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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.

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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SICAV

Emerging Local Markets Bond Fund

Research-driven investment in emerging market local currency sovereign bonds.

ISIN LU0310189781 WKN A0M1XQ

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

1.08%
$134.9m

1YR Return
(View Total Returns)

Manager Tenure

4.51%
8yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

0.36
1.66%

Inception Date 09-Aug-2007

Performance figures calculated in USD

Other Literature

31-Jan-2021 - Andrew Keirle, Portfolio Manager,
While uncertainty about vaccines and tightened restrictions came to the forefront in January, we retain a relatively optimistic view about emerging market (EM) local bonds. We believe vaccine rollouts could facilitate a broader economic recovery, supporting EM assets over the medium term. Financial conditions also continue to be supportive for the asset class and EM currencies remain attractive on a relative value basis despite the recent weakness.
Andrew Keirle
Andrew Keirle, Portfolio Manager

Andrew Keirle is a senior portfolio manager in the Fixed Income Division and a member of the Global Fixed Income Investment Team. Mr. Keirle is the lead portfolio manager for the Emerging Markets Local Currency Bond Strategy and has important input on a number of emerging markets bond strategies and global fixed income 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

Following the first quarter selloff in risk assets brought on by the coronavirus pandemic, an oil supply shock, and pronounced market illiquidity, emerging markets debt has enjoyed a V-shaped recovery and recouped its losses ultimately ending 2020 up just under 3%.

While the global economic slowdown and health care crisis have weighed on fundamentals in emerging markets, we remain encouraged by the fiscal and monetary steps taken by both developed and emerging nations to support the recovery in global economic activity. Some of the more fragile countries are likely to remain impaired but most countries should weather the storm and continue to rebound in 2021.

Furthermore, valuations of EM local currency bonds continue to look attractive from a medium-term perspective. EM currencies also appear attractive as USD depreciation has historically driven EM currency outperformance, so assuming we are entering a prolonged period of US sluggishness, this should be a tailwind for emerging markets local performance.

Vaccine efficacy and rollouts are supportive of EM growth over the medium term. The phasing out of lockdown measures in many countries will support EM growth momentum as trade increases. China's growth outlook remains imperative to Emerging Markets, so as the country's economic activity continues to recover from the pandemic, the regional outlook looks favourable and thus should support EM assets. Despite this, we are wary that Developed Market growth downgrades are materializing and will impact external demand for EM goods and services, weighing on the China-related bounce.

After a year of abundant global liquidity, any change in price or level of such liquidity will be a key driver for risk appetite, volatility, and potential flows into emerging markets. As growth returns, and the liquidity support is gradually removed from the global system, emerging markets with stronger balance sheets and medium-term growth prospects are likely to outperform.

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 emerging market issuers, with a focus on bonds that are denominated in the local currency.

Investment Approach

  • Focus primarily on sovereign debt denominated in the currencies of the respective emerging countries.
  • Integrate proprietary credit research and relative value analysis.
  • Establish independent credit rating by country.
  • Add value through active country, currency and individual security selection decisions.
  • Limit risk through diversification.
  • Employ long-term investment horizon combined with low portfolio turnover.

Portfolio Construction

  • Higher concentration portfolio structure: typically 100-150 securities
  • Duration bands: managed within +/- 2 years of the benchmark
  • Average Credit Quality: BBB
  • Country exposure maximum 30% per country
  • Target tracking error: 200-400 bps

Performance (Class I)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Since Manager Inception
Annualised
Fund % 4.51% 1.08% 7.02% 1.74% 0.62%
Indicative Benchmark % 2.92% 1.15% 6.42% 1.54% 0.43%
Excess Return % 1.59% -0.07% 0.60% 0.20% 0.19%

Inception Date 09-Aug-2007

Manager Inception Date 31-Oct-2012

Indicative Benchmark: Linked Benchmark

Data as of 31-Jan-2021

Performance figures calculated in USD

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Fund % 4.52% 3.16% 7.25% 1.67%
Indicative Benchmark % 2.69% 3.01% 6.72% 1.49%
Excess Return % 1.83% 0.15% 0.53% 0.18%

Inception Date 09-Aug-2007

Indicative Benchmark: Linked Benchmark

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 % -1.86% -5.32% -5.32% -1.26% 9.36%
Indicative Benchmark % -1.79% -5.44% -5.44% -1.07% 7.99%
Excess Return % -0.07% 0.12% 0.12% -0.19% 1.37%

Inception Date 09-Aug-2007

Indicative Benchmark: Linked Benchmark

Indicative Benchmark: Linked Benchmark

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.

