Download

Audience for the document: Share Class: Language of the document:

Download

Share Class: Language of the document:

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®) 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

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

Please enter valid search characters

Market Events

Four Stages of a Credit Crisis and Where We are Now

Mark J. Vaselkiv, Chief Investment Officer, Fixed Income

Q: What Stage of This Crisis Are Fixed Income Markets in Currently?

My lens here: I use four different phase/stages of a crisis.

First is evaluating the positioning of portfolios based on unanticipated developments in the economy and markets. Clearly, no one saw coronavirus coming.

Phase two is raising cash to meet redemptions on the behalf of our clients, many times driven by their own asset allocation decisions as they rotate potentially from fixed income back to equities. Let’s not forget that fixed income over the last two months, the higher quality sectors have performed well in generating positive returns so that they operated as very effective hedges relative to the drawdown in equities. We’re currently working through that.

I believe phase three, stage three, is the most important. And that’s when portfolio managers engage in targeted risk taking and look at compelling valuations in the credit markets, in securitized structures to generate over time over time higher total returns to offset some of the losses that we’ve experienced over the last month.

Phase four is preparing for the ultimate whiplash when the markets snap back and tighten spreads very suddenly. It’s very difficult, I would say virtually impossible, to pick the bottom. I’ve been through this four or five times in my 30 years in the high yield market. Nobody can predict that bottom, but when the markets do begin to come around, that can happen violently and quickly. If you haven’t engaged in phase three, in the acquisition of good collateral in your portfolios, typically you will lag significantly on the upside.

The balance of protecting on the downside but also participating opportunistically in improving credit situations requires some courage. Right now, given the violence and the velocity of this correction it’s time to engage in phase three.

Q: How are our portfolio managers engaging in this phase?

Energy is certainly front and center facing existential issues today. Two black swans – one, the virus and certainly the developments with OPEC when Saudis decided to flood the market with cheap oil. That will absolutely result ultimately in restructurings in high yield companies. But we’ll also see a number of investment-grade, well capitalized businesses downgraded into the high yield market. We refer to these as fallen angels, and we already have on the list five or six major corporations that will probably come into the high yield market

Last Friday, we organized a collaborative investment meeting with our high yield analysts, portfolio managers, equity analysts, as well as investment grade analysts, to look at a number of these situations. it’s very helpful in these situations because T. Rowe often owns equity positions in these companies as well as credit exposure in our fixed income portfolios. It was a very dynamic meeting on Friday that resulted in a number of some significant buy recommendations.


Important Information

This material is being furnished for general informational and/or marketing purposes only. The material does not constitute or undertake to give advice of any nature, including fiduciary investment advice, nor is it intended to serve as the primary basis for an investment decision. Prospective investors are recommended to seek independent legal, financial and tax advice before making any investment decision. T. Rowe Price group of companies including T. Rowe Price Associates, Inc. and/or its affiliates receive revenue from T. Rowe Price investment products and services. Past performance is not a reliable indicator of future performance. 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.

The material does not constitute a distribution, an offer, an invitation, a personal or general recommendation or solicitation to sell or buy any securities in any jurisdiction or to conduct any particular investment activity. The material has not been reviewed by any regulatory authority in any jurisdiction.

Information and opinions presented have been obtained or derived from sources believed to be reliable and current; however, we cannot guarantee the sources’ accuracy or completeness. There is no guarantee that any forecasts made will come to pass. The views contained herein are as of the date written and are subject to change without notice; these views may differ from those of other T. Rowe Price group companies and/or associates. Under no circumstances should the material, in whole or in part, be copied or redistributed without consent from T. Rowe Price.

The material is not intended for use by persons in jurisdictions which prohibit or restrict the distribution of the material and in certain countries the material is provided upon specific request. It is not intended for distribution to retail investors in any jurisdiction.

Canada—Issued in Canada by T. Rowe Price (Canada), Inc. T. Rowe Price (Canada), Inc.’s investment management services are only available to Accredited Investors as defined under National Instrument 45-106. T. Rowe Price (Canada), Inc. enters into written delegation agreements with affiliates to provide investment management services.

© 2020 T. Rowe Price. All rights reserved. T. ROWE PRICE, INVEST WITH CONFIDENCE, and the bighorn sheep design are, collectively and/or apart, trademarks or registered trademarks of T. Rowe Price Group, Inc.

202003-1123427