Global Equity Fund

Investment involves risk. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy.

Overview

Manager's Outlook

The investment landscape?marked by extreme inflation, tightening financial conditions, slowing growth, decelerating corporate earnings, and continued geopolitical risks?remains challenging. We are operating in an environment of rapidly changing and powerful economic factors by focusing on our "core basics" of following a truly idiosyncratic, sector-balanced approach that leverages our extensive research platform to invest in what we believe are well-run, durable growth compounders?stocks that should provide a solid return outcome in a lower-growth environment with meaningfully reset valuations.

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The ongoing conflict in Ukraine has led to extreme commodity price inflation that has rippled through the global economy, and COVID-related headwinds have continued to disrupt supply chains. Outside of China, the rest of the world has reopened, and the higher inflation that was once thought to be transitory is likely to remain higher for longer than we had thought. With central banks now laser focused on reigning in inflation, we are operating in a higher interest rate world with rising risks of a recession.

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Despite near-term uncertainty, we believe the market environment is still positive for equities and growth in the medium and longer term. While recession has become a broadly consensus view, it would likely be one of the most telegraphed recessions in history, and we would expect it to be short lived. Even though we are clearly in a new rate environment with the Federal Reserve going at a steeper and quicker pace than we anticipated, real rates remain negative and should remain very low for the medium term, which would be supportive for global growth equities. We believe the sharp downturn in equities has also removed much of the fundamental excess valuation in many stocks, which should provide for more compelling opportunities.

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We are cognizant of building the portfolio for tomorrow, rather than owning what has worked in the recent past. Despite the challenges of 2022, we have high conviction in our current positions with a strong enduring bias toward companies in highly attractive industries where dynamics such as low penetration and long runways will lead to high and sustained levels of growth. Extending our return horizon and thinking beyond the short-term market narrative have allowed us to be contrarian in the past and have contributed to our longer-term outperformance.

Strategy

Fund Summary

High conviction, truly global equity portfolio seeking to invest in companies with above-average and sustainable growth characteristics.

OUR VIEWS ON GLOBAL EQUITIES

Performance - Net of Fees

Past performance is not a reliable indicator of future performance.

30-Jun-2022 - Scott Berg, Portfolio Manager,

Portfolio Positioning and Activity

Global equity markets experienced an acute, near-indiscriminate selloff during the quarter as investors began to price in the possibility of a recession and concerns that central banks would not be able to create a "soft landing" in their efforts to tame inflation. As always, we remain focused on maintaining a broadly balanced portfolio with sector exposures that are relatively neutral to our core benchmark. We are cognizant of building the portfolio for tomorrow, rather than owning what has worked in the recent past. Despite the challenges of 2022, we have high conviction in our current positions with a strong enduring bias toward companies in highly attractive industries where dynamics such as low penetration and long runways will lead to high and sustained levels of growth. Extending our return horizon and thinking beyond the short-term market narrative have allowed us to be contrarian in the past and have contributed to our longer-term outperformance.

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Sector-wise, we favor the consumer discretionary and information technology sectors as we believe there are strong secular tailwinds in key areas that should benefit over the long term. We find fewer opportunities in areas like energy and consumer staples, though recent market movements have created opportunities for us to add selectively to those areas. Regionally, we continue to favor fast-growing emerging market countries that have low debt-to-gross domestic product ratios and attractive demographic growth, such as India, Indonesia, Vietnam, and the Philippines. Despite near-term challenges, we are also finding opportunities in China, with an emphasis on domestic exposure to areas like information technology and health care, where we believe there is a lot of innovation and the government is focused on building vibrant domestic industries.

Consumer Discretionary

We are focused on leaders within the global online retail and consumer services ecosystems. COVID-19 has pulled forward years of e-commerce share gains, and we have an expanded and diverse set of names levered to that trend. We continue to think the market is severely underestimating the profound effect the pandemic has had on the consumer landscape. It is now vital for companies to view their businesses through an omnichannel lens, and it is no longer an option for businesses to ignore the need for an online presence.

We sold shares of Amazon.com to manage our position size. We continue to have a favorable view of the company's cloud business and think its advertising business should continue to grow nicely as well. However, results over the next couple of quarters are likely to be somewhat challenged in a weaker consumer and economic environment, and we chose to scale back the magnitude of our bet.
We sold shares of European fashion retailer ASOS. The company faces a challenging macroeconomic backdrop as European consumers wrestle with rising inflation and slowing growth, made more acute due to its proximity to the Russia-Ukraine conflict. As such we chose to reallocate to names where we have higher conviction.

Materials

We favor the materials sector. Within the sector, we have largely neutralized exposure to metals and mining and have maintained a diversified approach that includes positions in chemicals, where the Russia-Ukraine conflict has contributed to increased demand and tightening supply, and packaging, where there are multi-year secular tailwinds. We see the materials sector as an opportunity to own companies that will have a positive impact on sustainability and the environment, but also recognize that we could be in a prolonged period of higher commodity prices due to the situation in Ukraine.

We purchased shares of BHP, which provides exposure to a portfolio of some of the highest-quality mining assets in the industry, mainly focused on iron ore, copper, and metallurgical coal. The company has a solid management team that we believe is executing well. The company recently spun out its petroleum business and prior to Russia's invasion of Ukraine had intensified its focus on potash. The company generates substantial cash and is one of the biggest dividend payers globally.
We purchased shares of Sweden-based mining and smelting company Boliden. We think Boliden is one of the highest-quality names in the metals and mining space, with a thoughtful yet opportunistic management team that has a history of creating value for shareholders by investing countercyclically, keeping leverage low, lowering costs through efficiencies and technology, and dampening volatility with its smelting business.

