SICAV

Global Natural Resources Equity Fund

Seeking to identify long-term global winners in the arena of natural resources extraction and production.

ISIN LU0272423913 WKN A0MKKE

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

-2.69%
$87.8m

1YR Return
(View Total Returns)

Manager Tenure

-6.57%
6yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

0.39
5.53%

Inception Date 15-Nov-2006

Performance figures calculated in USD

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31-Aug-2020 - Shawn T. Driscoll, Portfolio Manager,
We continue to believe that we are in a secular bear market for many commodities. However, depending on the duration of the coronavirus outbreak, we see the potential for a sharp rebound in oil prices as demand normalises. Despite our positive near-term outlook for crude prices, we expect West Texas Intermediate (WTI) crude oil to settle in the mid-USD 40s per barrel over the long term.
Shawn T.  Driscoll
Shawn T. Driscoll, Portfolio Manager

Shawn Driscoll is the portfolio manager of the Global Natural Resources Equity Strategy, including the New Era Fund, in the U.S. Equity Division. He is chairman of the Investment Advisory Committee of the Global Natural Resources Equity Strategy and a vice president and an Investment Advisory Committee member of the US Capital Appreciation, US Large-Cap Core Equity, US Growth Stock, US Large-Cap Core Equity, US Mid-Cap Growth Equity, US Multi-Cap Growth Equity, and Real Assets Equity Strategies. Shawn also is a vice president of T. Rowe Price Group, Inc.

Click for Manager Outlook
 

Strategy

Manager's Outlook

A massive wave of productivity gains and falling cost curves in U.S. shale began in 2011 and prompted a secular bear market in oil that has since extended to other commodities. Commodity cycles tend to last 15 to 20 years, on average, and we continue to believe there is more room for productivity to improve and the bear market to persist. The narrative of productivity-driven oil price deflation was exacerbated in early 2020 by dual demand and supply shocks, creating unprecedented pressure on the market's balance and briefly driving WTI prices into negative territory in late April. This�extreme price action sent oil producers a clear signal that output needed to be curtailed swiftly and meaningfully.

The global spread of the coronavirus effectively shut down many large economies around the world, resulting in the first contraction in oil demand since the 2008 global financial crisis. The magnitude of�negative demand shock, however, far exceeded any weakness previously seen in the oil market. Fortunately, it does not take long to rebalance the market, a point underscored by oil prices bouncing off their lows. While the timing of a recovery depends on the duration of the coronavirus' effect on global economic activity, we believe the market is shaping up for a powerful move in oil prices�and energy stocks over the next 12 to 24 months as demand begins to normalize. As rig counts drop in the U.S. and the steeper decline rates on shale wells kick in, the oil market should rebalance relatively quickly as inventories draw down. Just as oil prices shot through the cost curve on the way down, we would not be surprised to see them rebound above the incentive curve in recovery.

Throughout this experience, we have maintained our disciplined approach and remained extremely careful with what we call hidden leverage, or a dangerous spike in a company's debt caused by a meaningful decline in oil prices. The portfolio's energy allocation increased modestly over the period but remains near historical lows for the strategy. As oil prices bottomed, we carefully added some exposure to exploration and production and services and equipment stocks that tend to exhibit higher beta to commodity prices and should do well in a recovery. These purchases focused on names with quality assets and business models. Although this environment has created a compelling opportunity to take advantage of an unprecedented market anomaly, we firmly believe our longer-term view of a structural commodity bear market remains intact. We expect to retain considerable allocations to chemicals, utilities, and packaging, as these businesses should benefit from lower commodity prices. We�also�meaningful opportunities in the paper and forest products industry, where we see the cost curve steepening to the advantage of low-cost producers that we believe are poised to benefit from rising prices. Over the long term, we believe that favorable ESG profile could provide a secondary tailwind for the industry.

We remain committed to our bottom-up stock selection process and our philosophy of buying and holding a diverse selection of fundamentally sound natural resources companies with solid balance sheets and talented management teams. Our expansive global research platform continues to assist in identifying those companies that can provide long-term capital appreciation for our clients, and we believe the market will reward our disciplined and consistent approach to investing over the long term.

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 widely diversified portfolio of stocks of natural resources or commodities-related companies. The companies may be anywhere in the world, including emerging markets.

