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T. Rowe Price ("TRP") claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. T. Rowe Price has been independently verified for the twenty four-year period ended June 30, 2020, by KPMG LLP. The verification report is available upon request. A firm that claims compliance with the GIPS standards must establish policies and procedures for complying with all the applicable requirements of the GIPS standards. Verification provides assurance on whether the firm’s policies and procedures related to composite and pooled fund maintenance, as well as the calculation, presentation, and distribution of performance, have been designed in compliance with the GIPS standards and have been implemented on a firm-wide basis. Verification does not provide assurance on the accuracy of any specific performance report.

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SICAV

Frontier Markets Equity Fund

Seeking to identify long-term market leaders in countries on the cusp of rapid development.

ISIN LU1079765662 Valoren 24785101

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

7.80%
$107.2m

1YR Return
(View Total Returns)

Manager Tenure

54.09%
<1yr

Information Ratio
(5 Years)

Tracking Error
(5 Years)

-0.07
5.80%

Inception Date 24-Jun-2014

Performance figures calculated in USD

30-Jun-2021 - Johannes Loefstrand, Portfolio Manager ,
Conditions and investment opportunities will vary widely among frontier markets, even those within the same region. While the current global crisis brings investment opportunities, and the long-term growth outlook of many corporations remains underpriced, we acknowledge that there will be individual winners and losers. We believe the macro fundamentals and demographics in many frontier markets today are favourable and, in some cases, resemble those of emerging countries approximately 15 to 20 years ago.
Johannes Loefstrand
Johannes Loefstrand, Portfolio Manager

Johannes Loefstrand is the Co-Portfolio Manager on the Frontier Markets Fund in the Equity Division of T. Rowe Price. He is a vice president of T. Rowe Price Group, Inc. and T. Rowe Price International Ltd.

 

Strategy

Investment Objective

To increase the value of its shares, over the long term, through growth in the value of its investments. The fund invests mainly in a diversified portfolio of stocks of frontier markets companies.

Investment Approach

  • Invest across the entire frontier investment universe, including countries outside the MSCI Frontier Markets Index.
  • Rigorous, risk-aware approach to identify quality growing companies trading at attractive valuations.
  • Employ fundamental analysis with a focus on returns, balance sheet structure, management team and corporate governance.
  • Disciplined approach to valuation. Verify relative valuation appeal versus peers and history.
  • Consider macroeconomic and political factors to temper bottom-up enthusiasm.
  • Environmental, social and governance ("ESG") factors with particular focus on those considered most likely to have a material impact on the performance of the holdings or potential holdings in the funds’ portfolio are assessed. These ESG factors, which are incorporated into the investment process alongside financials, valuation, macro-economics and other factors, are components of the investment decision. Consequently, ESG factors are not the sole driver of an investment decision but are instead one of several important inputs considered during investment analysis.

Portfolio Construction

  • Number of holdings: typically 60-80 stocks
  • Individual position sizes typically range from 0.5%-10%
  • Country Ranges:
    • Index countries: Unconstrained
    • Non-index countries: Constrained – 15% limit in any one country.
  • Reserves are typically less than 5%
  • Expected Turnover range: 20-40%

Performance (Class I)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Since Manager Inception
Fund % 54.09% 7.80% 9.28% 4.84% 25.04%
Indicative Benchmark % 40.12% 9.36% 9.66% 2.76% 14.93%
Excess Return % 13.97% -1.56% -0.38% 2.08% 10.11%

Inception Date 24-Jun-2014

Manager Inception Date 01-Jan-2021

Indicative Benchmark: Linked Benchmark Net

Data as of 30-Jun-2021

Performance figures calculated in USD

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Fund % 54.09% 7.80% 9.28% 4.84%
Indicative Benchmark % 40.12% 9.36% 9.66% 2.76%
Excess Return % 13.97% -1.56% -0.38% 2.08%