Effective 1 January 2011, the benchmark for the sub-fund was changed to J.P. Morgan Government Bond Index-Emerging Markets (GBI-EM) Global Diversified. Prior to 1 January 2011, the benchmark was the J.P. Morgan Government Bond Index-Emerging Markets Broad Diversified Index. The benchmark change was made because the firm viewed the new benchmark to be a better representation of the investment strategy of the sub-fund. Historical benchmark representations have not been restated.

31-Jan-2021 - Andrew Keirle, Portfolio Manager,
EM local currency bonds generated negative returns in January, largely driven by weakness in EM currencies versus the U.S. dollar. Uncertainties and delays concerning the U.S. stimulus package under President Biden and the worsening pandemic there strengthened the greenback as risk sentiment retreated. Within the portfolio, our duration exposure held back relative gains slightly while currency marginally contributed. Our overweight exposure to Russian duration undermined relative gains amid rising inflation and geopolitical tensions. Our underweight positions in core-like duration markets, including Thailand and Poland, also dragged. In contrast, our off-benchmark holdings in Serbia and Ghana helped relative performance, along with our overweight exposure to Mexican duration. Within currencies, our short positions in the South African rand and Taiwanese dollar benefitted during the bout of EM weakness. Off-benchmark allocations to the Egyptian pound and Ghanaian cedi also helped, while our long positions in the offshore Chinese yuan, Russian rouble and Brazilian real worked against us.

Holdings

Issuers

Top
Issuers
10
Top 10 Issuers 68.08% Was (31-Dec-2020) 67.30%
Other View Top 10 Issuers

Monthly data as of31-Jan-2021

Holdings

Total
Holdings
106
Largest Holding Brazil Notas do Tesouro Nacional Serie F 3.46% Was (30-Sep-2020) 3.40%
Top 10 Holdings 27.08%
Other View Full Holdings Quarterly data as of  31-Dec-2020

Quality Rating View quality analysis

  Largest Overweight Largest Underweight
Quality Rating Reserves A
By % 5.46% -8.45%
Fund 5.46% 21.57%
Indicative Benchmark 0.00% 30.02%

Average Credit Quality

BBB

Monthly Data as of  31-Jan-2021
Indicative Benchmark:  J.P. Morgan GBI - EM Global Diversified

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.

Duration View duration analysis

  Largest Overweight Largest Underweight
Duration 5-7 Years 1-3 Years
By % 10.61% -17.88%
Fund 31.49% 7.13%
Indicative Benchmark 20.88% 25.01%

Weighted Average Duration

5.42 Years

Monthly Data as of  31-Jan-2021
Indicative Benchmark: J.P. Morgan GBI - EM Global Diversified

31-Dec-2020 - Andrew Keirle, Portfolio Manager,

During the period, the portfolio maintained its overweight relative duration tilted toward higher-yielding opportunities, while absolute duration marginally reduced as yields compressed somewhat. We continue to view EM FX risk positively and remain focused on frontier and more mainstream EM currencies, principally funded by a basket of developed market currencies.

Bond Allocation

  • On the duration side, we continue to lean on countries that illustrate recovery in activity combined with supportive central bank policy and subdued inflation. Indonesia, China, Malaysia, and Russia remained favored positions, supported by good fundamentals and relatively higher yields.
  • We retain underweights in Czech Republic, Poland, Chile, and Thailand, as we view these countries as possessing high valuations, higher correlation with global core rates, and limited scope for capital appreciation.
  • In our view, inflation is a growing risk. We held and added to our inflation linked debt in Thailand, Colombia, and Brazil.
  • As South Africa struggles to control pandemic-induced slowdowns, we reduced our overweight to the country, locking in recent gains.
  • We hold off-index long positions in Egypt, Serbia, India, and Kenya due to cheap valuations and favourable demand dynamics.

Currency Selection

  • The strategy added to our overweight EM FX positions versus the benchmark funded via a mix of dollar, DM and EM FX funders. We have hedged some of this via DM based currencies due to their lower volatility.
  • We retain our overweight position Latin American currencies, primarily via the Mexican peso, Peruvian sol and Colombian peso.
  • In Asia, we maintain our regional overweight with preference for the Indonesian rupiah, Chinese yuan and Malaysian ringgit. These positions are partially hedged via shorts in the South Korean won and Taiwanese dollar.
  • We are overweight Emerging Europe currencies, primarily focused on the Czech koruna, Russian ruble and Romanian leu. We also added a new Turkish lira position late in the period.
  • As valuations remain attractive, we have maintained our off-benchmark FX exposures to Serbia, Egypt, and Ukraine. We also opened a new FX position in Ghana, funded by closing our local Kenya position.

