

Benchmark: MSCI All Country World Index ex Australia (unhedged)

Largest Overweight

Germany
By3.30%
Fund 5.91%
Benchmark 2.61%

Largest Underweight

Japan
By-5.71%
Fund 1.29%
Benchmark 7.00%

Monthly Data as of 30-Sep-2020

Team (As of 01-Oct-2020)

Scott Berg

Scott Berg is the portfolio manager for the T. Rowe Price Global Growth Equity Strategy and a vice president of T. Rowe Price Group, Inc.

Mr. Berg has 17 years of investment experience, all of which have been with T. Rowe Price. He joined the firm in 2002 as a research analyst covering the business services sector after serving as a summer intern in 2001. In 2005, he joined the global equity team as an associate portfolio manager and in 2008 launched the Global Growth Equity Strategy. Prior to T. Rowe Price, he was the manager of financial analysis and planning for Mead Consumer and Office Products. Previously, Mr. Berg was also employed by McKinsey & Company as a business analyst and was a core team member on the firm's global growth initiative.

Mr. Berg graduated first in his class from Macquarie University in Australia, with a B.Ec. in actuarial studies and finance. He also holds an M.B.A. from the Stanford Graduate School of Business, where he again graduated at the top of his class. Mr. Berg has earned the Chartered Financial Analyst designation.

  • Fund manager
    since
    2008
  • Years at
    T. Rowe Price
    18
  • Years investment
    experience
    18
Harishankar Balkrishna

Hari Balkrishna is an associate portfolio manager for the Global Growth Equity Strategy in the Equity Division of T. Rowe Price. Mr. Balkrishna is a vice president of T. Rowe Price Group, Inc. and T. Rowe Price International Ltd.

Mr. Balkrishna has 12 years of investment experience. He completed an internship at T. Rowe Price in 2009. Prior to joining the firm in 2010, he worked at Goldman Sachs, Sydney, Australia, in the financial institutions group of the Investment Banking Division.

Mr. Balkrishna has a bachelor of commerce in finance and accounting (university medal and first-class honours) from the University of New South Wales and also has earned an M.B.A., with distinction, from Harvard Business School.

  • Fund manager
    since
    2015
  • Years at
    T. Rowe Price
    10
  • Years investment
    experience
    13
Samuel Ruiz

Samuel Ruiz is a portfolio specialist in the Equity Division. He is a vice president of T. Rowe Price Australia Limited. 

Sam’s investment experience began in 2008, and he has been with T. Rowe Price since 2020, beginning as an associate working with the Global Equity and Australia Equity Strategies in the Equity Division. Prior to this, Sam was employed by Macquarie Investment Management in the area of strategy in the Equities Division. 

Sam earned a bachelor of applied finance degree from the University of South Australia.

  • Years at
    T. Rowe Price
    <1 year
  • Years investment
    experience
    0

Fees

APIR Minimum Initial Investment (AUD) Minimum Subsequent Investment (AUD) Buy / Sell Spread Management Fees
ETL0071AU $500,000 $100,000 Buy +0.25%/ Sell -0.20% 1.18% pa

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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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