T. Rowe Price T. Rowe Price Trusty Logo

SICAV

Emerging Local Markets Bond Fund

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

ISIN LU0310189781 Bloomberg TRPELMI:LX

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

-1.04%
$87.6m

1YR Return
(View Total Returns)

Manager Tenure

-4.43%
7yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

-0.10
1.50%

Inception Date 09-Aug-2007

Performance figures calculated in USD

Other Literature

30-Apr-2020 - Andrew Keirle, Portfolio Manager,
Although emerging market assets enjoyed a partial recovery in April, the full extent of the global economic impact of the coronavirus is not yet clear. We expect ongoing periods of volatility in the coming months. However, our long-term outlook remains more positive as bond yields and currency valuations are attractive. We also expect increased discrepancy between names with strong and weak fundamentals, creating potential opportunities by focusing on bottom-up security selection.
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

Emerging markets local currency bonds will likely continue to experience volatility in the coming months as the full economic impact of the coronavirus outbreak becomes clear. We do not expect any sustained recovery until it appears the spread of the coronavirus is under control. EM currencies, in particular, could see further weakness as investors prioritize perceived safe-haven developed market currencies.

Global economic data will likely see further drops in the coming weeks and months as the full effects of economic shutdowns filter through. Economies most reliant on commodity prices could underperform as demand will likely remain subdued. An agreement on output cuts by oil-producing countries could provide support, however.

We expect global central banks and governments in both developed economies as well as EMs to continue to respond to the coronavirus outbreak and provide support. Concerted action on monetary easing and fiscal stimulus could help provide a floor to the sell-offs. Accommodative policies are likely to remain in place for the foreseeable future and could result in a sharp recovery later in 2020, once it is clear the outbreak is easing.��

We are more constructive in our medium- to long-term outlook for EM local currency bond markets. Yields have risen in absolute and relative terms toward levels that have historically resulted in strong performance. Currency valuations are also increasingly attractive. While near-term volatility is expected, we believe investors can find attractive opportunities by focusing on a longer-term investment horizon. In this environment, a selective approach is essential, in our opinion, to identify countries that can maintain healthy fundamentals and potentially rebound when global markets stabilize. �

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 % -4.43% -1.04% 0.29% 0.36% -1.59%
Indicative Benchmark % -2.68% 0.09% 0.44% 0.65% -1.42%
Excess Return % -1.75% -1.13% -0.15% -0.29% -0.17%

Inception Date 09-Aug-2007

Manager Inception Date 31-Oct-2012

Indicative Benchmark: Linked Benchmark

Data as of  30-Apr-2020

Performance figures calculated in USD

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Fund % -8.24% -1.74% 0.20% 0.13%
Indicative Benchmark % -6.52% -0.80% 0.25% 0.41%
Excess Return % -1.72% -0.94% -0.05% -0.28%

Inception Date 09-Aug-2007

Indicative Benchmark: Linked Benchmark

Data as of  31-Mar-2020

Performance figures calculated in USD

Recent Performance

  Month to DateData as of 27-May-2020 Quarter to DateData as of 27-May-2020 Year to DateData as of 27-May-2020 1 MonthData as of 30-Apr-2020 3 MonthsData as of 30-Apr-2020
Fund % 5.84% 10.07% -8.00% 3.99% -11.97%
Indicative Benchmark % 4.57% 8.67% -7.86% 3.92% -10.74%
Excess Return % 1.27% 1.40% -0.14% 0.07% -1.23%

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.

30-Apr-2020 - Andrew Keirle, Portfolio Manager,
Emerging market local currency bonds delivered positive returns in April as risk assets gained back some ground following the sharp sell-off in March as major central banks and governments responded to liquidity concerns with massive stimulus packages. Within the portfolio, our overweight position in South Africa local currency bonds helped performance as the wider backdrop and a government stimulus package helped stabilise the country’s bond prices despite S&P downgrading the country’s credit rating to BB- during the month. Our overweight exposure to Indonesia also contributed amid the improving outlook for Asian economies, partly due to the coronavirus outbreak in China subsiding. Conversely, our underweight position in Thai government bonds hurt relative performance. Turning to currencies, our overweight exposure to the Indonesian rupiah and Russian rouble boosted relative returns. However, our overweight in the Brazilian real held back returns as an increase in the political uncertainty hampered the currency in April.

Holdings

Issuers

Top
Issuers
10
Top 10 Issuers 68.75% Was (31-Mar-2020) 69.83%
Other View Top 10 Issuers

Monthly data as of 30-Apr-2020

Holdings

Total
Holdings
100
Largest Holding Brazil Notas do Tesouro Nacional Serie F 3.21% Was (31-Dec-2019) 3.19%
Top 10 Holdings 26.75%
Other View Full Holdings Quarterly data as of 31-Mar-2020

Quality Rating View quality analysis

  Largest Overweight Largest Underweight
Quality Rating Reserves A
By % 4.62% -5.78%
Fund 4.62% 18.75%
Indicative Benchmark 0.00% 24.53%

Average Credit Quality

BBB

Monthly Data as of 30-Apr-2020
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 % 15.53% -17.53%
Fund 36.61% 7.25%
Indicative Benchmark 21.08% 24.78%

Weighted Average Duration

5.39 Years

Monthly Data as of 30-Apr-2020
Indicative Benchmark:  J.P. Morgan GBI - EM Global Diversified

