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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.

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SICAV

Continental European Equity Fund

Style-agnostic, quality-driven European equity investment.

ISIN LU0938199691 Valoren 21508567

3YR Return Annualised
(View Total Returns)

Total Assets
(EUR)

12.22%
€111.4m

1YR Return
(View Total Returns)

Manager Tenure

23.82%
<1yr

Information Ratio
(5 Years)

Tracking Error
(5 Years)

0.70
2.96%

Inception Date 24-May-2013

Performance figures calculated in GBP

30-Jun-2021 - Tobias Mueller, Portfolio Manager ,
It remains the case, in our view, that the path to economic recovery will be dictated by the development of effective vaccines and the gradual reopening of economies. In these uncertain times one should be prepared for market dislocations triggered by events. Opportunities may emerge to buy high-quality companies that have become stronger due to the coronavirus crisis and to sell those that are likely to have been fundamentally weakened.
Tobias Mueller, CFA
Tobias Mueller, CFA, Portfolio Manager

Tobias Mueller is a regional portfolio manager for the European Select Strategy, effective October 2018, and for the Europe Equity and Europe ex-UK Equity Strategies, effective October 2020. He is a vice president of T. Rowe Price International Ltd.

 

Strategy

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 diversified portfolio of stocks of companies in Europe (excluding the UK).

Investment Approach

  • Fundamental research is critical to successfully identify and assess long-term investment opportunities. We look for companies with high returns on capital and capable of providing sustainable earnings across the market cycle.
  • Style agnostic, focus on quality. By avoiding style constraints, we can invest in quality companies and maintain a balanced portfolio through market cycles.
  • Disciplined approach to valuation. We aim to buy businesses at a clear discount to their intrinsic value.
  • Risk management is essential and is assisted by diversification, quantitative analysis, and automatic stabilizers built in to our investment process.
  • 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

  • Typically 40-70 stocks
  • Individual position size up to 4.0% relative to the indicative benchmark
  • Sector ranges: typically +/- 10% relative to the indicative benchmark
  • Country ranges: typically +/- 10% relative to the indicative benchmark
  • Expected Tracking Error: typically 3.0% to 6.0%
  • Information Ratio objective: >0.5
  • Cash target range: fully invested, typically less than 5.0%
  • Turnover range: 40%-100%

Performance (Class Q | GBP)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Since Manager Inception
Fund % 23.82% 12.22% 13.38% 11.00% 17.57%
Indicative Benchmark % 22.18% 9.38% 11.30% 8.85% 19.36%
Excess Return % 1.64% 2.84% 2.08% 2.15% -1.79%

Inception Date 24-May-2013

Manager Inception Date 01-Oct-2020

Indicative Benchmark: FTSE Developed Europe ex United Kingdom Index Net

Data as of 30-Jun-2021

Performance figures calculated in GBP

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Fund % 23.82% 12.22% 13.38% 11.00%
Indicative Benchmark % 22.18% 9.38% 11.30% 8.85%
Excess Return % 1.64% 2.84% 2.08% 2.15%

Inception Date 24-May-2013

Indicative Benchmark: FTSE Developed Europe ex United Kingdom Index Net

Data as of 30-Jun-2021

Performance figures calculated in GBP

Recent Performance

  Month to DateData as of 03-Aug-2021 Quarter to DateData as of 03-Aug-2021 Year to DateData as of 03-Aug-2021 1 MonthData as of 30-Jun-2021 3 MonthsData as of 30-Jun-2021
Fund % 0.72% 2.53% 13.34% 2.73% 8.48%
Indicative Benchmark % 0.81% 2.40% 13.10% 1.79% 7.89%
Excess Return % -0.09% 0.13% 0.24% 0.94% 0.59%

Inception Date 24-May-2013

Indicative Benchmark: FTSE Developed Europe ex United Kingdom Index Net

Indicative Benchmark: FTSE Developed Europe ex United Kingdom Index Net

Performance figures calculated in GBP

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.

