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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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AUT

Australian Equity Fund

Seeking high-quality opportunities in Australian companies with positive structural industry dynamics, strong competitive positions and which can sustainably grow at attractive rates of return.

APIR ETL0328AU

3YR Return Annualised (Net)
(View Total Returns)

Total Assets
(AUD)

5.64%
$100.2m

1YR Return (Net)
(View Total Returns)

Manager Tenure

-5.00%
8yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

-0.03
3.12%

Inception Date 26-Apr-2012

Performance figures calculated in AUD

Other Literature

31-Jan-2021 - Randal Jenneke, Head of Australian Equities,
Australia’s success at suppressing the various coronavirus outbreaks bodes well for the economic recovery, job creation, and earnings growth. With high levels of government support expected to continue, risks look to be to the upside in 2021. We also expect interest rates to remain low to support the recovery. The key near-term issue is the timeframe for the rollout of the COVID-19 vaccines and their real-world effectiveness.
Randal S. Jenneke
Randal S. Jenneke, Portfolio Manager

Randal Jenneke is a portfolio manager and head of Australian equities in the International Equity Division. He is a director of T. Rowe Price Australia, Ltd. He is also a vice president of T. Rowe Price Group, Inc.

Click for Manager Outlook
 

Strategy

Manager's Outlook

The clouds are parting and a clearer picture of 2021 is emerging. The prospect of the rollout of an effective COVID-19 vaccine, coupled with strong ongoing fiscal and monetary support, bodes well for economic growth and earnings recovery. The risks to markets are morphing to the more familiar ones of potentially higher inflation and rising bond yields. However, given the extreme and unusual nature of the pandemic, the policy response, and consumer behaviour, it is wise to expect the unexpected! The key near-term issue is the time frame for the rollout of the vaccines and the real-world effectiveness of these treatments.

Despite the recent small COVID-19 outbreak in Sydney, and reaction from states in closing their borders to New South Wales or to residents of Greater Sydney, this is expected to be a short-term hiccup in the successful suppression of COVID-19 in Australia. This bodes well for the economic recovery, job creation, and earnings growth. With high levels of government support expected to continue, we believe the risks look to be to the upside going into 2021.

Despite our positive view on economic growth, we expect interest rates to remain low to support the recovery. The recent announcement of quantitative easing by the RBA signals this intent. As a result, we expect growth stocks to continue to do well.���

Investment Objective

The Fund's investment objective is long-term capital appreciation through investment primarily in a portfolio of securities of Australian companies listed on the S&P/ASX200 Accumulation Index (ASX200). The portfolio will include the securities of a broad range of companies across the market capitalisation. Additionally the portfolio may contain investments in the Securities of companies outside of the ASX200 including certain New Zealand and ASX dual listed companies.

Investment Approach

  • Our investment approach focuses on bottom-up company fundamentals but recognizes that sector and industry analysis are also critical to understanding growth drivers. The portfolio manager ultimately seeks to construct a growth-oriented portfolio of stocks, ranging across all market capitalization segments and maintaining sector diversification.
  • One of the core tenets of our investment philosophy is that quality growth stocks are frequently mispriced. Our long-term investment approach provides us with the opportunity to take advantage of near-term trends that can often be overemphasized by the market and our competitors.
  • We implement fundamental analysis to identify companies with positive structural industry dynamics, strong competitive positions and those that we believe can grow sustainably at attractive rates of return. In seeking out these higher-quality businesses, we focus on industry attractiveness, competitive advantage, management quality, free cash flow, return on capital and financing/balance sheet structure.
  • Our global research platform enables us to access and use information from local and global perspectives, generating unique insights. The fund comprises some of the highest-conviction ideas from our research platform, as well as the insights of our global sector and regional equity portfolios. We expect these businesses to compound value faster than the overall market and outperform over time, focusing on opportunities where our fundamental views differ from market expectations.
  • We assess valuations relative to other local market opportunities, seeking high-growth companies with attractive valuations relative to their long-term intrinsic value.
  • Systematic and integrated risk management are hallmarks of our investment process.

Portfolio Construction

  • The portfolio may contain investments in the securities of companies outside of the ASX200 including certain New Zealand and ASX dual listed companies.
  • Typically 30-50 holdings, ranging across all market capitalization segments
  • Individual positions range from +/- 5% relative to benchmark
  • Expected Tracking Error: typically 3.0 to 6.0% over rolling three-year period
  • Cash target range: Cash Reserves are typically less than 5% but will not exceed 10% of the Fund's total market value
  • Turnover range: 30 – 50% per annum

Performance - Net of Fees 

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Since Manager Inception
Annualised
Fund % -5.00% 5.64% 9.94% 9.49% 9.49%
Benchmark % -3.11% 7.00% 10.03% 9.30% 9.30%
Excess Return % -1.89% -1.36% -0.09% 0.19% 0.19%

Inception Date 26-Apr-2012

Manager Inception Date 26-Apr-2012

Benchmark: S&P/ASX 200 Index

Data as of 31-Jan-2021

Performance figures calculated in AUD

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Fund % -0.82% 5.35% 8.47% 9.50%
Benchmark % 1.40% 6.73% 8.73% 9.36%
Excess Return % -2.22% -1.38% -0.26% 0.14%