Energy

We started positions in several of the platform's highest-conviction ideas within the sector during the most recent quarter, skewing towards those aiding energy transition in Europe that are relatively cleaner from an ESG perspective. While we continue to expect a normalization of energy prices as exogenous factors reverse and productivity continues to improve, we recognize that we cannot know exactly how the Ukraine crisis will unfold going forward, exacerbating the high level of uncertainty around the timing and path of normalization.

We purchased shares of Baker Hughes, one of the world's largest oil field services companies. With the ongoing conflict in Ukraine, the global energy supply chain will need to be retooled, and we think Baker Hughes will be a beneficiary of a multiyear runway of increased capital expenditures to help with that retooling, particularly on the natural gas and liquefied natural gas side.
We bought shares of European oil and gas exploration and production firm Galp Energia. We think Galp Energia offers unique and high-quality exposure to European energy, with a diversified asset base and good balance sheet. In particular, we think the company's Brazilian pre-salt and Mozambique liquid natural gas assets offer a long runway for growth.

Health Care

The long-term secular tailwinds for the health care sector remain in place. Within the sector, we have meaningful exposure to life sciences tools and services companies making biologics or facilitating research and development efforts for companies in the biopharma space, as well as equipment and supplies companies focused on medical diagnostics and testing. Within pharmaceuticals, we continue to invest in highly innovative companies with diverse product portfolios and promising pipeline assets. We also own companies tied to the ongoing secular trend of robotic surgery and have exposure to U.S. managed care where fundamentals remain strong, and valuations are attractive.

We sold shares of Argenx, an antibody platform company developing novel therapies in autoimmune diseases and cancer, on strength. The company's therapy Vyvgart has a best-in-class profile with a first-mover advantage across several indications, and we think some earlier stage programs such as ARGX-117, which is a novel complement (C2) inhibitor, could be sources of long-term value creation for the company.

Team

Scott Berg,
Portfolio Manager

Scott Berg is the portfolio manager for the T. Rowe Price Global Growth Equity Strategy.

Portfolio Manager since

2012

Years at
T. Rowe Price

Years investment
experience

Samuel P. Ruiz,
Portfolio Specialist

Samuel P. Ruiz is a Portfolio Specialist in the Equity Division at T. Rowe Price, representing the firm's global and Australian equity portfolio managers to clients, consultants and prospects.

Years at
T. Rowe Price

Years investment
experience

The Management Fee for the T. Rowe Price Global Equity Fund- I Class is 0.85% p.a. and the Indirect Cost is 0.00% p.a. Full details of other fees and charges are available within the Fund's Product Disclosure Statement and Reference Guide.

Benchmark Data Source: MSCI. MSCI index returns are shown with reinvestment of dividends after the deduction of withholding taxes. MSCI and its affiliates and third party sources and providers (collectively, “MSCI”) makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed, or produced by MSCI. Historical MSCI data and analysis should not be taken as an indication or guarantee of any future performance analysis, forecast or prediction. None of the MSCI data is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such.

The specific securities identified and described in this website do not represent all of the securities purchased or sold for this fund. This information is not intended to be a recommendation to take any particular investment action and is subject to change. No assumption should be made that the securities identified were or will be profitable.

Unless otherwise specified, all fund ratings, awards and data are as of 31-Aug-2023 and sourced from T. Rowe Price.

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Equity Trustees Limited (“Equity Trustees”) (ABN 46 004 031 298 AFSL 240975) is a subsidiary of EQT Holdings Limited (ABN 22 607 797 615), a publicly listed company on the Australian Stock Exchange (ASX:EQT). Equity Trustees and T. Rowe Price Australia Limited ("TRPAU") (ABN: 13 620 668 895 and AFSL: 503741) are, respectively, the responsible entity and investment manager of the T. Rowe Price Australian Unit Trusts. A Target Market Determination for each T. Rowe Price Australian Unit Trust (or class of units in a Trust) is available here (http://www.eqt.com.au/insto). It describes who the financial product is likely to be appropriate for (i.e. the target market), and any conditions around how the product can be distributed to investors. It also describes the events or circumstances where Equity Trustees Limited, the responsible entity of the T. Rowe Price Australian Unit Trusts may need to review the Target Market Determination for the financial product.

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Past performance is not a reliable indicator of future performance. The price of any fund may go up or down. Investment involves risk including a possible loss to the principal amount invested. For general information purposes only, does not take into account the investment objectives, financial situation or needs of any particular investor. For further details, please refer to each fund's product disclosure statement and reference guide which are available from Equity Trustees (www.eqt.com.au/insto) or TRPAU (www.troweprice.com.au).

Information and opinions presented have been obtained or derived from sources believed to be reliable and current; however, we cannot guarantee the sources' accuracy or completeness. There is no guarantee that any forecasts made will come to pass. The views contained herein are as of the date noted on the material and are subject to change without notice; these views may differ from those of other T. Rowe Price group companies and/or associates. Under no circumstances should the material, in whole or in part, be copied or redistributed without consent from T. Rowe Price.

Portfolio Positioning and Activity

Consumer Discretionary

Materials

Energy

Health Care

Risks

Typical Investor

How to Invest