30-Jun-2021 - Tobias Mueller, Portfolio Manager ,
The FTSE All-World Developed Europe ex UK Index rose to a fresh record level in June as economies continued to reopen and central bankers reaffirmed their commitment to ultra-loose monetary policies. However, worries that inflationary pressures might bring forward interest rate increases and the spread of a super-infectious variant of the novel coronavirus curbed equities’ advance. At the portfolio level, stock picking in consumer discretionary, financials and communication services contributed the most to relative performance. Zalando, Europe’s largest online fashion retail platform, was our best performer within consumer discretionary. The negative effect on the share price of the Kinnevik share distribution waned. The company also told brokers the reopening of large European markets is driving traffic online where there is greater choice than in stores. On the negative side, our choice of securities in information technology (IT) and modest underperformance in consumer staples dragged on relative returns. Amadeus IT, a leading provider of global distribution systems and IT solutions for the travel industry, suffered as the rapid spread of the delta variant raised the prospect of delays in reopening economies and knocked travel stocks.

Holdings

Total
Holdings
58
Largest Holding ASML Holding 4.48% Was (31-Mar-2021) 4.36%
Other View Full Holdings Quarterly data as of  30-Jun-2021
Top 10 Holdings 29.29% View Top 10 Holdings Monthly data as of  30-Jun-2021

Largest Top Contributor^

ASML Holding
By 0.31%
% of fund 4.46%

Largest Top Detractor^

Siemens
By -0.59%
% of fund 2.98%

^Absolute

Quarterly Data as of 30-Jun-2021

Top Purchase

Mayr Melnhof Karton (N)
0.96%
Was (31-Mar-2021) 0%

Top Sale

Munich Re (E)
0.00%
Was (31-Mar-2021) 2%

Quarterly Data as of 30-Jun-2021

31-Mar-2021 - Tobias Mueller, Portfolio Manager ,

Focus on Quality, Cyclicals Amid Volatile Markets

The first quarter of 2021 was volatile, largely driven by the market's shifting perception of the impact and recovery path from the coronavirus pandemic. We continued to see a market rotation away from companies with growth and momentum factor characteristics into more value-oriented, lower-quality names.

We identified four key themes (energy transition, sustainability, offline to online, and biologics) where we found numerous stocks on what we believe is the right side of change. We also bought stocks that we thought were idiosyncratic opportunities where change was more internally driven. The recent underperformance of quality created a window for us to add names on weakness and build up existing positions. We also raised our exposure to cyclical parts of the index where we still see upside, such as aerospace.

  • We increased our overweight in industrials and business services; we added Airbus and exited RELX.
  • We raised an overweight in financials, adding ING.
  • We reduced our position in materials to a modest overweight, adding Akzo Nobel and Symrise, while exiting Air Liquide, Acerinox, and Corbion.
  • We moved from a modest overweight to a modest underweight in health care; we added Coloplast, and we exited Grifols and Novartis.
  • We have a zero weight in energy after exiting Koninklijke Vopak.

Industrials and Business Services

We increased our overweight in the cyclical industrials and business services sector, which has become our largest absolute and relative allocation. We added Airbus, a global aerospace and defense company, and Fluidra, a Spain-based builder of swimming pools and provider of pool equipment, which is gaining market share in North America after a transformational merger with rival Zodiac almost three years ago. �

We also trimmed several positions that performed well, recycling some funds into new opportunities in the materials and consumer discretionary sectors. The reductions included Assa Abloy, a global leader in security lock products and solutions that we added to the portfolio late last year; Epiroc, a leading provider of products, solutions, and services to the global mining and infrastructure markets; and Norma, a specialist in engineering joining technology.

Our largest industry exposures in relative terms are to machinery and aerospace and defense. In the former, our largest investments are Valmet, a Finland-based provider of services and equipment to the paper, board, and pulp industry, and Epiroc. In the latter industry, Airbus is our main holding.

We invested in Airbus because we believe that the company can emerge from the coronavirus crisis in a stronger competitive position, with exposure to a structural growth end market given the demand to fly. A cost-reduction program last year freed up resources to boost aircraft production, already at strong levels, over the medium term. The company is also dominant in the market for narrow-body aircraft, which are expected to lead the industry out of the recent slump.We exited RELX, the leading publisher of science journals and a provider of risk assessments on transactions with retail customers, to recycle the funds into UK-based Ascential, a company in the communication services sector in which we have higher conviction. Ascential, a B2B media business specializing in exhibitions, festivals, and information services for retailers, will, in our view, emerge stronger from the coronavirus as it steadily shifts the portfolio of its businesses to higher-growth brands and continues with its plan to become fully digitized.