Inception Date 26-Apr-2012

Benchmark: S&P/ASX 200 Index

Data as of 31-Dec-2020

Performance figures calculated in AUD

Recent Performance

  Month to DateData as of 04-Mar-2021 Quarter to DateData as of 04-Mar-2021 Year to DateData as of 04-Mar-2021 1 MonthData as of 31-Jan-2021 3 MonthsData as of 31-Jan-2021
Fund % 0.67% 3.47% 3.47% 0.73% 10.64%
Benchmark % 1.89% 3.69% 3.69% 0.31% 11.89%
Excess Return % -1.22% -0.22% -0.22% 0.42% -1.25%

Inception Date 26-Apr-2012

Benchmark: S&P/ASX 200 Index

Benchmark: S&P/ASX 200 Index

Performance figures calculated in AUD

Past performance is not a reliable indicator of future performance.

Source for performance: T Rowe Price. Net of fees performance is based on end of month redemption prices after the deduction of fees and expenses and the reinvestment of all distributions. Figures include changes in principal value. Investment return and principal value will vary, and an account may be worth more or less at termination than at inception.

Daily performance (MTD, QTD, and YTD) data is based on the latest available NAV minus one business day.

Returns for time periods greater than one year are annualised.

31-Jan-2021 - Randal Jenneke, Head of Australian Equities,
The Australian equity market was broadly flat in January, slightly outperforming its developed market peers while underperforming emerging markets. Domestically, coronavirus-related border restrictions imposed on New South Wales by other Australian states were gradually reduced through January, with the outbreak on Sydney’s Northern Beaches contained and zero locally acquired COVID-19 cases in the latter half of January. Globally, the vaccine rollout proceeded, with Israel, the United Arab Emirates and UK making the most progress. Joe Biden was sworn in as the 46th President of the U.S. and a number of high-profile coordinated “short squeezes” by retail investors created some volatility in equity markets in late January. At the portfolio level, performance benefitted from our holdings in names such as Zip Co, IDP Education, and Domain Holdings while notable underperformers included Adbri, Altium, and Star Entertainment. Zip Co released a positive quarterly trading update which continued to highlight the strong tailwinds behind the buy now pay later (BNPL) sector. On the negative side, Altium provided a disappointing trading update, highlighting COVID-19’s impact on its sales performance.

Holdings

Total
Holdings
36
Largest Holding Bhp 9.47% Was (30-Sep-2020) 8.76%
Other View Full Holdings Quarterly data as of  31-Dec-2020
Top 10 Holdings 49.32% View Top 10 Holdings Monthly data as of  31-Jan-2021

Largest Top Contributor^

Bhp
By 3.03%
% of fund 9.48%

Largest Top Detractor^

CSL
By -1.92%
% of fund 5.94%

^Absolute

Quarterly Data as of 31-Dec-2020

Top Purchase

Eagers Automotive (N)
2.30%
Was (30-Sep-2020) 0%

Top Sale

CSL
5.94%
Was (30-Sep-2020) 10.19%

Quarterly Data as of 31-Dec-2020

31-Dec-2020 - Randal Jenneke, Head of Australian Equities,

The portfolio is well positioned in cyclical growth, recovery growth, and high-quality stocks that we believe will benefit as economic conditions continue to improve. We have tilted our holdings toward more domestic exposed companies, to reflect the stronger performance of the Australian economy. To fund these portfolio changes, we have taken profits on defensive growth names and reduced our exposure to offshore earners.

As a result of these shifts, as of the end of December 2020, by far our largest relative sector overweight position was in consumer discretionary.� The portfolio had more modest overweight exposures to communication services and materials.� Our key underweights were in financials, real estate, and energy.

Materials

The portfolio retains a small overweight position in materials.� Over the course of the quarter, we made a number of changes to our holdings, identifying a new opportunity and switching some of our existing positions.� �

  • We initiated a position in Oz Minerals, a copper and gold producer with assets in Australia and Brazil. The outlook for commodities has improved and remains supportive for earnings upgrades and the share price. The company is increasing production at lower costs, while capital expenditure is stabilizing, both of which are driving higher returns. We also believe that low-risk jurisdictions are providing potential growth opportunities.

We also made a number of adjustments within the portfolio's mining holdings.� For example, we continued to reduce our position in Rio Tinto, switching our mining exposure to BHP.� We believe BHP provides exposure to some of the highest quality mining assets in the industry and is our preferred diversified large-cap mining holding. In our view, iron ore prices have likely peaked and so will Rio Tinto's near-term earnings. By contrast, we believe that BHP's earnings profile will be buffered from a cyclical improvement in non-iron ore exposure such as coal, copper, and oil.

Consumer Discretionary

Consumer discretionary is by far the most significant overweight sector position in the portfolio and over the course of the fourth quarter we further raised our exposure, in part to reflect the more positive outlook for the Australian domestic economy. We initiated a position in Eagers Automotive and raised the size of our positions in online retailer Kogan and Star Entertainment.

