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GIPS® Information

T. Rowe Price ("TRP") claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. T. Rowe Price has been independently verified for the twenty four-year period ended June 30, 2020, by KPMG LLP. The verification report is available upon request. A firm that claims compliance with the GIPS standards must establish policies and procedures for complying with all the applicable requirements of the GIPS standards. Verification provides assurance on whether the firm’s policies and procedures related to composite and pooled fund maintenance, as well as the calculation, presentation, and distribution of performance, have been designed in compliance with the GIPS standards and have been implemented on a firm-wide basis. Verification does not provide assurance on the accuracy of any specific performance report.

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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SICAV

US Smaller Companies Equity Fund

Seeks capital appreciation using both value and growth approaches.

ISIN LU0133096981 Bloomberg TRPSCEI:LX

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

19.19%
$3.5b

1YR Return
(View Total Returns)

Manager Tenure

38.20%
2yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

0.64
6.52%

Inception Date 28-Sep-2001

Performance figures calculated in USD

31-Aug-2021 - Curt Organt, Portfolio Manager ,
Markets continued their upward trajectory, but the pace has tapered as we begin to move toward the next stage of economic recovery. We saw some noise from "meme" stocks and retail investors, but those trades seem to have moderated for now. We are monitoring inflation, interest rates, and the details of potential infrastructure packages coming out of Washington. However, they do not drive portfolio construction, and we maintain our focus on long-term investment outcomes.
Curt J. Organt, CFA
Curt J. Organt, CFA, Portfolio Manager

Curt Organt is the portfolio manager of the US Smaller Companies Equity Strategy in the U.S. Equity Division. Curt is a vice president and an Investment Advisory Committee member of the US Small-Cap Core Equity and US Diversified Small-Cap Value Equity Strategies. He is a vice president of T. Rowe Price Group, Inc.

Click for Manager Outlook
 

Strategy

Manager's Outlook

Markets continued their upward trajectory in the quarter, but the velocity has tapered as we begin to move toward the next stage of economic recovery. We saw some noise from "meme" stocks and retail investors in the second quarter, but those trades seem to have moderated for now. We are monitoring inflation, interest rates, and the details of potential infrastructure packages coming out of Washington. While we take these macro factors into consideration, they do not drive portfolio construction, and we maintain our focus on long-term investment outcomes.

The US Smaller Companies Equity strategy seeks to capitalize on opportunities across the broad range of the small-cap and mid-cap U.S. equity market. The portfolio has a collection of core holdings in high-quality companies we expect to compound value over time and looks for select investments in "deeper value" opportunities, companies experiencing challenge or controversy of one sort or another that the investment team believes can be resolved in a reasonable period of time. The portfolio holds a number of income-oriented, dividend-growth companies, as well as a collection of high-growth investments that the investment team believes other investors do not yet fully appreciate the companies' long-term growth potential.�Overall, the strategy remains modestly overweight the high-quality compounding companies.

Since the strategy's inception 20 years ago, it has relied upon T. Rowe Price's team of fundamental research analysts to provide unique perspective and insight on the companies they follow. Going forward, the portfolio manager will continue to work closely with this talented team of investment professionals to identify the most attractive opportunities across the full range of the small-cap and mid-cap segment of the U.S. equity market.

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 from smaller capitalization companies in the United States.

Investment Approach

  • Focus on companies within the market cap range of the Russell 2500 Index at time of purchase.
  • Assess valuation using relevant sector/industry metrics — absolute and relative price to earnings, price to cash flow, and price to assets.
  • Integrate fundamental research by a dedicated Small-Cap research team to discover underfollowed companies possessing clear business plans, financial flexibility, and proven management teams.
  • Identification of a “value creation” catalyst is key.
  • Broadly diversify holdings to manage portfolio risk profile.
  • Employ a low turnover and patient trading strategy to promote full value realization.
  • Environmental, social and governance ("ESG") factors with particular focus on those considered most likely to have a material impact on the performance of the holdings or potential holdings in the funds’ portfolio are assessed. These ESG factors, which are incorporated into the investment process alongside financials, valuation, macro-economics and other factors, are components of the investment decision. Consequently, ESG factors are not the sole driver of an investment decision but are instead one of several important inputs considered during investment analysis.