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

Bond Allocation

  • We reduced the portfolio's overall duration exposure intraperiod as we recognized the escalation in the coronavirus outbreak and its impact on oil prices and the global economy would likely persist for the near term. However, at the end of the period we began selectively adding to some markets, such as Brazil, which we believe may have oversold and represent long-term value.�
  • We remain overweight Mexico as we see potential for the country to maintain healthy fundamentals and potentially ease policy further during the near-term volatility. Conversely, we are underweight Chile as its sensitivity to commodity prices may result in ongoing underperformance.
  • In Asia, after closing an overweight mid-period, we began moderately adding to our off-benchmark exposure in India as we believe current prices offer long-term value. We remained underweight to Thailand through the period.
  • In emerging Europe, we maintained an overweight to Russia as we believe the country offers healthy account balances and stable policy.We also moved to an overweight to Poland as we see the country's central bank likely to remain more dovish than regional counterparts. We added to an overweight to Romania as we see potential for the country to maintain a stable fiscal position. Conversely, we hold an underweight to the Czech Republic.

Currency Selection

  • We reduced the portfolio's exposure to EM local currencies during the quarter as we recognized the likelihood for weakness in the near term. We also reduced or closed short positions in currencies such as the Singapore dollar, which can show relative stability in volatile markets.
  • We moved from a neutral position in the Colombian peso to an underweight, with the low oil prices likely to make an impact in the coming weeks. We also reduced our exposure to the Chilean peso.
  • Elsewhere, we moderated an off-benchmark exposure to the Indian rupee and closed overweights to the Czech koruna and Romanian leu.
  • Following the sell-off during the first quarter, valuations in EM currencies improved. We moderately began building exposures back up in some currencies, including the Mexico peso and Indonesia rupiah, where we view current levels offering long-term value.

Sectors

Total
Sectors
6
Largest Sector Sovereign 91.98% Was (31-Mar-2020) 92.89%
Other View complete Sector Diversification

Monthly Data as of 30-Apr-2020

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

Largest Overweight

Reserves
By4.61%
Fund 4.61%
Indicative Benchmark 0.00%

Largest Underweight

Sovereign
By-8.02%
Fund 91.98%
Indicative Benchmark 100.00%

Monthly Data as of 30-Apr-2020

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 32.48% Was (31-Mar-2020) 28.85%
Other View complete Region Diversification

Monthly Data as of 30-Apr-2020

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

Largest Overweight

Asia
By3.76%
Fund 32.48%
Indicative Benchmark 28.72%

Largest Underweight

Emerging Europe
By-8.02%
Fund 24.16%
Indicative Benchmark 32.18%

Monthly Data as of 30-Apr-2020

Countries

Total
Countries
33
Largest Country Indonesia 11.60% Was (31-Mar-2020) 8.63%
Other View complete Country Diversification

Monthly Data as of 30-Apr-2020

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

Largest Overweight

India
By2.41%
Fund 2.41%
Indicative Benchmark 0.00%

Largest Underweight

Poland
By-5.42%
Fund 3.50%
Indicative Benchmark 8.91%

Monthly Data as of 30-Apr-2020

30-Apr-2020 - Andrew Keirle, Portfolio Manager,
Although global markets are likely to remain volatile in the near term, we maintained positions in countries that demonstrate positive reforms processes and a commitment to upholding stable fundamentals. For example, we continue to hold out-of-benchmark exposures to India and Serbia. We also selectively increased exposure to countries where valuations had improved following the March sell-offs, such as Indonesia, Malaysia and the Philippines. Conversely, we reduced our exposure to Russia by taking profits following the March rebound.

Currency

Total
Currencies
34
Largest Currency Indonesian rupiah 12.53% Was (31-Mar-2020) 10.35%
Other View complete Currency Diversification

Monthly Data as of 30-Apr-2020

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

Largest Overweight

Czech koruna
By 3.20%
Fund 7.82%
Indicative Benchmark 4.63%

Largest Underweight

U.S. dollar
By -3.89%
Fund -3.89%
Indicative Benchmark 0.00%

Monthly Data as of 30-Apr-2020

30-Apr-2020 - Andrew Keirle, Portfolio Manager,
We maintained an overall cautious stance toward emerging market local currencies. However, we added to exposures to the Mexican peso and Indonesia rupiah in April amid improved valuations. We also increased our out-of-benchmark position in the Egyptian pound as we believe the country’s healthy current account balance and currency reserves can help it weather the current challenging environment. Elsewhere, we moved further underweight the Polish zloty due to the expected economic impact from the coronavirus and the dovish stance of the country’s central bank.

Team (As of 21-May-2020)

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
    14
  • Years investment
    experience
    23

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.

Dismiss
Tap to dismiss

Download

Latest Date Range
Audience for the document: Share Class: Language of the document:
Download Cancel

Download

Share Class: Language of the document:
Download Cancel
Sign in to manage subscriptions for products, insights and email updates.
Continue with sign in?
To complete sign in and be redirected to your registered country, please select continue. Select cancel to remain on the current site.
Continue Cancel
Once registered, you'll be able to start subscribing.

Change Details

If you need to change your email address please contact us.
Subscriptions
OK
You are ready to start subscribing.
Get started by going to our products or insights section to follow what you're interested in.

Products Insights

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

Other Literature

You have successfully subscribed.

Notify me by email when
regular data and commentary is available
exceptional commentary is available
new articles become available

Thank you for your continued interest