  • Car dealer group Eagers Automotive, in our view, has a range of factors that should drive strong earnings growth over the next few years. These include material synergy benefits from its merger with Automotive Holdings Group. We expect the industry to improve materially from the dual effects of supply disruptions and greater demand, which should produce margin expansion. We also expect Eagers Automotive to fare better than smaller competitors that do not enjoy the same scale, which should allow the company to gain market share through the downturn and emerge stronger when new vehicle sales eventually pick up again.
  • In the case of Star Entertainment, this large casino operator should, in our view, benefit as the economy continues to reopen.�There is also the possibility of further consolidation within the industry, which could lead to significant synergies and create shareholder value.

Utilities

The portfolio moved from the small overweight at the start of the fourth quarter to a modest underweight. This reflects our strategy of reducing the extent of our exposure to defensive growth stocks.

  • We eliminated our position in APA, an energy infrastructure business developing, owning and operating a portfolio that includes gas transmission pipelines and distribution networks. A prolonged impact of COVID-19 may depress oil and East Coast gas prices for longer, which will delay new energy project investment decisions and adversely impact the growth capital expenditure profile of APA.�

Energy

As the fourth quarter began, we had a modest underweight position in industrials and business services. Over the course of the period, we eliminated our holding in an energy stock where our investment thesis had played out. As a result, the portfolio moved further underweight over the review period.

  • Earlier this year, Woodside Petroleum's share price suffered amid sharp declines in global oil prices and disruptions to its operations in Western Australia caused by tropical cyclone Damien. We believed that the market would rebalance production and adjust back towards the incentive curve; price weakness provided us with an opportunity to buy the stock anticipating a recovery in the coming months and when these themes played out, we sold out of our position.

Switch From Defensive to Domestic Growth

Beyond the individual sectors above, we made a number of other adjustments to the portfolio, which reflect our strategy of gradually shifting away from defensive names toward companies that stand to benefit from an improvement in the Australian economy.�

  • For example, we reduced our exposure to the traditionally defensive health care sector, selling plasma specialist CSL and respiratory product specialist Fisher and Paykel. The proceeds of these sales were redeployed into raising the size of existing positions in Domain Holdings and SEEK.� Domain is a real estate technology and services company, with a focus on the Australian property market. SEEK, meanwhile, is a job search website and stands to be an early beneficiary of an improvement in the Australian economy.

Sectors

Total
Sectors
9
Largest Sector Consumer Discretionary 23.49% Was (31-Dec-2020) 20.59%
Other View complete Sector Diversification

Monthly Data as of 31-Jan-2021

Benchmark: S&P/ASX 200 Index

Top Contributor^

Communication Services
Net Contribution 0.71%
Sector
0.01%
Selection 0.70%

Top Detractor^

Financials
Net Contribution -1.48%
Sector
-0.82%
Selection
-0.66%

^Relative

Quarterly Data as of 31-Dec-2020

Largest Overweight

Consumer Discretionary
By15.71%
Fund 23.49%
Benchmark 7.78%

Largest Underweight

Financials
By-8.49%
Fund 19.80%
Benchmark 28.29%

Monthly Data as of 31-Jan-2021

31-Jan-2021 - Randal Jenneke, Head of Australian Equities,
The portfolio is well positioned in cyclical growth, recovery growth, and high-quality stocks that we believe will benefit as economic conditions continue to improve. We have tilted our positioning towards more domestic exposures to reflect the stronger economic performance of the Australian economy. To fund these portfolio changes we have taken profit in defensive growth names and somewhat reduced exposure to companies with offshore earnings. As a result, our main sector overweight exposure is to consumer discretionary and, to a lesser extent, communication services. In contrast, the portfolio’s most significant underweights are in financials, energy, and real estate.

Countries

Total
Countries
4
Largest Country Australia 93.97% Was (31-Dec-2020) 91.51%
Other View complete Country Diversification

Monthly Data as of 31-Jan-2021

Benchmark: S&P/ASX 200 Index

Largest Overweight

New Zealand
By0.90%
Fund 2.03%
Benchmark 1.13%

Largest Underweight

Australia
By-3.39%
Fund 93.97%
Benchmark 97.36%

Monthly Data as of 31-Jan-2021

Team (As of 25-Feb-2021)

Randal S. Jenneke

Randal Jenneke is a portfolio manager and head of Australian equities in the International Equity Division. He is a director of T. Rowe Price Australia, Ltd. He is also a vice president of T. Rowe Price Group, Inc.

Randal’s investment experience began in 1991, and he has been with T. Rowe Price since 2010, beginning in the International Equities Group. Prior to this, Randal was employed by Schroders in the area of investment management.

Randal earned a B.Ec. in accounting and finance from Macquarie University. He also earned a graduate diploma in applied finance and investment from the Securities Institute of Australia.

  • Fund manager
    since
    2012
  • Years at
    T. Rowe Price
    10
  • Years investment
    experience
    29

Fees

APIR Minimum Initial Investment (AUD) Minimum Subsequent Investment (AUD) Buy/Sell Spread Management Fees
ETL0328AU $500,000 $100,000 Buy +0.10%/ Sell -0.05% 0.60% pa