Financials

We raised our overweight in financials, adding ING, a global Dutch bank, as we sought to add a cyclical tilt to the portfolio.

With this move, we are now modestly overweight banks, where our largest bets are Erste Group Bank, one of the largest lenders in Austria and Central Europe, and Bawag, the fourth-largest bank in Austria. We increased our overweight exposure to insurance, dominated by our position in Zurich Insurance, a global insurer based in Switzerland, and we raised our overweight in capital markets, where our largest holding is Julius Baer, a global private bank based in Switzerland.

  • ING has shown great resilience since the market correction in early 2020. The capital position is strong, which sets it apart from most European Union banks. Its commitment to technological development and innovation supports revenue growth and shields it from market disruption. If the digital bank in Germany�is successful, the model could be replicated elsewhere, which, we believe, should boost growth. The new chief executive officer is also focusing on cost discipline.

Materials

We made numerous adjustments to our holdings in the materials sector, reducing our allocation to a modest overweight position.

We exited France-based Air Liquide, one of the largest industrial gas companies internationally, and Acerinox, a global stainless-steel producer, after strong performance. We also sold our holding in Corbion, a Dutch biobased ingredients company operating in the food and biochemical sectors, where the thesis has played out. We added Akzo Nobel, a global company specializing in decorative paints and industrial performance coatings, now one of our largest holdings in the sector. We also initiated a position in Germany-based Symrise, a supplier of flavorings and fragrances to food, beverage, cosmetic, and personal care producers.

Our biggest position in the sector is Koninklijke DSM, a leading vitamin maker and performance materials business. Our largest industry exposure is to containers and packaging, where we own Verallia, Europe's biggest maker of glass containers.

  • Akzo Nobel's earnings should grow, we believe, as an economic recovery takes hold. The company is asset light, has good pricing power, and generates strong cash flow. Management is halfway through a turnaround and is beginning to deliver stronger operational performance. It has also started a capital return program.
  • Symrise's management has diversified the business to exploit new growth areas like premium pet food and care, probiotics, and aquaculture. These efforts should allow the company to sustain strong organic growth over the medium term.
  • We exited Corbion, whose stock rerated after a strong rally since March last year. However, in our view, the earnings potential of polylactic acid production, an ingredient for making biodegradable plastic that has become a strong focus of environmental, social, and governance-related interest, is fully factored into valuations.

Health Care

We adjusted our holdings in the health care sector, moving from a modest overweight to a modest underweight exposure. We added Danish company Coloplast, a global leader in the chronic care medical products industry, and exited Grifols, a Spain-based company that collects blood plasma and manufactures biopharmaceuticals, and Novartis, a Switzerland-based manufacturer of health care and nutritional products.

  • Coloplast has excellent management, a differentiated research and development portfolio, and, in our view, the industry's most advanced and effective distribution channel, giving it a competitive advantage over rivals. The market also underappreciates the potential for gaining market share in the U.S. over the longer term.
  • We sold our holding in Grifols because the plasma business is being affected by the coronavirus pandemic, which� limit its could growth prospects. We exited Novartis, which has continued to suffer from negative momentum on topline estimates as both Novartis-specific regulatory and launch execution�issues�have been exacerbated by the pandemic.

Energy

We moved to a zero weight in energy, exiting our only holding, Koninklijke Vopak, the world's largest tank terminal operator and a specialist in the storage and handling of liquid and gaseous chemicals. The sector faces structural challenges as the world transitions to cleaner forms of energy; many of the companies in the sector are on the wrong side of change, in our view, as they are overly wedded to fossil fuel extraction.