Inception Date 24-Jun-2014

Indicative Benchmark: Linked Benchmark Net

Data as of 30-Jun-2021

Performance figures calculated in USD

Recent Performance

  Month to DateData as of 23-Jul-2021 Quarter to DateData as of 23-Jul-2021 Year to DateData as of 23-Jul-2021 1 MonthData as of 30-Jun-2021 3 MonthsData as of 30-Jun-2021
Fund % -0.14% -0.14% 24.87% 2.50% 15.89%
Indicative Benchmark % -2.09% -2.09% 12.52% 2.67% 14.52%
Excess Return % 1.95% 1.95% 12.35% -0.17% 1.37%

Inception Date 24-Jun-2014

Indicative Benchmark: Linked Benchmark Net

Indicative Benchmark: Linked Benchmark Net

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.

Index returns shown with reinvestment of dividends after the deduction of withholding taxes. 

Effective 1 July 2018, the "net" version of the indicative benchmark replaced the "gross" version of the indicative benchmark. The "net" version of the indicative 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. 

Effective 1 January 2020, the benchmark for the sub-fund changed to MSCI Frontier Markets 10/40 Index Net. Prior to this change, the benchmark was MSCI Frontier Markets Index Net. Historical benchmark representations have not been restated.

30-Jun-2021 - Johannes Loefstrand, Portfolio Manager ,
After a very strong couple of months, frontier equities posted more modest returns in June but once again outperformed developed markets as well as their emerging peers. Index heavyweight Vietnam continued to make strong gains, despite an outbreak of a coronavirus variant which raised some concerns about the impact that this could have on economic activity. The sustained boom in interest from retail investors was largely responsible for the rise in the market. Morocco eked out a positive return, with some bank names coming under pressure following a period of outperformance. The Bahrain stock market hit a 10-month high in June, with commercial banks and insurers performing particularly strongly. Within the portfolio, our significant holding in Kazakhstan-based Halyk Savings Bank held back performance. After several consecutive months of sharp gains, its shares slipped as investors took the opportunity to book profits. Longer term, we believe the bank is well placed to generate both higher returns on equity and higher margins. Conversely, our sizeable position in Vietnam-based FPT once again made a significant contribution to returns. Investors have been encouraged by the technology and telecom group’s latest quarterly results.

Holdings

Total
Holdings
46
Largest Holding Mobile World Investment 7.61% Was (31-Mar-2021) 7.39%
Other View Full Holdings Quarterly data as of  30-Jun-2021
Top 10 Holdings 51.38% View Top 10 Holdings Monthly data as of  30-Jun-2021

Largest Top Contributor^

Mobile World Investment
By 0.27%
% of fund 7.60%

Largest Top Detractor^

Marel HF
By -1.92%
% of fund 5.45%

^Absolute

Quarterly Data as of 30-Jun-2021

Top Purchase

Marel HF
5.45%
Was (31-Mar-2021) 1.39%

Top Sale

Vietnam Prosperity JSC Bank
0.00%
Was (31-Mar-2021) 2.27%

Quarterly Data as of 30-Jun-2021

31-Mar-2021 - Johannes Loefstrand, Portfolio Manager ,

Over the course of the first quarter, we added to our exposure in Bangladesh, Egypt, and the Philippines. In contrast, we reduced our position in Morocco and eliminated our exposure to the UAE.

Vietnam

Vietnam remains the portfolio's largest country position, on both an absolute and relative basis. This is our highest conviction market, with a huge investment opportunity set of over 1,600 listed stocks. The country has handled the pandemic incredibly well and has a dynamic economy, which has been successful in taking manufacturing market share from China in recent years.�

