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SICAV

Emerging Local Markets Bond Fund

Research-driven investment in emerging market local currency sovereign bonds.

ISIN LU0310189781 Valoren 3428869

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

6.78%
$98.9m

1YR Return
(View Total Returns)

Manager Tenure

13.77%
7yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

0.07
1.51%

Inception Date 09-Aug-2007

Performance figures calculated in USD

Other Literature

31-Dec-2019 - Andrew Keirle, Portfolio Manager,
We are optimistic about the outlook for emerging market local currency assets. The partial U.S.-China trade agreement should remove a near-term downside risk and further boost the improving global growth outlook. The U.S. dollar could also continue to ease in the coming months, creating opportunities in active currency positions. However, we remain aware of the risks from rising Middle East tensions or other idiosyncratic geopolitical events.
Andrew Keirle
Andrew Keirle, Portfolio Manager

Andrew Keirle is a senior portfolio manager in the Fixed Income Division and a member of the Global Fixed Income Investment Team. Mr. Keirle is the lead portfolio manager for the Emerging Markets Local Currency Bond Strategy and has important input on a number of emerging markets bond strategies and global fixed income strategies. He is a vice president of T. Rowe Price Group, Inc. and T. Rowe Price International Ltd.

 

Strategy

Investment Objective

To maximise the value of its shares through both growth in the value of, and income from, its investments. The fund invests mainly in a diversified portfolio of bonds of all types from emerging market issuers, with a focus on bonds that are denominated in the local currency.

Investment Approach

  • Focus primarily on sovereign debt denominated in the currencies of the respective emerging countries.
  • Integrate proprietary credit research and relative value analysis.
  • Establish independent credit rating by country.
  • Add value through active country, currency and individual security selection decisions.
  • Limit risk through diversification.
  • Employ long-term investment horizon combined with low portfolio turnover.

Portfolio Construction

  • Higher concentration portfolio structure: typically 100-150 securities
  • Duration bands: managed within +/- 2 years of the benchmark
  • Average Credit Quality: BBB
  • Country exposure maximum 30% per country
  • Target tracking error: 200-400 bps

Performance (Class I)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Since Manager Inception
Annualised
Fund % 13.77% 6.78% 2.89% 2.41% 0.27%
Indicative Benchmark % 13.47% 7.03% 2.78% 2.57% 0.27%
Excess Return % 0.30% -0.25% 0.11% -0.16% 0.00%

Inception Date 09-Aug-2007

Manager Inception Date 31-Oct-2012

Indicative Benchmark: Linked Benchmark

Data as of  31-Dec-2019

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Fund % 13.77% 6.78% 2.89% 2.41%
Indicative Benchmark % 13.47% 7.03% 2.78% 2.57%
Excess Return % 0.30% -0.25% 0.11% -0.16%

Inception Date 09-Aug-2007

Indicative Benchmark: Linked Benchmark

Data as of  31-Dec-2019

Performance figures calculated in USD

Recent Performance

  Month to Date Quarter to Date Year to Date 1 MonthData as of 31-Dec-2019 3 MonthsData as of 31-Dec-2019
Fund % N/A N/A N/A 4.43% 5.50%
Indicative Benchmark % N/A N/A N/A 4.13% 5.20%
Excess Return % N/A N/A N/A 0.30% 0.30%

Inception Date 09-Aug-2007

Indicative Benchmark: Linked Benchmark

Indicative Benchmark: Linked Benchmark

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.

Effective 1 January 2011, the benchmark for the sub-fund was changed to J.P. Morgan Government Bond Index-Emerging Markets (GBI-EM) Global Diversified. Prior to 1 January 2011, the benchmark was the J.P. Morgan Government Bond Index-Emerging Markets Broad Diversified Index. The benchmark change was made because the firm viewed the new benchmark to be a better representation of the investment strategy of the sub-fund. Historical benchmark representations have not been restated.

31-Dec-2019 - Andrew Keirle, Portfolio Manager,
Emerging market local currency bonds posted strong positive returns over the final month of 2019. Progress towards a U.S.-China phase one trade deal buoyed sentiment globally. A weaker U.S. dollar also boosted local currency returns. Within the portfolio, our overweight to South Africa government bonds aided performance. Despite ongoing economic concerns, Fitch rating agency kept the country’s credit rating on hold which supported sentiment. However, our underweight in Thai government bonds held back performance as the country’s assets improved amid the wider rally. Within currencies, we opened an overweight in the Chilean peso following a sell-off in November. This exposure made a positive impact in December as the peso rebounded on the back of a government stimulus package and the central bank indicating interest rates would remain stable for the medium term. Our overweight position in the Brazilian real also furthered relative gains, helped by stronger-than-expected economic data.

