SICAV

US Blue Chip Equity Fund

Seeking superior returns from high quality US companies.

ISIN LU0133088293 Valoren 1274291

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

23.68%
$1.2b

1YR Return
(View Total Returns)

Manager Tenure

39.65%
5yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

0.75
7.81%

Inception Date 04-May-2015

Performance figures calculated in USD

Other Literature

31-Aug-2020 - Larry J. Puglia, Portfolio Manager,
We recognise that it is difficult to predict the outcome of pandemic, elections, and many economic factors with any degree of conviction. Therefore, we think it is prudent to avoid companies that we feel require a robust economic backdrop or a meaningful increase in interest rates. Instead, we will continue to focus on high-quality growth companies that we believe can continue to generate durable earnings and free cash flow growth in most economic and regulatory environments.
Larry J. Puglia, CFA, CPA
Larry J. Puglia, CFA, CPA, Lead Portfolio Manager

Larry J. Puglia is a portfolio manager in the U.S. Equity Division. Larry has been managing the US Large-Cap Core Growth Equity Strategy since 1993 and has had lead responsibility for all institutional accounts and other investment products within the strategy since 1997. He also is president of the Investment Advisory Committee of the US Large-Cap Core Growth Equity Strategy. Larry is a vice president of T. Rowe Price Group, Inc.

Click for Manager Outlook
 

Strategy

Manager's Outlook

In our view, the two principal risks going forward are the extent of economic damage caused by the pandemic, including how much it impedes growth, and how the upcoming U.S. elections play out.

After trending positively on hopes for a potential vaccine and/or more effective treatments, sentiment appears to have shifted in the other direction more recently. For example, the recent escalation in cases in several U.S. states will probably cause the deferral of vacations and other forms of travel, which could be injurious to growth. Regarding the elections, the possibility of a Democratic sweep as well as various other outcomes create significant uncertainty for investors trying to determine potential tax and regulatory policy.

We recognize that it is difficult to forecast the pandemic, elections, and many economic factors with any degree of conviction. With this in mind, we think it is prudent to avoid companies that we feel require a robust economic backdrop or a meaningful increase in interest rates in order to justify ownership, as well as those we believe are prohibitively expensive with relative valuations that are difficult to justify. Instead, we will continue to emphasize high-quality growth companies that we believe can continue to generate durable earnings and free cash flow growth in most economic and regulatory environments. As always, we maintain a disciplined adherence to our rigorous investment process, which is rooted in bottom-up, fundamental research.

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 large and medium sized “blue chip” companies in the United States.

Investment Approach

  • Identify high-quality companies with leading market positions in fertile growth fields. Integrate fundamental research — emphasize sustainable growth, not momentum growth.
  • Focus on high-quality earnings, strong free cash flow growth, shareholder-oriented management, and rational competitive environments.
  • Avoid overpaying for growth, while broadly diversifying portfolios, to manage portfolio risk.

Portfolio Construction

  • Typically 100-140 stock portfolio
  • Active position sizes typically range +/- 3.00% relative to S&P 500 Index
  • Sector weights vary from 0.5X to 2.0X for primary sectors relative to S&P 500 Index

Performance (Class I)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Fund % 39.65% 23.68% 19.63% 18.31%
Indicative Benchmark % 21.23% 13.85% 13.77% 11.52%
Excess Return % 18.42% 9.83% 5.86% 6.79%

Inception Date 04-May-2015

Indicative Benchmark: S&P 500 Net 30% Withholding Tax

Data as of  31-Aug-2020

Performance figures calculated in USD

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Fund % 18.07% 18.43% 15.64% 15.03%
Indicative Benchmark % 6.87% 10.07% 10.05% 9.27%
Excess Return % 11.20% 8.36% 5.59% 5.76%

Inception Date 04-May-2015

Indicative Benchmark: S&P 500 Net 30% Withholding Tax

Data as of  30-Jun-2020

Performance figures calculated in USD

Recent Performance

  Month to DateData as of 25-Sep-2020 Quarter to DateData as of 25-Sep-2020 Year to DateData as of 25-Sep-2020 1 MonthData as of 31-Aug-2020 3 MonthsData as of 31-Aug-2020
Fund % -8.91% 8.36% 18.43% 9.38% 23.02%
Indicative Benchmark % -5.69% 6.69% 3.10% 7.13% 15.33%
Excess Return % -3.22% 1.67% 15.33% 2.25% 7.69%

Inception Date 04-May-2015

Indicative Benchmark: S&P 500 Net 30% Withholding Tax

Indicative Benchmark: S&P 500 Net 30% Withholding Tax

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 June 2019, 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.

