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GIPS® Information

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.

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.

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SICAV

Asian Opportunities Equity Fund

A concentrated portfolio of high-quality Asian companies.

ISIN LU1044871900 WKN A114WL

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

10.71%
$375.4m

1YR Return
(View Total Returns)

Manager Tenure

38.19%
6yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

0.59
4.26%

Inception Date 21-May-2014

Performance figures calculated in USD

Other Literature

31-Jan-2021 - Eric C. Moffett, Portfolio Manager,
We maintain a constructive outlook on the region. In north Asia, we recognise pockets of froth which have been the subject of retail speculative fervour such as electric-vehicle names but our focus is on high-quality companies with earnings visibility. We think there are attractive risk/reward profiles in certain value-oriented or cyclical stocks. Some of these were unfairly sold off due to the pandemic despite strong fundamentals and we think there are investment opportunities among them.
Eric C. Moffett
Eric C. Moffett, Portfolio Manager

Eric Moffett is a vice president of T. Rowe Price Group, Inc. and T. Rowe Price Hong Kong Limited. He is the portfolio manager for the firm's Asia Opportunities equity strategy and chairman of the strategy's Investment Advisory Committee. 

Click for Manager Outlook
 

Strategy

Manager's Outlook

We remain constructive on the long-term outlook for Asia ex-Japan equities. Most Asian economies are on a steady path to more normalized economic activity even as the impact of the coronavirus pandemic varies across the region. Compared to other parts of the world, much of Asia has seen more effective COVID-19 containment measures while the relative deterioration in fiscal and current account balances is more manageable. Domestic demand generally recovered quickly in the region following the initial shock from the coronavirus and the consumption recovery is likely to broaden.

Valuations have normalized but the gap between the region versus developed markets is still wide. While there are pockets of excessive optimism, we believe that many high-quality growth businesses are still trading at reasonable multiples.

We recognize that while global markets have re-rated, forward earnings estimates of Asian companies have yet to reflect the positive impact of a return to normalcy following the progress on vaccines.

We view Southeast Asian markets, which have lagged their north Asian counterparts, as fertile hunting ground for high-quality growth stocks with depressed valuations. While some of these markets are still seeking to contain the pandemic, we think they will pull through with vaccine availability and herd immunity.

We believe that an improvement in the trajectory of the fractious relations between U.S. and China under President Biden's administration bodes well for Asia. However, we think that competition in technology, innovation, and related areas between the two countries will likely persist for the foreseeable future.

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 companies in Asia.

Investment Approach

  • Seeking long term capital appreciation to come from owning high quality businesses that will reliably compound earnings/ cash flow generation over time.
  • In Asia, this type of company tends to exhibit three key characteristics:
    • Established companies with leading market positions.
    • Good management teams who care about shareholder returns.
    • Returns-focused capital allocation and prudent balance sheet management.
  • Fundamental research is critical in helping us to identify these characteristics and exploit market inefficiencies:
    • Focus on the long term. Be patient.
    • Gain a better understanding of the durability of a company’s prospects than the market.
    • More accurately assess a company’s intrinsic value than other market participants.

Portfolio Construction

  • Typically 40-70 stock portfolio
  • Individual positions typically range from 0.50% to 6.00%.
  • Country and sector weightings a residual of stock selection.
  • Cash position typically less than 5%.

Performance (Class I)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Since Manager Inception
Annualised
Fund % 38.19% 10.71% 18.84% 12.85% 12.85%
Indicative Benchmark % 36.18% 6.97% 16.33% 9.29% 9.29%
Excess Return % 2.01% 3.74% 2.51% 3.56% 3.56%

Inception Date 21-May-2014

Manager Inception Date 21-May-2014

Indicative Benchmark: MSCI All Country Asia ex Japan Index Net

Data as of 31-Jan-2021

Performance figures calculated in USD

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Fund % 27.96% 12.65% 16.32% 12.53%
Indicative Benchmark % 25.02% 8.15% 13.58% 8.75%
Excess Return % 2.94% 4.50% 2.74% 3.78%

Inception Date 21-May-2014

Indicative Benchmark: MSCI All Country Asia ex Japan Index Net

Data as of 31-Dec-2020

Performance figures calculated in USD

Recent Performance

  Month to DateData as of 05-Mar-2021 Quarter to DateData as of 05-Mar-2021 Year to DateData as of 05-Mar-2021 1 MonthData as of 31-Jan-2021 3 MonthsData as of 31-Jan-2021
Fund % -0.39% 4.54% 4.54% 2.93% 18.14%
Indicative Benchmark % -0.25% 5.12% 5.12% 4.08% 20.09%
Excess Return % -0.14% -0.58% -0.58% -1.15% -1.95%

Inception Date 21-May-2014

Indicative Benchmark: MSCI All Country Asia ex Japan Index Net

Indicative Benchmark: MSCI All Country Asia ex Japan Index 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. 