Holdings

Issuers

Top
Issuers
10
Top 10 Issuers 72.94% Was (30-Nov-2019) 69.08%
Other View Top 10 Issuers

Monthly data as of 31-Dec-2019

Holdings

Total
Holdings
103
Largest Holding Republic of South Africa Government Bond 3.77% Was (30-Sep-2019) 2.73%
Top 10 Holdings 30.43%
Other View Full Holdings Quarterly data as of 31-Dec-2019

Quality Rating View quality analysis

  Largest Overweight Largest Underweight
Quality Rating BBB A
By % 4.75% -9.02%
Fund 55.37% 22.92%
Indicative Benchmark 50.62% 31.94%

Average Credit Quality

BBB

Monthly Data as of 31-Dec-2019
Indicative Benchmark:  J.P. Morgan GBI - EM Global Diversified

Sources for Credit Quality Diversification: Moody's Investors Service and Standard & Poor's (S&P) split ratings (i.e. BB/B and B/CCC) are assigned when the Moody's and S&P ratings differ. Short-Term holdings are not rated.

Duration View duration analysis

  Largest Overweight Largest Underweight
Duration 5-7 Years 1-3 Years
By % 13.34% -14.51%
Fund 35.50% 11.05%
Indicative Benchmark 22.16% 25.56%

Weighted Average Duration

5.38 Years

Monthly Data as of 31-Dec-2019
Indicative Benchmark:  J.P. Morgan GBI - EM Global Diversified

30-Sep-2019 - Andrew Keirle, Portfolio Manager,

Bond Allocation

  • Our portfolio holds overweight positions in countries with the potential to maintain or ease monetary policy stances amid subdued inflation, such as Brazil where we added to an overweight exposure during the quarter. We also retained an overweight to Mexico.
  • In Asia, we held our out-of-benchmark exposure to Sri Lanka amid contained inflation and attractive real yields. We also retained an overweight to India.
  • In emerging Europe, we initiated an overweight to Russia during the period due to a supportive fiscal position and rising expectations of an extended rate cutting cycle. We remain underweight CEE countries, including Czech Republic, Hungary, and Poland. The region's government bond prices have risen in recent months along with core eurozone bonds and currently offer little further value, in our view.
  • As we continue to seek attractive, risk-adjusted relative value, we expand our opportunity set beyond the benchmark. We continue to hold out-of-benchmark positions, including an allocation to Serbia.

Currency Selection

  • We hold overweight positions in currencies with stable underlying fundamentals and whose countries are undertaking structural reforms, such as the Indonesian rupiah. We also opened an overweight in the Indian rupee during the period.��
  • Elsewhere in Asia, we moderated our overweight to the Philippines peso during the quarter by taking some profits after its strong performance this year.
  • In Latin America, we added to an overweight exposure in the Mexican peso. We believe the country's strong current accounts and healthy foreign currency reserves can help the peso maintain stability despite geopolitical risks. We also maintained an overweight to the Brazilian real. Conversely, we closed our overweight to the Argentinean peso during the period as we see the policy uncertainty in the coming months as a potential source of further volatility.
  • The breadth of our research process allows us to evaluate currencies outside the benchmark where we see attractive opportunities. We continue to hold an off-benchmark position in the Egyptian pound. Primary surpluses paired with solid growth has improved Egypt's debt dynamics, significantly reducing its debt/gross domestic product ratio recently. We also maintained our off-benchmark exposure to the Nigerian naira, Serbian dinar, and Sri Lankan rupee.
  • The strategy retains a mix of developed and emerging market currency short positions in the Swiss franc, South Korean won, Singapore dollar, and Taiwanese dollar, which we use to fund our preferred overweight positions.

Sectors

Total
Sectors
5
Largest Sector Sovereign 95.43% Was (30-Nov-2019) 92.51%
Other View complete Sector Diversification

Monthly Data as of 31-Dec-2019

Indicative Benchmark: J.P. Morgan GBI - EM Global Diversified

Largest Overweight

Reserves
By1.74%
Fund 1.74%
Indicative Benchmark 0.00%

Largest Underweight

Sovereign
By-4.57%
Fund 95.43%
Indicative Benchmark 100.00%

Monthly Data as of 31-Dec-2019

30-Nov-2015 - Andrew Keirle, Portfolio Manager,
We maintain off-benchmark allocations to selected U.S. dollar-denominated and euro-denominated sovereign and quasi-sovereign bonds that hold attractive relative value.