31-Aug-2020 - Larry J. Puglia, Portfolio Manager,
U.S. equities produced strong gains in August, continuing their recovery from March lows. Within the portfolio, the information technology (IT) sector added the most to relative results due to both our overweight position and stock selection. For example, shares of Salesforce.com rose after the company reported better-than-expected quarterly results and an increase to its full-year earnings guidance. Results were driven by higher subscription and support revenue as the company benefitted from the increased use of cloud-based solutions and ongoing digital transformations. Overall, we believe Salesforce.com should be able to sustain an impressive rate of organic revenue growth in the coming years. Favourable stock selection in the communication services and consumer discretionary sectors added further value. Conversely, stock choices in the industrials and business services and health care sectors dragged. Within the latter, shares of Becton, Dickinson & Company tumbled following the release of weak quarterly results, coupled with lower-than-expected fiscal 2020 guidance for revenue and earnings, primarily due to the impact of the coronavirus pandemic. Despite the recent weakness, we continue to have a positive view on the firm’s high-quality business, which is demonstrating strong and durable growth as it continues to reduce leverage and improve its capital structure.

Holdings

Total
Holdings
120
Largest Holding Amazon.com 9.61% Was (31-Mar-2020) 9.50%
Other View Full Holdings Quarterly data as of 30-Jun-2020
Top 10 Holdings 49.94% View Top 10 Holdings Monthly data as of 31-Aug-2020

Largest Top Contributor^

Amazon.com
By 3.17%
% of fund 9.64%

Largest Top Detractor^

Charles Schwab
By -0.07%
% of fund 0.13%

^Absolute

Quarterly Data as of 30-Jun-2020

Top Purchase

Apple
3.95%
Was (31-Mar-2020) 3.19%

Top Sale

Alibaba Group Holding
4.03%
Was (31-Mar-2020) 4.68%

Quarterly Data as of 30-Jun-2020

30-Jun-2020 - Larry J. Puglia, Portfolio Manager,

Being on the right side of change means identifying and investing in companies that make it easier for businesses of all sizes and across the economy to expand their online presence, improve productivity, and engage customers across multiple channels. It appears that we are still relatively early in a golden age for technology innovation, as the extraordinary power of the internet has enabled unprecedented value creation for both companies and investors.

Given the current environment, we continue to emphasize secular growth companies with strong competitive positions in large addressable markets that support multiyear growth horizons. Prominent sectors in the portfolio, including information technology, consumer discretionary, and health care, are areas that we continue to believe offer fertile ground for innovative companies to achieve above-average growth prospects.

Information Technology

Within the information technology sector, we focus on innovative business models that can take advantage of transformational change. We favor companies with durable businesses that address large and growing markets, including electronic payment processing and public cloud computing services.

  • We added shares of Wix.com during the quarter. The company has benefited from increased user engagement as social distancing measures accelerated the need for businesses to have an online presence in order to reach consumers. With its disruptive website development technology driving share gains, innovative new tools that are ready to be monetized, and a subscription business model providing a high degree of recurring revenue, we believe Wix.com's runway for growth is underappreciated by the market.
  • We sold VMware on relative strength as shares rallied after a difficult start to the year. In addition to valuation concerns, we feel that an uncertain information technology spending environment related to the coronavirus pandemic could weigh on the company's performance in the near term. We redeployed the proceeds of the sale to fund more compelling opportunities.

Consumer Discretionary

We remain optimistic about stock-specific opportunities within the consumer discretionary sector. We favor businesses benefiting from the secular shift of consumer spending to online products and services. We believe industries such as physical retail and traditional media are secularly challenged; therefore, we plan to continue emphasizing companies within the sector that we think are on the right side of change and disruption.

  • We bought shares of Chipotle Mexican Group during the quarter. While the company's dining rooms were closed during much of the quarter due to the ongoing coronavirus pandemic, Chipotle saw strong growth in its online orders. We like the company over the long term as the fast-casual concept remains popular, and Chipotle has a strong brand.
  • We sold shares of Nike during the period given the challenges we foresee for the company over the next year or so due to excess inventory and wholesale challenges. While Nike remains a premier consumer company, we prefer other companies in the sector that we think have better risk/reward profiles.