Investment Approach

  • Focus on well-managed companies that own or develop natural resources and other basic commodities with attractive long-term supply-demand fundamentals.
  • Invest in companies that operate “downstream” from these resources, e.g., refining, paper manufacturing, steel fabrication, and petrochemicals.
  • The portfolio invests in resource companies on a global basis including — international energy, forest products, mining, and commodities.
  • Assessment of resource/commodity cycle, industry valuation, and company fundamentals is key.
  • Broadly diversify holdings to manage portfolio risk profile relative to highly concentrated energy or gold strategies.

Portfolio Construction

  • Typically 90-120 securities
  • Positions typically range to 5%
  • Reserves typically range from 0% to 5%

Performance (Class I)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Since Manager Inception
Annualised
Fund % -6.57% -2.69% 1.45% 0.89% -1.98%
Indicative Benchmark % -13.07% -5.54% -0.73% 0.74% -3.33%
Excess Return % 6.50% 2.85% 2.18% 0.15% 1.35%

Inception Date 15-Nov-2006

Manager Inception Date 30-Sep-2013

Indicative Benchmark: MSCI World Select Natural Resources Index Net

Data as of  31-Aug-2020

Performance figures calculated in USD

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Fund % -21.32% -5.91% -3.39% 0.30%
Indicative Benchmark % -23.96% -6.46% -4.01% 0.79%
Excess Return % 2.64% 0.55% 0.62% -0.49%

Inception Date 15-Nov-2006

Indicative Benchmark: MSCI World Select Natural Resources Index Net

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 % -7.12% 2.91% -21.04% 3.89% 10.80%
Indicative Benchmark % -8.33% -3.96% -28.73% 3.24% 5.24%
Excess Return % 1.21% 6.87% 7.69% 0.65% 5.56%

Inception Date 15-Nov-2006

Indicative Benchmark: MSCI World Select Natural Resources Index Net

Indicative Benchmark: MSCI World Select Natural Resources 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-Aug-2020 - Shawn T. Driscoll, Portfolio Manager,
Commodity prices were positive in August. Natural gas prices jumped sharply as Appalachian gas and shale oil producers have been slow to return to operations after low prices drove many offline earlier this year. Crude oil prices were modestly higher as lockdown restrictions continue to ease globally, a positive sign for oil demand. Improving economic trends benefitted chemicals companies, with diversified, commodity, and specialty chemicals companies all gaining ground. Meanwhile, after recent outperformance, precious metals and minerals companies modestly pulled back. Gold prices were volatile but closed the month roughly flat, while copper prices advanced. Within the portfolio, the electrical components and equipment and semiconductor equipment industries held back relative returns the most. Both industries saw names levered to solar technology and green energy push higher over the period, and our lack of exposure to these trends worked against us. We have limited exposure to both industries and focus on more traditional players within those segments of the market. Conversely, not owning water utilities contributed the most for the month. In a period of strong equity performance, these defensive stocks posted negative returns as investors increased their risk appetite, and our lack of exposure to the industry proved beneficial.

Holdings

Total
Holdings
117
Largest Holding Total 4.48% Was (31-Mar-2020) 6.31%
Other View Full Holdings Quarterly data as of 30-Jun-2020
Top 10 Holdings 25.36% View Top 10 Holdings Monthly data as of 31-Aug-2020

Largest Top Contributor^

Air Products & Chemicals
By 0.17%
% of fund 3.21%

Largest Top Detractor^

NextEra Energy
By -1.03%
% of fund 2.74%

^Absolute

Quarterly Data as of 30-Jun-2020

Top Purchase

Enbridge
1.32%
Was (31-Mar-2020) 0.65%

Top Sale

Total
4.44%
Was (31-Mar-2020) 6.31%

Quarterly Data as of 30-Jun-2020

31-Jul-2020 - Shawn T. Driscoll, Portfolio Manager,
Our bearish long-term outlook for oil prices has not changed. Accordingly, we favour defensive industries, such as electric utilities, and areas of the natural resources universe that tend to benefit from lower commodity prices. We continued to upgrade the portfolio by trimming lower-conviction ideas while adding to high-quality companies that look attractive now and that we’d like to own on the other side of the economic cycle. Although we see the potential for a strong countercyclical rally in oil prices and energy stocks over the next 12 months, we remain selective in how we position for this trade.