Portfolio Construction

  • 200-250 securities
  • Position sizes typically range from 0.15% to 2.50%
  • Primary sector weights generally vary from 0.5X to 2.0X the Russell 2500 Index weights

Performance (Class I)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Since Manager Inception
Annualised
Fund % 38.20% 19.19% 18.78% 17.06% 24.83%
Indicative Benchmark % 45.38% 12.61% 14.60% 13.83% 19.56%
Excess Return % -7.18% 6.58% 4.18% 3.23% 5.27%

Inception Date 28-Sep-2001

Manager Inception Date 31-Mar-2019

Indicative Benchmark: Russell 2500 Net 30% Index

Data as of 31-Aug-2021

Performance figures calculated in USD

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Fund % 48.50% 20.57% 19.60% 15.72%
Indicative Benchmark % 57.25% 14.74% 15.85% 12.37%
Excess Return % -8.75% 5.83% 3.75% 3.35%

Inception Date 28-Sep-2001

Indicative Benchmark: Russell 2500 Net 30% Index

Data as of 30-Jun-2021

Performance figures calculated in USD

Recent Performance

  Month to DateData as of 24-Sep-2021 Quarter to DateData as of 24-Sep-2021 Year to DateData as of 24-Sep-2021 1 MonthData as of 31-Aug-2021 3 MonthsData as of 31-Aug-2021
Fund % -0.78% 1.63% 14.00% 1.54% 3.27%
Indicative Benchmark % -0.82% -0.39% 16.33% 2.24% 1.58%
Excess Return % 0.04% 2.02% -2.33% -0.70% 1.69%

Inception Date 28-Sep-2001

Indicative Benchmark: Russell 2500 Net 30% Index

Indicative Benchmark: Russell 2500 Net 30% Index

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 June 2019, 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-2021 - Curt Organt, Portfolio Manager ,
U.S. equities produced gains in August, despite some market volatility. Equities were boosted by strong corporate earnings and improving economic conditions, although headwinds including the surge of the Delta variant tempered gains. At the portfolio level, our stock choices in the consumer discretionary sector weighed on relative results. Shares of Ollies Bargain Outlet Holdings pulled back on quarterly results, highlighting headwinds from challenging comparable sales and rising supply chain costs. Stock selection in industrials and business services, particularly professional services companies, also hindered performance, as did our overweight position in the sector. Our position in Upwork, an online marketplace for freelancers which has benefitted from a shift to remote work, gave back some gains during the month, possibly due to profit taking. On the positive side, our holdings in information technology (IT), particularly in software, added value. Shares of Paycom Software, a provider of cloud-based payroll and human capital management solutions, were boosted by strong quarterly results reflecting significant adoption of its automated payroll solution by its customer base. Our holding in HubSpot, a software-as-a-service marketing provider, climbed on quarterly results reflecting broad-based strength, with particularly impressive growth in subscription revenues.

Holdings

Total
Holdings
183
Largest Holding Avery Dennison 1.58% Was (31-Mar-2021) 1.53%
Other View Full Holdings Quarterly data as of  30-Jun-2021
Top 10 Holdings 12.68% View Top 10 Holdings Monthly data as of  31-Aug-2021

Largest Top Contributor^

Avery Dennison
% of fund 1.60%

Largest Top Detractor^

Gibraltar Industries
% of fund 0.96%

^Absolute, percentages based on the difference between the total net assets of the two largest holdings of the fund.