31-Jan-2021 - Eric C. Moffett, Portfolio Manager,
Asia ex-Japan equities began 2021 on a strong footing. Shares advanced amid expectations that China’s economic strength and the start of vaccine rollouts would help support the region’s recovery from the pandemic. Within the portfolio, stock choices in China curbed relative returns. In particular, Zhongsheng Group and China Yongda crimped fund performance as shares of these auto dealers fell following sharp gains in 2020 and concerns that Tesla’s rising volume in China and its latest price cut will hurt other luxury brands. Zhongsheng’s brands include Mercedes-Benz and Lexus, while Yongda is the largest BMW and Porsche dealer. We prefer exposure to these auto dealers as not only are they beneficiaries of the rise in luxury car penetration but also of aftermarket growth acceleration. Stock selection in the consumer discretionary sector also weakened performance. Not owning Meituan, a China-based ecommerce platform, weighed on returns as its shares outperformed following solid quarterly results. Meituan, however, is entering a heavy investment cycle in online grocery. In contrast, stock choices in India such as Shriram Transport Finance worked well for the portfolio as shares outperformed following positive results that showed disbursements back at pre-coronavirus levels.

Holdings

Total
Holdings
66
Largest Holding Taiwan Semiconductor Manufacturing 6.93% Was (30-Sep-2020) 6.86%
Other View Full Holdings Quarterly data as of  31-Dec-2020
Top 10 Holdings 42.68% View Top 10 Holdings Monthly data as of  31-Jan-2021

Largest Top Contributor^

Taiwan Semiconductor Manufacturing
By 1.38%
% of fund 6.87%

Largest Top Detractor^

Alibaba Group Holding
By -4.27%
% of fund 5.11%

^Absolute

Quarterly Data as of 31-Dec-2020

Top Purchase

Tencent Holdings
6.65%
Was (30-Sep-2020) 7.62%

Top Sale

Treasury Wine Estates (E)
0.00%
Was (30-Sep-2020) 2.79%

Quarterly Data as of 31-Dec-2020

31-Dec-2020 - Eric C. Moffett, Portfolio Manager,

We believe we are well positioned for an eventual recovery from the coronavirus pandemic. While most Asia ex-Japan stocks are pricing in a return to more normal conditions, we have identified opportunities in Southeast Asia, where markets have yet to fully rerate and earnings estimates have not been adjusted to reflect the positive impact of vaccine availability.

We remained comfortable with our positioning following the significant changes that we made to our holdings in the first half of 2020. We continued to take the opportunity to invest in quality companies that can reliably compound earnings - companies that can deliver consistent earnings regardless of the economic cycle. We favor businesses which are run by a reliable management team, and which are cash-generative with an attractive dividend yield. We think the strength of domestic consumption in the region will prevail and will yield ample secular growth opportunities.

Consumer Discretionary

We have a significant exposure in the consumer discretionary sector. Our preference is for cash-generative fast-food restaurants, auto dealers benefiting from China's auto demand recovery and increasing share in a fragmented market, as well as ecommerce companies gaining from people working, shopping and consuming media from home. In the quarter, we avoided exposure to the electric vehicle space, which was favored by many local investors in China, but whose valuation we deemed unattractive given its fundamentals. Instead, we invested in new quality positions and added to names that will likely benefit from the broadening of China's recovery.