Sectors

Total
Sectors
10
Largest Sector Industrials & Business Services 20.76% Was (31-May-2021) 21.12%
Other View complete Sector Diversification

Monthly Data as of 30-Jun-2021

Indicative Benchmark: FTSE Developed Europe ex United Kingdom Index

Top Contributor^

Communication Services
Net Contribution 0.37%
Sector
0.00%
Selection 0.36%

Top Detractor^

Information Technology
Net Contribution -0.42%
Sector
-0.02%
Selection
-0.40%

^Relative

Quarterly Data as of 30-Jun-2021

Largest Overweight

Industrials & Business Services
By4.25%
Fund 20.76%
Indicative Benchmark 16.51%

Largest Underweight

Consumer Staples
By-5.21%
Fund 5.19%
Indicative Benchmark 10.41%

Monthly Data as of 30-Jun-2021

30-Jun-2021 - Tobias Mueller, Portfolio Manager ,
We made some small adjustments to positioning, with a continued focus on quality stocks that could benefit from an economic reopening. We deepened our underweight exposure to health care, exiting Morphosys, a German biotechnology company, after a misstep involving the launch of its main drug, and reduced our positions in pharmaceutical names, taking profits on strong performance. In contrast, we increased our overweight allocation to the materials sector, adding a large paper and packaging producer that we believe is undervalued by the market.

Countries

Total
Countries
11
Largest Country Germany 18.13% Was (31-May-2021) 17.73%
Other View complete Country Diversification

Monthly Data as of 30-Jun-2021

Indicative Benchmark: FTSE Developed Europe ex United Kingdom Index

Top Contributor^

Germany
Net Contribution 0.41%
Country
0.02%
Selection 0.39%

Top Detractor^

Switzerland
Net Contribution -0.53%
Country
-0.11%
Selection
-0.42%

^Relative

Quarterly Data as of 30-Jun-2021

Largest Overweight

Italy
By5.27%
Fund 10.33%
Indicative Benchmark 5.06%

Largest Underweight

France
By-9.05%
Fund 13.22%
Indicative Benchmark 22.27%

Monthly Data as of 30-Jun-2021

30-Sep-2019 - Dean Tenerelli, Portfolio Manager ,
We deepened our underweight allocation in consumer staples, the largest in the portfolio, by selling Essity Aktiebolag, a global hygiene products company, taking profits after a strong run. In our view, the margin-improvement thesis has largely played out and is factored into the share price. Raw material prices have also started to decline, and the company could find it more challenging to maintain price increases. Consequently, the shares may struggle to rise much further. In contrast, we increased our overweight exposure to industrial and business services, health care and real estate.

Team (As of 27-Jul-2021)

Tobias Mueller, CFA

Tobias Mueller is a regional portfolio manager for the European Select Strategy, effective October 2018, and for the Europe Equity and Europe ex-UK Equity Strategies, effective October 2020. He is a vice president of T. Rowe Price International Ltd.

Tobias’s investment experience began in 2006, and he has been with T. Rowe Price since 2011, beginning in the medical technology and exchange sectors as a research analyst in the Equity Division. Prior to this, Tobias completed an internship at the firm in 2010 and was employed by Lehman Brothers in the Principal Finance Group in London, where he focused on distressed fixed income assets.

Tobias earned an M.B.A. from the University of Chicago, Booth School of Business and is a graduate of business administration from the University of Applied Sciences in Munich, Germany. He also has earned the Chartered Financial Analyst® designation.

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

  • Fund manager
    since
    2020
  • Years at
    T. Rowe Price
    9
  • Years investment
    experience
    14
Andrew Clifton

Andrew Clifton is a portfolio specialist in the Equity Division. He is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price International Ltd.

Andrew’s investment experience began in 1990, and he has been with T. Rowe Price since 2010, beginning in the Investment Specialist Group. Prior to this, Andrew was employed by UBS as an executive director at Global Asset Management. Andrew also was a vice president at Merrill Lynch.

Andrew earned a B.Sc. in economics from the London School of Economics and an M.Sc. in econometrics from the University of Southampton.

  • Years at
    T. Rowe Price
    11
  • Years investment
    experience
    32

Fee Schedule

Share Class Minimum Initial Investment and Holding Amount (EUR) Minimum Subsequent Investment (EUR) Minimum Redemption Amount (EUR) 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%

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