Quarterly Data as of 30-Jun-2021

Top Purchase

Option Care Health (N)
0.36%
Was (31-Mar-2021) 0%

Top Sale

Proofpoint
0.51%
Was (31-Mar-2021) 1.2%

Quarterly Data as of 30-Jun-2021

30-Jun-2021 - Curt Organt, Portfolio Manager ,

We do not make sector "bets," and sector weightings are formed as a residual of our bottom-up investment process. There were no major thematic changes to portfolio positioning in the quarter. We continued to invest in companies that we believe offer compelling long-term investment opportunities, and we trimmed exposure to names that performed strongly, were acquired, or appreciated beyond our typical market capitalization range. During the quarter, trading activity spanned the various sectors. We've highlighted some of the larger purchases and sales occurring within health care, industrials and business services, consumer discretionary, and information technology.�

Health Care

In health care, we have a sizable allocation to biotechnology, providers and services, and equipment and supplies names. The health care segment has been a sector of controversy over recent years amid reform legislation, attempts at repeal, and the uncertainty regarding its outcomes. We have focused on investments that we feel will benefit from the environment regardless of the end result by sticking to fundamentals and a diversified approach within biotechnology to mitigate risk.

  • We added a position in Option Care Health. Its merger with BioScrip, completed in 2019, created the largest home infusion company in the country. Option Care should benefit from ongoing merger synergies, the shift of health care to the home, and the potential for additional mergers and acquisitions in a fragmented industry.
  • We initiated a position in Agiliti, a leading medical equipment, rental maintenance, and management company that helps hospitals and health care facilities lower costs and increase patient care time by addressing capital equipment ownership and utilization inefficiencies. Shares were attractively valued, in our opinion, and the company's scale, built over its 80-year history, creates barriers to entry. An attractive merger and acquisition pipeline provides additional upside potential.
  • IRhythm Technologies develops monitoring and diagnostic solutions. The inability of the company to provide its Zio Service to Medicare patients following a lower-than-expected reimbursement rate significantly reduced its addressable market and we exited our position.

Industrials and Business Services

The portfolio is overweight in the industrials and business services sector compared with the benchmark allocation due in particular to sizable positions in machinery, professional services, and road and rail. The sector tends to be cyclical, with strong surges during economic recovery. We have exposure to cyclical holdings to take advantage of economic recovery, but we also hold positions in more stalwart areas that allow steady and measured returns to provide a more balanced risk exposure.

  • We took advantage recent share price weakness to increase the portfolio's position in Graco, a manufacturer of paint and liquid pumping systems with leading positions in defensible market niches where precision dosing is critical to meet customer specifications or improve productivity. The company's industrial and process divisions are recovering more quickly than anticipated, and its contractor segment should be buoyed by strength in the housing market.
  • We trimmed transportation names Knight-Swift Transportation Holdings and J.B. Hunt Transport Services following a strong run on valuation considerations.
  • We exited Dun & Bradstreet, a commercial database and analytics provider, as factors including new competitive threats may limit upside. We deployed proceeds into higher-conviction names.

Consumer Discretionary

We are underweight the benchmark allocation within the consumer discretionary sector, where our largest allocations are to the hotels, restaurants, and leisure; specialty retail; and diversified consumer services industries. Despite our underweight, we continue to believe the sector is ripe with select names that provide attractive business models and insulated growth opportunities. Coronavirus-related pressures on the sector have created compelling investment opportunities.

  • We initiated a position in Bally's. The company's recent merger and acquisition activity goes beyond traditional geographic expansion and into new arenas such as sports betting and igaming, creating multiple methods to capitalize not only on the current reopening activity but also on longer-term secular trends.
  • Ollie's Bargain Outlet Holdings was a strong performer in 2020, benefiting from stimulus, its designation as an essential business, and a coronavirus-driven shift in consumer shopping habits. Shares pulled back on the prospect of more challenging comparable sales in the year ahead, and we increased the portfolio's position on weakness. We favor Ollie's for its position within the attractive closeout retail industry, its strong customer value proposition, and its long runway for unit growth.
  • We exited NVR, the fourth-largest homebuilder in America, on strength. The company has benefited from strong housing demand.