Sectors

Total
Sectors
9
Largest Sector Chemicals 20.23% Was (31-Jul-2020) 20.13%
Other View complete Sector Diversification

Monthly Data as of 31-Aug-2020

Indicative Benchmark: MSCI World Select Natural Resources Index

Largest Overweight

Other
By6.65%
Fund 9.55%
Indicative Benchmark 2.90%

Largest Underweight

Energy Services & Processors
By-15.60%
Fund 8.57%
Indicative Benchmark 24.17%

Monthly Data as of 31-Aug-2020

31-Aug-2020 - Shawn T. Driscoll, Portfolio Manager,
Our bearish long-term outlook for oil prices has not changed. Accordingly, we favour defensive industries, such as electric utilities, and areas of the natural resources universe that tend to benefit from lower commodity prices. We continued to upgrade the portfolio by trimming lower-conviction ideas while adding to high-quality companies that look attractive now and that we’d like to own on the other side of the economic cycle. Although we see the potential for a strong countercyclical rally in oil prices and energy stocks over the next 12 months, we remain selective in how we position for this trade.

Countries

Total
Countries
17
Largest Country United States 56.18% Was (31-Jul-2020) 56.41%
Other View complete Country Diversification

Monthly Data as of 31-Aug-2020

Indicative Benchmark: MSCI World Select Natural Resources Index

Largest Overweight

United States
By7.92%
Fund 56.18%
Indicative Benchmark 48.26%

Largest Underweight

Canada
By-6.59%
Fund 7.86%
Indicative Benchmark 14.46%

Monthly Data as of 31-Aug-2020

31-Jul-2015 - Shawn T. Driscoll, Portfolio Manager,
From a country perspective, our allocation to Norway saw the largest percentage increase during the month of July. There were no notable reductions for the period.

Currency

Total
Currencies
10
Largest Currency U.S. dollar 60.95% Was (31-Jul-2020) 62.03%
Other View complete Currency Diversification

Monthly Data as of 31-Aug-2020

Indicative Benchmark : MSCI World Select Natural Resources Index

Largest Overweight

U.S. dollar
By 12.47%
Fund 60.95%
Indicative Benchmark 48.48%

Largest Underweight

Canadian dollar
By -9.81%
Fund 4.67%
Indicative Benchmark 14.49%

Monthly Data as of 31-Aug-2020

Team (As of 05-Aug-2020)

Shawn T.  Driscoll

Shawn Driscoll is the portfolio manager of the Global Natural Resources Equity Strategy, including the New Era Fund, in the U.S. Equity Division. He is chairman of the Investment Advisory Committee of the Global Natural Resources Equity Strategy and a vice president and an Investment Advisory Committee member of the US Capital Appreciation, US Large-Cap Core Equity, US Growth Stock, US Large-Cap Core Equity, US Mid-Cap Growth Equity, US Multi-Cap Growth Equity, and Real Assets Equity Strategies. Shawn also is a vice president of T. Rowe Price Group, Inc. 

Shawn’s investment experience began in 2003, and he has been with T. Rowe Price since 2006, beginning in the U.S. Equity Division. Prior to this, Shawn was employed by MTB Investment Advisors as an equity research analyst. Shawn also was employed by MPower Communications as an information technology project manager. 

Shawn earned a B.A. in economics and mathematics from the University of Rochester and an M.B.A. in finance and global business from New York University, Leonard N. Stern School of Business.

  • Fund manager
    since
    2013
  • Years at
    T. Rowe Price
    14
  • Years investment
    experience
    17
Brian Dausch

Brian Dausch is a portfolio specialist in the U.S. Equity Division of T. Rowe Price. He is a member of the Global Natural Resources Equity, US Mid-Cap Growth Equity, US Small-Cap Growth Equity, QM US Small-Cap Growth Equity, and Health Sciences Strategy teams, working closely with institutional clients, consultants, and prospects. Mr. Dausch is a vice president of T. Rowe Price Group, Inc.

Mr. Dausch has 22 years of investment experience, 21 of which have been at T. Rowe Price. He joined the firm in 1998; prior to his current position, he managed the U.S. Equity Portfolio Analysis Group. Mr. Dausch also served as an associate research analyst in the U.S. Equity Division in health care, specializing in biotechnology and pharmaceutical company research.

Mr. Dausch earned a B.S. in business administration, with a concentration in finance, from the University of Delaware. He also has earned the Chartered Financial Analyst designation.

  • Years at
    T. Rowe Price
    21
  • Years investment
    experience
    22

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 1.74%
Class I $2,500,000 $100,000 $0 0.00% 75 basis points 0.84%
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.

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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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