Meet Howard Woodward — Euro Corporate Bond Fund Portfolio Manager

Transcript

Hi I’m Howard Woodward, portfolio manager of the T. Rowe Price Euro Corporate Bond Fund

I’ve been investing in fixed income markets for over 25 years

I have two strong passions in my life, aside from my family, …rugby and investing

These passions, to my mind share surprising parallels

To achieve success in both requires a clear game plan, a plan that’s agile and adaptable in the face of the opposition or market conditions

And with both, disciplined execution, within that game plan, can reap rewards

With rugby and investing, the players on the field, those in your team, are the talent or the squad that you can leverage, the team at your disposal as a portfolio manager

Understanding the squad…understanding the team, is of paramount importance

And having spent the first 18 years of my career as an analyst at T.Rowe Price, I have a deep appreciation for the analytical rigour of the credit research structure and the analysts that support the investment process

My team, however, is not drawn from 15 players… but from over 50 analysts who contribute directly and indirectly to the fund

Each analyst is a specialist in their field, bringing unique insights that identify opportunities to generate alpha for the portfolio

My role is to construct a portfolio that blends the high-conviction investment ideas from our research team, within defined risk limits

Complementing this, our macro team provide a top-down perspective, helping us understand the broader risk environment

In rugby, a coach picks the best team suited to the weather, the pitch, the opposition, to deliver the best performance

In portfolio management, we must also adapt, blending tactical ideas with core positions, and defensive offsets depending on the market environment

We aim to outperform in all conditions — whether spreads tighten or widen.

For example, in 2022, when markets reacted to the invasion of Ukraine, we shifted to a more defensive stance to protect the portfolio to the downside while still capturing opportunities to outperform

Ultimately, my goal is simple: to build a portfolio that functions like a high-performing rugby team — be resilient, adaptable and consistently deliver strong results no matter what the conditions throw at us

That’s why I am proud that the Euro Corporate Bond Fund has delivered top quartile & even top decile performance over most short & long periods.

 

 

Risks – the following risks are materially relevant to the fund  

Credit - Credit risk arises when an issuer's financial health deteriorates and/or it fails to fulfill its financial obligations to the fund.

Derivatives - Derivatives may be used to create leverage which could expose the fund to higher volatility and/or losses that are significantly greater than the cost of the derivative.

Hedging - Hedging measures involve costs and may work imperfectly, may not be feasible at times, or may fail completely.

Interest rate - Interest rate risk is the potential for losses in fixed-income investments as a result of unexpected changes in interest rates.

Geographic concentration  - Geographic concentration risk may result in performance being more strongly affected by any social, political, economic, environmental or market conditions affecting those countries or regions in which the fund's assets are concentrated.

Sector concentration - Sector concentration risk may result in performance being more strongly affected by any business, industry, economic, financial or market conditions affecting a particular sector in which the fund's assets are concentrated.

 Default - Default risk may occur if the issuers of certain bonds become unable or unwilling to make payments on their bonds.

 High yield bond - High yield debt securities are generally subject to greater risk of issuer debt restructuring or default, higher liquidity risk and greater sensitivity to market conditions.

Security liquidity - Any security could become hard to value or to sell at a desired time and price.

 Contingent convertible bond - Contingent Convertible Bonds may be subject to additional risks linked to: capital structure inversion, trigger levels, coupon cancellations, call extensions, yield/valuation, conversions, write downs, industry concentration and liquidity, among others.

 Total return swap - Total return swap contracts may expose the fund to additional risks, including market, counterparty and operational risks as well as risks linked to the use of collateral arrangements.

General Fund Risks

Conflict of interest - The investment manager's obligations to a fund may potentially conflict with its obligations to other investment portfolios it manages.

Counterparty - Counterparty risk may materialise if an entity with which the fund does business becomes unwilling or unable to meet its obligations to the fund

Custody - In the event that the depositary and/or custodian becomes insolvent or otherwise fails, there may be a risk of loss or delay in return of certain fund's assets.

Cybersecurity - The fund may be subject to operational and information security risks resulting from breaches in cybersecurity of the digital information systems of the fund or its third-party service providers.

ESG - ESG integration as well as events may result in a material negative impact on the value of an investment and performance of the fund.

Investment fund - Investing in funds involves certain risks an investor would not face if investing in markets directly.

Inflation - Inflation may erode the value of the fund and its investments in real terms.

Market - Market risk may subject the fund to experience losses caused by unexpected changes in a wide variety of factors.

Market liquidity - In extreme market conditions it may be difficult to sell the fund's securities and it may not be possible to redeem shares at short notice.

Operational - Operational risk may cause losses as a result of incidents caused by people, systems, and/or processes.

Sustainability - Funds that seek to promote environmental and/or social characteristics may not or only partially succeed in doing so.