Information Technology

A number of the disruptive companies that are on the right side of change are featured in the sector. We remain sanguine on the sector as a whole. The portfolio has large allocations in the software; semiconductors; electronic equipment, instruments, and components; and IT services industries. We have been able to find many niche software providers that we believe have attractive growth opportunities and barriers to ward off their competition.

  • Shares of Proofpoint surged on the announcement that the company had accepted a takeout offer from private-equity firm Thoma Bravo, and we exited the portfolio's position.
  • PagerDuty is a software-as-a-service company focused on providing real-time alerting solutions to enterprises. Shares performed well, and we exited our position on valuation considerations.

Sectors

Total
Sectors
11
Largest Sector Industrials & Business Services 22.33% Was (31-Jul-2021) 23.15%
Other View complete Sector Diversification

Monthly Data as of 31-Aug-2021

Indicative Benchmark: Russell 2500 Index

Top Contributor^

Information Technology
Net Contribution 0.63%
Sector
-0.03%
Selection 0.65%

Top Detractor^

Industrials & Business Services
Net Contribution -0.91%
Sector
-0.16%
Selection
-0.75%

^Relative

Quarterly Data as of 30-Jun-2021

Largest Overweight

Industrials & Business Services
By6.39%
Fund 22.33%
Indicative Benchmark 15.94%

Largest Underweight

Consumer Discretionary
By-4.83%
Fund 7.70%
Indicative Benchmark 12.53%

Monthly Data as of 31-Aug-2021

31-Aug-2021 - Curt Organt, Portfolio Manager ,
Industrials and business services, IT, health care, and financials remain the dominant sectors in the portfolio, each with greater than 10% of the equity allocation. We continue to invest in select companies across various industries where we feel valuations may underestimate the sustainability of growth or turnaround potential. During the month, this included boosting our positions within commercial services and supplies, machinery, and container and packaging.

Team (As of 10-Sep-2021)

Curt J. Organt, CFA

Curt Organt is the portfolio manager of the US Smaller Companies Equity Strategy in the U.S. Equity Division. Curt is a vice president and an Investment Advisory Committee member of the US Small-Cap Core Equity and US Diversified Small-Cap Value Equity Strategies. He is a vice president of T. Rowe Price Group, Inc.

Curt’s investment experience began in 1993, and he has been with T. Rowe Price since 1995, beginning in the U.S. Equity Division. Prior to this, Curt was employed by DAP Products, Inc., as a financial and marketing analyst. 

Curt earned a B.S. in finance and philosophy from La Salle University and an M.B.A. from Wake Forest University. Curt also has earned the Chartered Financial Analyst® designation.

CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.

  • Fund manager
    since
    2019
  • Years at
    T. Rowe Price
    25
  • Years investment
    experience
    29
Eric Papesh, CFA, BA, MBA

Eric Papesh is a portfolio specialist based in London in the U.S. Equity Division. Eric supports the US Smaller Companies Equity and US Large-Cap Equity Income Strategies offered in the Europe, Middle East, and Africa and Asia-Pacific regions. Eric is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price International Ltd. 

Eric’s investment experience began in 1994, and he has been with T. Rowe Price since 2014, beginning in the ISG division as a portfolio specialist. Prior to this, Eric was employed by Russell Investments where he focused on U.S. equity investment strategies.

Eric earned a B.A. in business administration, with concentrations in finance and information systems, and an M.B.A. in business administration from the University of Washington. Eric has earned the Chartered Financial Analyst® designation.

CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.

  • Years at
    T. Rowe Price
    6
  • Years investment
    experience
    26

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 1.68%
Class I $2,500,000 $100,000 $0 0.00% 95 basis points 0.99%
Class Q $1,000 $100 $100 0.00% 95 basis points 1.04%
Class S $10,000,000 $0 $0 0.00% 0 basis points 0.04%

Please note that the Ongoing Charges figure is inclusive of the Investment Management Fee and is charged per annum.