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


Share Class: Language of the document:

Change Details

If you need to change your email address please contact us.
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

International Equities

Japanese Equities—An Asset Class Familiar With Volatility

Archibald Ciganer, Regional Portfolio Manager

While unsettling, uncertainty can help to affirm investment conviction.

Much has been written about recent market events, but the past month has been defined by a near perfect storm of negative and unpredictable news flow. Set against a backdrop of raised expectations that 2020 would be defined by stability and improvement, the subsequent emergence of the coronavirus, the economic impact of control measures to delay its spread, and a very untimely oil price war have combined to shock equity markets lower.

Recent market volatility is certainly understandable, given that investors are fearful of the unknown—in this case, the scale and longevity of the coronavirus impact being the definition of “unknown.” However, while times like these are challenging for investors, we believe that volatility and uncertainty can also help to affirm conviction in certain investments, especially those that can emerge sustainably from periods of duress.

Opening Quote ...Japanese equities is an asset class used to investor skepticism. Closing Quote

Maintaining Calm

March 11, 2020, marked the nine‑year anniversary of the Tohoku earthquake, and the subsequent Fukushima nuclear disaster—a disaster that caused the TOPIX, on March 15, 2011, to fall more than 12%1 in a single day as investors struggled to price risk or gauge the potential duration of the risks that emerged in that period. Coming on the heels of the global financial crisis in 2008, the earthquake and its market impact led to an extreme level of skepticism that even Japanese equities have rarely seen—and Japanese equities is an asset class used to investor skepticism.

Today’s environment is very different from either of the events mentioned above, but there are parallels with respect to investment success during worrying and uncertain times. And it is this previous experience that we are drawing on to help guide us in the management of the Japanese Equity Strategy during the current challenging period.

This includes the fundamental truth that, ultimately, the quality, durability, and cash flow generation of a business matter greatly over the medium and long term when considering returns. In addition, we retain a strong belief that periods of crisis and volatility are not usually opportune moments to rotate aggressively toward a more risk‑averse portfolio. Instead, maintaining conviction and investing through a cycle, including periods of volatility, can lead to better outcomes over the longer term.

In our ongoing search for assets that fit the characteristics noted above, we are utilizing the full extent of our local and global resources. We are also leaning on our deep experience in the Japanese equity market in order to manage emerging risks while also being awake to new opportunities to invest in what we believe are exceptional businesses that are now trading at much lower valuations.

The core of our investment process is built around a long‑term investment horizon and measured, unemotional, fundamental research. We are maintaining these principles through the current market environment.

Opening Quote While challenging for investors, we believe that periods of volatility and uncertainty can help to affirm conviction in certain investments... Closing Quote

With respect to the coronavirus, we believe that we will work through the issues currently dominating society and markets and see better times, both in terms of the health and social impact, as well as the economic impact. While the global backdrop could potentially worsen in the very near term, markets have re‑priced a sharp economic and earnings impact with speed, assuming a recessionary outlook for the first half of 2020. We think this is a fair and realistic assessment.

However, with policymakers active in providing liquidity, and with potential fiscal policy stimulus at the ready should the situation deteriorate, any further action is likely to be a globally coordinated one. The oil price collapse has only accelerated the convergence of central bank interest rate expectations and long‑end bond yields. The U.S. Federal Reserve has already responded with emergency action to support the economy, cutting interest rates to a target range of 0%–0.25%. With monetary policy reaching its limits, we could see renewed and coordinated fiscal response to help support economies as we deal with the near‑term decline in economic activity levels.

While stimulus alone in no way guarantees the improvement we expect in the second half of 2020, we do see a likely path to a better backdrop, and we retain conviction in our portfolio of holdings given the strength of business models, balance sheets, and management quality that, we naturally look for in our investments. Japan continues to progress along a path of structural improvement in terms of governance, engagement, and shareholder returns, and corporate Japan delivered record stock buybacks in 2019 (amid a profits recession) in demonstration of this point. As and when we see stability return to the economic environment, improvement and growth will no doubt be fertile themes for investors, and we believe Japan typifies these kinds of opportunities.

It is times like these when quality matters, and we believe we have a significant bias to quality, both within our strategy and within the research resources directed toward the management of our clients’ assets during these periods of concern.

1 Source: TOPIX—Tokyo Stock Exchange, Inc.

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.