  • We initiated a holding in Saigon Beer Alcohol Beverage (Sabeco) a leading Vietnamese beer producer. We believe that the Vietnamese beer industry is at a cyclical trough. As the industry recovers from the impacts of the pandemic and new laws enforcing harsher punishments for anyone found driving under the influence, we expect the company to improve its market share in both on-premise and modern retail segments. We also anticipate improved efficiency from the company under its new management. A reduction in government ownership in coming years may also be a positive catalyst for improved efficiency, in our view, as well as improving the liquidity of the stock.
  • We reduced our position in Vincom Retail, Vietnam's largest retail developer, owner and operator. The group has an expansive nationwide network of retail malls. We chose to take some profit from our holding as the share price had a strong run and began to approach its fair value. Vietnam's retail real estate sector remains resilient despite the pandemic, with the country experiencing a stronger recovery in traffic rates versus its regional peers.
  • We trimmed our holding in Military Commercial Bank, primarily due to profit taking and reduction of concentration following strong outperformance. The bank delivered strong third-quarter results, is well-positioned to weather the disruption caused by the pandemic and continues to remain profitable. This remains one of the fund's largest positions and we maintain conviction on the stock.

Bangladesh

We raised our exposure to Bangladesh over the quarter. We believe the country's economy is bouncing back strongly and valuations are generally favorable.

  • We added to our holding in BRAC Bank, one of the fastest growing banks in the country. We believe that the bank is well-positioned to benefit from an improving macroeconomic environment in the country. Furthermore, the bank's subsidiary bKash is the country's dominant mobile money system. We believe that there are strong structural tailwinds for mobile banking in Bangladesh due to the significant proportion of the population that is currently unbanked, and the widespread use of mobile telephones. We expect this subsidiary to be a key driver of returns in the coming years.

Egypt

We continued to build up our positions in a number of the smaller frontier markets, such as Egypt. Our overweight position in this market is largely due to bottom-up, stock-specific ideas. Our key positions include digital payments company Fawry and diagnostics specialist IDH.

  • We added to our position in Cairo Investment & Real Estate, Egypt's largest private education provider, which owns and operates schools and one university. The company continues to expand, adding further faculties to the university and opening new schools. Egypt's young and growing population creates a wide student base which is likely to fuel sustainable long-term demand for education. The company is likely to be a key beneficiary of the widening demand-supply gap in education in Egypt. Recent company results were in line with expectations, despite lockdowns and school and university closures.

Philippines

We identified a new investment opportunity in the Philippines, raising the extent of our off-benchmark exposure to this market.

  • We initiated a holding in Universal Robina, the Philippines-based snack and beverage manufacturer, which also has exposure to other ASEAN markets. We are encouraged by improving margins and market share gains since the current CEO came onboard. The company has executed well in the tough market environment of 2020 and delivered robust profits. In our view the business is well-positioned to benefit from an improving macroeconomic backdrop. The share price has struggled recently amid rising coronavirus cases in the Philippines. However, we believe that the business' longer-term thesis remains intact and found an attractive entry point to begin building a position.

Morocco

Over the course of the review period, we reduced our exposure to Morocco, trimming the size of our positions in a couple of names. Morocco has undergone a difficult coronavirus crisis and we believe that the country will be a laggard in the normalization of economic activities post-pandemic.

  • We reduced our holding in Attijariwafa Bank, the country's largest bank. The company reported 2020 earnings that were negatively affected by the pandemic but included stable margins and an improvement in cost efficiency. We believe that the share price is approaching its fair value and we are also increasingly cautious on the macroeconomic outlook in Morocco. The tourism dependent economy continues to be challenged by the pandemic. We trimmed our holding and redeployed proceeds to higher conviction ideas.

UAE

By the end of the review period, we moved to a zero-weight in the UAE after we eliminated our only holding in the country.

  • We sold out of our position in Network International, the digital payment solutions provider, which serves merchants and financial institutions in Africa and the Middle East. The stock has been a strong contributor to performance in recent months, however we see more compelling investment opportunities elsewhere in companies that have more of an exposure to frontier markets dynamics.