Sectors

Total
Sectors
6
Largest Sector Sovereign 91.63% Was (31-Dec-2020) 90.79%
Other View complete Sector Diversification

Monthly Data as of 31-Jan-2021

Indicative Benchmark: J.P. Morgan GBI - EM Global Diversified

Largest Overweight

Reserves
By5.41%
Fund 5.41%
Indicative Benchmark 0.00%

Largest Underweight

Sovereign
By-8.37%
Fund 91.63%
Indicative Benchmark 100.00%

Monthly Data as of 31-Jan-2021

30-Nov-2015 - Andrew Keirle, Portfolio Manager,
We maintain off-benchmark allocations to selected U.S. dollar-denominated and euro-denominated sovereign and quasi-sovereign bonds that hold attractive relative value.

Regions

Total
Regions
5
Largest Region Asia 33.14% Was (31-Dec-2020) 32.19%
Other View complete Region Diversification

Monthly Data as of 31-Jan-2021

Indicative Benchmark: J.P. Morgan GBI - EM Global Diversified

Largest Overweight

Middle East & Africa
By5.17%
Fund 12.75%
Indicative Benchmark 7.58%

Largest Underweight

Emerging Europe
By-7.31%
Fund 21.06%
Indicative Benchmark 28.37%

Monthly Data as of 31-Jan-2021

Countries

Total
Countries
30
Largest Country Indonesia 9.86% Was (31-Dec-2020) 9.94%
Other View complete Country Diversification

Monthly Data as of 31-Jan-2021

Indicative Benchmark: J.P. Morgan GBI - EM Global Diversified

Largest Overweight

Egypt
By2.28%
Fund 2.28%
Indicative Benchmark 0.00%

Largest Underweight

Poland
By-5.79%
Fund 2.51%
Indicative Benchmark 8.30%

Monthly Data as of 31-Jan-2021

31-Jan-2021 - Andrew Keirle, Portfolio Manager,
We reduced our duration exposure but maintained a modest overweight position in higher yielding countries like Indonesia and Romania, while adding to our off-benchmark position in Ghana. We retained underweight positions in Thailand and Poland on a relative value basis and added to our inflation-linked debt exposure due to low implied inflation. Elsewhere, we increased our allocation to South Africa as we believe fiscal and funding concerns have potentially reached their peak.

Currency

Total
Currencies
32
Largest Currency 10.91% Was (31-Dec-2020) 11.06%
Other View completeCurrency Diversification

Monthly Data as of  31-Jan-2021

Indicative Benchmark :

Largest Overweight

Offshore Chinese renminbi
By 3.64%
Fund 3.64%
Indicative Benchmark 0.00%

Largest Underweight

U.S. dollar
By -11.70%
Fund -11.70%
Indicative Benchmark 0.00%

Monthly Data as of  31-Jan-2021

31-Jan-2021 - Andrew Keirle, Portfolio Manager,
We remain constructive on EM currencies, focusing on both frontier and mainstream EM. These positions are principally funded by a basket of developed market currencies, primarily the U.S. dollar, and are partially hedged to help insulate any potential downside. We are overweight the Indonesian rupiah and Malaysia ringgit due to an improving trade outlook. Similarly, we retain our overweight in the Russian rouble, and off-benchmark exposures to the Egyptian pound, Serbian dinar and Ghanaian cedi given their attractive relative valuations.

Team (As of 25-Feb-2021)

Andrew Keirle

Andrew Keirle is a senior portfolio manager in the Fixed Income Division and a member of the Global Fixed Income Investment Team. Mr. Keirle is the lead portfolio manager for the Emerging Markets Local Currency Bond Strategy and has important input on a number of emerging markets bond strategies and global fixed income strategies. He is a vice president of T. Rowe Price Group, Inc. and T. Rowe Price International Ltd.

Mr. Keirle has 23 years of investment experience, 14 of which have been with T. Rowe Price. Prior to joining the firm in 2005, he was a portfolio manager and analyst at Lazard Asset Management. Prior to joining Lazard, Mr. Keirle spent seven years as a global portfolio manager at Gulf International Bank in London.

Mr. Keirle is a qualified member of the Institute of Investment Management and Research, and he also holds a diploma from the Society of Technical Analysts. He graduated with a B.Sc. in economics and politics from the University of Swansea at the University of Wales.

  • Fund manager
    since
    2012
  • Years at
    T. Rowe Price
    15
  • 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 I $2,500,000 $100,000 $0 0.00% 65 basis points 0.75%
Class Q $1,000 $100 $100 0.00% 65 basis points 0.82%
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.