Health Care

Our allocation to the health care sector is composed of select therapeutics and medical device companies that we believe have limited exposure to potential regulatory pressures. We are also emphasizing managed care companies positioned to benefit from industry consolidation as well as the increasing focus on providing cost-effective solutions.

  • We added shares of biotechnology firm Incyte during the period. We think the company may be underappreciated by the market given the potential of its promising lymphoma treatment and improved visibility into the life-cycle extension of Jakafi, its treatment for bone marrow disorders.
  • We trimmed our position in Becton, Dickinson & Company, which posted modest gains during the quarter. The stock came under pressure late in the period following the company's surprising capital raise in late May. While the proceeds of the offering provide additional liquidity and balance sheet support that position the company for potential acquisitions, it was dilutive. As a result, we trimmed our position in favor of other investment opportunities.

Sectors

Total
Sectors
9
Largest Sector Information Technology 40.06% Was (31-Jul-2020) 38.15%
Other View complete Sector Diversification

Monthly Data as of 31-Aug-2020

Indicative Benchmark: S&P 500 Index

Top Contributor^

Communication Services
Net Contribution 2.15%
Sector
-0.09%
Selection 2.24%

Top Detractor^

Energy
Net Contribution -0.20%
Sector
-0.21%
Selection
0.01%

^Relative

Quarterly Data as of 30-Jun-2020

Largest Overweight

Information Technology
By11.34%
Fund 40.06%
Indicative Benchmark 28.71%

Largest Underweight

Consumer Staples
By-6.96%
Fund 0.00%
Indicative Benchmark 6.96%

Monthly Data as of 31-Aug-2020

31-Aug-2020 - Larry J. Puglia, Portfolio Manager,
Being on the right side of change means identifying and investing in companies that make it easier for businesses of all sizes and across the economy to expand their online presence, improve productivity, and engage customers across multiple channels. As such, we continue to focus on secular growth companies with strong competitive positions in large addressable markets that support multiyear growth horizons. Prominent sectors in the portfolio, including IT, consumer discretionary, and health care, are areas that we continue to believe offer fertile ground for innovative companies to achieve above-average growth prospects.

Team (As of 05-Aug-2020)

Larry J. Puglia, CFA, CPA

Larry J. Puglia is a portfolio manager in the U.S. Equity Division. Larry has been managing the US Large-Cap Core Growth Equity Strategy since 1993 and has had lead responsibility for all institutional accounts and other investment products within the strategy since 1997. He also is president of the Investment Advisory Committee of the US Large-Cap Core Growth Equity Strategy. Larry is a vice president of T. Rowe Price Group, Inc.

Larry’s investment experience began in 1989, and he has been with T. Rowe Price since 1990, beginning as an investment analyst, specializing in financial services stocks, in the U.S. Equity Division. His coverage included banking, consumer finance, brokerage, investment management, and diversified financial companies. Prior to T. Rowe Price, Larry was employed by Peat Marwick Main & Co. as a senior manager.

Larry earned a B.B.A., summa cum laude, in accounting from the University of Notre Dame and an M.B.A. in finance from the University of Virginia, Darden School of Business, where he was a Shermet Scholar. He also has earned the Chartered Financial Analyst® designation and is a certified public accountant.

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

  • Fund manager
    since
    2015
  • Years at
    T. Rowe Price
    30
  • Years investment
    experience
    31
Craig Watson

Craig Watson is a portfolio specialist in the Equity Division of T. Rowe Price. He is a member of the U.S. Large-Cap Growth team working closely with institutional clients, consultants, and prospects. Mr. Watson is a vice president of T. Rowe Price Group, Inc.

Mr. Watson has 24 years of investment experience. Prior to joining the firm in 2007, he was senior vice president of global equity sales for HSBC Securities. Mr. Watson also was employed by UBS as director of institutional equity sales.

Mr. Watson earned a B.S., magna cum laude, in accounting from Hampton University and an M.B.A. from The Wharton School, University of Pennsylvania. He also has earned the certified public accountant accreditation.

  • Years at
    T. Rowe Price
    12
  • Years investment
    experience
    24

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% 150 basis points 1.59%
Class I $2,500,000 $100,000 $0 0.00% 65 basis points 0.69%
Class J $10,000,000 $0 $0 0.00% 0 basis points 0.03%
Class Q $1,000 $100 $100 0.00% 65 basis points 0.75%

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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