  • We bought shares in Gree Electric Appliance, the largest air conditioner maker in China. We think the company can resume its original earnings growth trajectory, helped by channel reform and the absence of price wars as the sector focuses on profitability.� It has also been buying back shares for its stock incentive program.
  • We sought to diversify our exposure to the China online space and bought a position in Pinduoduo, choosing it over its rival Meituan Dianping which we sold. While Alibaba Group, the country's dominant internet platform company and a core holding of the portfolio, has a solid ecommerce business with robust cashflow generation capability, Pinduoduo is able to grow the market, helped in part by its differentiated positioning as a marketplace for value-for-money products. We think Pinduoduo, where Tencent has a stake, is a well-managed company. It has found innovative ways to help expand the ecommerce pie and its community grocery business will likely be a new growth driver.
  • We increased our positions in the core quality companies that we own, adding to Yum China, fast-food operator in China. The fast-food business of Yum China, which operates the KFC and Pizza Hut chains, remained resilient during the coronavirus outbreak, helped by their early decision to handle their own delivery services. We continue to like its cash-generative business model and strong balance sheet as well as the quality of its corporate governance. We think Yum China is likely to benefit from the end of the pandemic given its plans to increase the number of stores it is set to open.

Consumer Staples

The portfolio has a sizeable exposure to consumer staples. We believe that Asian households are generally under levered and consumption is a secular opportunity. Our focus has been on cash-rich domestic quality companies.

  • However, in the quarter we sold Treasury Wine Estates on the back of concerns over increasing political tensions between Australia and China. The Australia-listed winemaker's Penfolds brand has enabled its strong growth in China in recent years, a market that was viewed as a significant long-term opportunity for them. China, however, announced in November the imposition of higher duties on Australian wine imports.

Industrials and Business Services

We have a considerable position in industrials and business services. We preferred select transport and property management companies, which we think are likely to weather the near-term economic difficulties with either their strong balance sheet or increased discipline concerning new investments. They are also likely to gain once mobility restrictions are lifted. We also favored companies benefiting from the trend toward increased imports created by the U.S.-China trade dispute.

  • We took the opportunity to invest in Singapore-listed Jardine Matheson, an ASEAN-focused conglomerate. Notably, the company has been buying back its stock, which we liked, and its valuation was undemanding.� It has exposure to the Hong Kong office property market through Hongkong Land and its other units include pan-Asian retailer Dairy Farm and Astra International, an Indonesian automobile maker. Dairy Farm's earnings will likely improve on the turnaround of its Southeast Asian grocery business, which has already shown signs of margin improvement in the first half. We like its strong cashflow generation capabilities and shareholder return discipline. It also owns the IKEA and Starbucks franchises in Hong Kong and Singapore. Astra's third-quarter results showed a gradual recovery and we expect improvement as coronavirus restrictions are eased. Astra is a market proxy for Indonesia's wealth recovery and consumption.

Communication Services

The portfolio has a sizable position in the communication services sector in absolute terms. Our focus here is on social media platforms and search engine companies that are benefiting from developments such as increased remote working and consumption of goods and services from home. We added to our positions in these companies and found an opportunity in a company catering to the Southeast Asian region.

  • We bought Sea Limited, an internet platform provider domiciled in Singapore whose ecommerce business is gaining shares in Southeast Asia. This new addition to the portfolio further diversified our investments in the sector. We think Sea Limited is well positioned to grow market share in the Southeast Asian online gaming and ecommerce market. The company continues to demonstrate strong execution as reflected in its above-consensus results for the third quarter.

Health Care

The portfolio has a relatively low weighting to the health care space. However, we found opportunities and bought selected quality Chinese pharmaceutical companies, including Jiangsu Hengrui Medicine and Sino Biopharmaceutical, with favorable growth prospects over the quarter.

  • Jiangsu Hengrui Medicine, which started as a local state-owned enterprise, is a high-quality company in China's fast-growing oncology market. �Its PD-1 inhibitor, a cancer treatment, made it to China's annual list of drugs to be covered by the country's national insurance fund in December. The average price cut was less than last years, a relief to both domestic and foreign drug makers whose profits were reduced by China's push to cut health-care costs. We expect the company's earnings to compound amid the rising incidence of cancer in China, higher penetration of better cancer treatment, and its strong product cycle. Hengrui has a deep pipeline that can support its growth for the next five years.
  • Sino Biopharmaceutical is a leading generic drug company in China and is also penetrating the oncology market. It has one of the strongest sales team among pharmaceutical companies in China with an efficient research and development system. In December, it announced that it had agreed to acquire a stake in COVID-19 vaccine developer Sinovac Life Sciences.

