Concentrated Global Equity Fund Quarterly Review

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Reviewing the T. Rowe Price Concentrated Global Equity Fund for the third quarter of 2025, the portfolio delivered a return of 1.71% net of fees, but did lag a very strong MSCI World Index return of closer to 6% in Australian dollar terms.

Our aim in this portfolio is to have a bias towards higher durability and quality in the companies we select, but also be balanced for all market conditions.

And when we reflect on the last quarter, there was really an increased shift in the market towards heightened risk taking and speculation.

We actually saw high risk stocks outperform high quality stocks to the tune of almost 20% in the Russell 1000 in the third quarter alone.

We're also continuing to see a disconnect between the performance of real economy stocks versus digital economy stocks, which continue to significantly outperform.

On the latter part, it was our underweight to some of these beneficiaries from the digital economy that drove around 90-91% of all the underperformance we saw in the quarter.

So our underweights to four companies such as NVIDIA, Tesla, Apple and Alphabet actually drove that return despite us having strong overweights to stocks benefiting such as Amphenol and TSMC.

But an interesting dichotomy when it comes to the success of the digital economy is when we think about our positioning in companies exposed to the housing sector to manufacturing or general industrials, which continue to see weakness as the CapEx cycle and investments in general are yet to pick up.

And we believe this is due to companies really waiting for more tariff and policy certainty.

So while we have lagged by owning some of these stocks, we do believe there is an inflexion point which will be rewarded in the near term future.

We have to acknowledge though, one other segment of the portfolio that worked against us was also stock picking in healthcare.

Two companies, Eli Lilly and Shogai, both exposed to the future development of weight loss drugs, particularly Eli Lilly's expectation that they would have an oral pill available as opposed to an injectable received a negative data point in the quarter with the trials showing that the weight loss did not meet the hurdle that investors needed or expected, which would allay the concerns of potential future competition and pricing pressure.

On the back of that, we did actually eliminate Lilly, believing that that would create more questions around the terminal value and the value of that blockbuster drug in general.

The Fund’s approach remains focused on high-conviction ideas and long-term fundamentals, rather than reacting to short-lived trends.

Samuel Ruiz Portfolio Specialist

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Oct 2025 In the Loop

Global Equity Fund Quarterly Review

By Samuel Ruiz

Important Information

Equity Trustees Limited (“Equity Trustees”) (ABN: 46 004 031 298, AFSL: 240975), is the Responsible Entity for the T. Rowe Price Australian Unit Trusts ("the Fund"). Equity Trustees is a subsidiary of EQT Holdings Limited (ABN: 22 607 797 615), a publicly listed company on the Australian Securities Exchange (ASX: EQT).

This video has been prepared by T. Rowe Price Australia Limited ("TRPAU") (ABN: 13 620 668 895, AFSL: 503741) to provide you with general information only. In preparing this information, we did not take into account the investment objectives, financial situation or particular needs of any particular person. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information. Neither TRPAU, Equity Trustees nor any of its related parties, their employees or directors, provide any warranty of accuracy or reliability in relation to such information or accepts any liability to any person who relies on it.

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