Sectors

Total
Sectors
11
Largest Sector Financials 32.76% Was (31-May-2021) 32.66%
Other View complete Sector Diversification

Monthly Data as of 30-Jun-2021

Indicative Benchmark: MSCI Frontier Market 10/40 Index Net

Top Contributor^

Financials
Net Contribution 1.85%
Sector
-0.14%
Selection 1.99%

Top Detractor^

Materials
Net Contribution -1.52%
Sector
-1.51%
Selection
-0.00%

^Relative

Quarterly Data as of 30-Jun-2021

Largest Overweight

Information Technology
By15.35%
Fund 15.35%
Indicative Benchmark 0.00%

Largest Underweight

Materials
By-9.41%
Fund 0.06%
Indicative Benchmark 9.48%

Monthly Data as of 30-Jun-2021

30-Jun-2021 - Johannes Loefstrand, Portfolio Manager ,
The portfolio’s main sector overweight positions remain in information technology (IT) and consumer discretionary while the most significant underweights are materials, real estate, and health care. Within industrials and business services, we added to our existing position in Iceland’s market leader in advanced processing equipment, systems and services to the animal protein industry. The company supplies innovation-driven equipment, automation software and services to meet the growing global demand protein and processed food, while minimising waste and increasing added value for its customers.

Regions

Total
Regions
5
Largest Region Pacific Ex Japan 48.41% Was (31-May-2021) 45.68%
Other View complete Region Diversification

Monthly Data as of 30-Jun-2021

Indicative Benchmark: MSCI Frontier Market 10/40 Index Net

Top Contributor^

Pacific ex Japan
Net Contribution 1.33%
Region
0.44%
Selection 0.89%

Top Detractor^

Latin America
Net Contribution -0.41%
Region
-0.41%
Selection
0.00%

^Relative

Quarterly Data as of 30-Jun-2021

Largest Overweight

Pacific Ex Japan
By15.04%
Fund 48.41%
Indicative Benchmark 33.37%

Largest Underweight

Middle East & Africa
By-20.63%
Fund 17.40%
Indicative Benchmark 38.03%

Monthly Data as of 30-Jun-2021

Countries

Total
Countries
18
Largest Country Vietnam 35.79% Was (31-May-2021) 34.19%
Other View complete Country Diversification

Monthly Data as of 30-Jun-2021

Indicative Benchmark: MSCI Frontier Market 10/40 Index Net

Top Contributor^

Morocco
Net Contribution 0.71%
Country
0.36%
Selection 0.35%

Top Detractor^

Kazakhstan
Net Contribution -0.78%
Country
-0.09%
Selection
-0.69%

^Relative

Quarterly Data as of 30-Jun-2021

Largest Overweight

Vietnam
By5.32%
Fund 35.79%
Indicative Benchmark 30.47%

Largest Underweight

Bahrain
By-6.82%
Fund 0.00%
Indicative Benchmark 6.82%

Monthly Data as of 30-Jun-2021

30-Jun-2021 - Johannes Loefstrand, Portfolio Manager ,
As of the end of June, the portfolio’s main country relative overweight positions included Vietnam, Bangladesh, Egypt, and Pakistan, while the most significant underweights included Bahrain, Nigeria, and Morocco. Over the course of June, we initiated a position in a company which is UK-listed but which operates a portfolio of leading online classified portals across Lithuania, Estonia and Latvia via 12 portals. We believe the Baltic economies are well-placed to catch up with the rest of Europe and stand to benefit from the European Union’s Recovery and Resilience Facility and other fiscal support measures.

Team (As of 13-Jul-2021)

Johannes Loefstrand

Johannes Loefstrand is the Co-Portfolio Manager on the Frontier Markets Fund in the Equity Division of T. Rowe Price. He is a vice president of T. Rowe Price Group, Inc. and T. Rowe Price International Ltd.

Johannes’s investment experience began in 2012 and he has been with T. Rowe Price since 2015, beginning in the Emerging Markets Equity Division. Prior to this, he was an investment analyst at Arisaig Partners in Singapore and in Cape Town.

Johannes earned a master of laws degree from the London School of Economics and a bachelor of laws degree from the University of Groningen, Netherlands.

  • Fund manager
    since
    2020
  • Years at
    T. Rowe Price
    5
  • Years investment
    experience
    0

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% 200 basis points 2.17%
Class I $2,500,000 $100,000 $0 0.00% 110 basis points 1.20%
Class Q $1,000 $100 $100 0.00% 110 basis points 1.27%
Class S $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.