Regions

Total
Regions
5
Largest Region Latin America 29.93% Was (30-Nov-2019) 28.09%
Other View complete Region Diversification

Monthly Data as of 31-Dec-2019

Indicative Benchmark: J.P. Morgan GBI - EM Global Diversified

Largest Overweight

Middle East & Africa
By5.01%
Fund 14.48%
Indicative Benchmark 9.47%

Largest Underweight

Emerging Europe
By-8.19%
Fund 23.64%
Indicative Benchmark 31.83%

Monthly Data as of 31-Dec-2019

Countries

Total
Countries
27
Largest Country South Africa 12.05% Was (30-Nov-2019) 11.07%
Other View complete Country Diversification

Monthly Data as of 31-Dec-2019

Indicative Benchmark: J.P. Morgan GBI - EM Global Diversified

Largest Overweight

India
By3.07%
Fund 3.07%
Indicative Benchmark 0.00%

Largest Underweight

Poland
By-6.20%
Fund 2.78%
Indicative Benchmark 8.97%

Monthly Data as of 31-Dec-2019

31-Dec-2019 - Andrew Keirle, Portfolio Manager,
We maintain a preference for countries that are implementing economic reforms, such as South Africa where we added to our overweight exposure amid attractive valuations. We also maintained an overweight to India where we see potential for monetary policy to become more accommodative. Conversely, we remain underweight central and eastern Europe countries Poland and Czech Republic where we see little value in current bond prices.

Currency

Total
Currencies
36
Largest Currency Indonesian rupiah 11.46% Was (30-Nov-2019) 11.41%
Other View complete Currency Diversification

Monthly Data as of 31-Dec-2019

Indicative Benchmark : J.P. Morgan GBI - EM Global Diversified

Largest Overweight

Czech koruna
By 2.52%
Fund 6.21%
Indicative Benchmark 3.69%

Largest Underweight

U.S. dollar
By -8.70%
Fund -8.70%
Indicative Benchmark 0.00%

Monthly Data as of 31-Dec-2019

31-Dec-2019 - Andrew Keirle, Portfolio Manager,
Similar to bond markets, we hold overweight and off-benchmark positions in currencies where countries are undertaking structural reforms and we see upside potential. Conversely, we are underweight currencies we view as having limited relative value. We hold an overweight in the Egyptian pound as we see positive structural reforms continuing. We also added to an overweight to the Chilean peso as fiscal and monetary policy in the country could remain supportive of the currency despite recent social protests.

Team (As of 06-Jan-2020)

Andrew Keirle

Andrew Keirle is a senior portfolio manager in the Fixed Income Division and a member of the Global Fixed Income Investment Team. Mr. Keirle is the lead portfolio manager for the Emerging Markets Local Currency Bond Strategy and has important input on a number of emerging markets bond strategies and global fixed income strategies. He is a vice president of T. Rowe Price Group, Inc. and T. Rowe Price International Ltd.

Mr. Keirle has 23 years of investment experience, 14 of which have been with T. Rowe Price. Prior to joining the firm in 2005, he was a portfolio manager and analyst at Lazard Asset Management. Prior to joining Lazard, Mr. Keirle spent seven years as a global portfolio manager at Gulf International Bank in London.

Mr. Keirle is a qualified member of the Institute of Investment Management and Research, and he also holds a diploma from the Society of Technical Analysts. He graduated with a B.Sc. in economics and politics from the University of Swansea at the University of Wales.

  • Fund manager
    since
    2012
  • Years at
    T. Rowe Price
    14
  • Years investment
    experience
    23

Fee Schedule

Share Class Minimum Initial Investment and Holding Amount Minimum Subsequent Investment Minimum Redemption Amount 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 $15,000 $100 $100 0.00% 65 basis points 0.82%
Class Sd $10,000,000 $0 $0 0.00% 0 basis points 0.10%

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

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GIPS® Information

T. Rowe Price ("TRP") claims compliance with the Global Investment Performance Standards (GIPS®). TRP has been independently verified for the twenty one- year period ended June 30, 2017 by KPMG LLP. The verification report is available upon request. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm's policies and procedures are designed to calculate and present performance in compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite presentation.

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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