Sectors

Total
Sectors
10
Largest Sector Consumer Discretionary 25.10% Was (31-Dec-2020) 26.99%
Other View complete Sector Diversification

Monthly Data as of 31-Jan-2021

Indicative Benchmark: MSCI All Country Asia ex Japan Index

Top Contributor^

Financials
Net Contribution 1.75%
Sector
-0.06%
Selection 1.81%

Top Detractor^

Consumer Staples
Net Contribution -1.26%
Sector
-0.24%
Selection
-1.02%

^Relative

Quarterly Data as of 31-Dec-2020

Largest Overweight

Consumer Discretionary
By5.24%
Fund 25.10%
Indicative Benchmark 19.86%

Largest Underweight

Financials
By-4.66%
Fund 12.65%
Indicative Benchmark 17.31%

Monthly Data as of 31-Jan-2021

31-Jan-2021 - Eric C. Moffett, Portfolio Manager,
The portfolio has a substantial position in communication services in absolute terms. Our focus here is on social media platforms and search engine companies that are benefitting from developments such as increased remote working and consumption of goods and services from home. We added to our positions in these companies in the last quarter. We own Sea Limited, an internet platform provider whose ecommerce business is gaining shares in Southeast Asia. This addition to the portfolio further diversified our investments in the sector where we own shares of Tencent Holdings, its unit Tencent Music Entertainment, and South Korea’s NAVER.

Countries

Total
Countries
10
Largest Country China 40.47% Was (31-Dec-2020) 38.17%
Other View complete Country Diversification

Monthly Data as of 31-Jan-2021

Indicative Benchmark: MSCI All Country Asia ex Japan Index

Top Contributor^

India
Net Contribution 1.72%
Country
-0.00%
Selection 1.72%

Top Detractor^

South Korea
Net Contribution -0.48%
Country
-0.74%
Selection
0.26%

^Relative

Quarterly Data as of 31-Dec-2020

Largest Overweight

Hong Kong
By5.58%
Fund 12.88%
Indicative Benchmark 7.30%

Largest Underweight

China
By-4.53%
Fund 40.47%
Indicative Benchmark 45.00%

Monthly Data as of 31-Jan-2021

31-Jan-2021 - Michael Ganske, Portfolio Specialist,
We have a sizable absolute position in Taiwan and added to our exposure in this market. We hold Taiwan Semiconductor Manufacturing, which has strong pricing power in leading-edge wafer fabrication products, and its unit Vanguard International that focuses on 8-inch wafer fabrication foundry services, which we view as an earnings compounder. We invested in MediaTek, a fabless design house that will likely benefit from 5G cycle acceleration. Outside of technology, we own Chailease, a leasing company with a good track record in Taiwan, a growing China business and is expanding into Southeast Asia.

Team (As of 25-Feb-2021)

Eric C. Moffett

Eric Moffett is a vice president of T. Rowe Price Group, Inc. and T. Rowe Price Hong Kong Limited. He is the portfolio manager for the firm's Asia Opportunities equity strategy and chairman of the strategy's Investment Advisory Committee. 

Mr. Moffett has 19 years of investment experience, 12 of which have been with T. Rowe Price. Prior to joining the firm in 2007, Mr. Moffett was an analyst with Fayez Sarofim & Company, where he covered the household products, communications equipment and lodging/leisure industries. Mr. Moffett also was employed as an associate at Audax Group and as a management consultant with Bain & Company.

Mr. Moffett earned an A.B., magna cum laude, in economics from Princeton University and an M.B.A. from Harvard Business School.

  • Fund manager
    since
    2014
  • Years at
    T. Rowe Price
    13
  • Years investment
    experience
    20
Nick Beecroft, CFA

Nick Beecroft is the APAC head of the Investment Specialist Group and a portfolio specialist in the Equity Division. He also is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price International Ltd.

Nick’s investment experience began in 2001, and he has been with T. Rowe Price since 2005, beginning in the Equity Division. Prior to this, Nick was employed by Mercer Investment Consulting as an investment analyst.

Nick earned a B.A., with honors, in contemporary European studies from the University of Southampton. 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
    16
  • Years investment
    experience
    20

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% 160 basis points 1.77%
Class I $2,500,000 $100,000 $0 0.00% 75 basis points 0.85%
Class Q $1,000 $100 $100 0.00% 75 basis points 0.92%

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