T. Rowe Price T. Rowe Price Trusty Logo

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®). 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

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

SICAV

Emerging Local Markets Bond Fund

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

ISIN LU1629937985 Valoren 37190840

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

0.83%
$103.6m

1YR Return
(View Total Returns)

Manager Tenure

-7.78%
3yrs

Inception Date 16-Jun-2017

Performance figures calculated in EUR

Other Literature

31-Oct-2020 - Andrew Keirle, Portfolio Manager,
While uncertainty about the pandemic persists, financial conditions remain broadly favourable for emerging market (EM) assets and are likely to remain this way in the coming months. The recovery in EM currencies has lagged other non-dollar counterparts recently, and near-term risks may support the U.S. dollar, but valuations and technical factors are supportive for EM currencies in the medium term. Bond yields remain compelling, although risk premia have fallen, meaning bottom-up security selection is key.
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.

Click for Manager Outlook
 

Strategy

Manager's Outlook

Following the first quarter selloff in risk assets brought on by the coronavirus pandemic, an oil supply shock, and market illiquidity, emerging markets debt has enjoyed a notable recovery over the last two quarters, with gains being moderated by U.S. dollar strength.

While the uncertainty about the trajectory of the COVID pandemic and the outcome of the U.S. elections continue to weight on risk sentiment, financial conditions remain broadly favorable for EM assets and are likely to remain this way in the coming months. We remain encouraged by the fiscal and monetary steps taken by both developed and emerging nations to support the recovery in global economic activity and expect these accommodative policies to continue globally.

Furthermore, the valuation of EM local currency bonds continues to look attractive from a medium-term perspective. EM currencies also look attractive as the seven-year long U.S. dollar bull market has cheapened EM FX substantially. U.S. dollar depreciation has historically driven EM currency outperformance, so assuming we are entering a prolonged period of US sluggishness, this should be a tailwind for emerging markets local currency bonds' performance.

The phasing out of lockdown measures in many countries will support EM growth momentum as trade increases. China's growth outlook remains imperative to emerging markets, so as the country's economic activity continues to recover from the pandemic, the regional outlook looks favorable and thus should support EM assets. Despite this, we are wary that developed market growth downgrades are materializing and will impact external demand for EM goods and services, weighing on the China-related bounce.

Even with unprecedented monetary stimulus, inflation across emerging markets remains relatively benign. The improving growth tone globally and attractive external positions has allowed for this counter cyclical policy action and is consequently supporting rate markets.

Finally, while the upcoming U.S. elections have the potential to create not only short-term volatility but also potentially a notable shift in economic policy within and outside the U.S. The election calendar in emerging markets countries is light in the coming quarters, and thus political risk in the asset class should be relatively controlled. We feel this, combined with a weakening U.S. dollar and supportive market technicals, could lead to an increase in inflows to the asset class and support market performance.

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 | EUR)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Fund % -7.78% 0.83% N/A -0.48%
Indicative Benchmark % -7.88% 1.28% N/A -0.02%
Excess Return % 0.10% -0.45% N/A -0.46%

Inception Date 16-Jun-2017

Indicative Benchmark: Linked Benchmark

Data as of  31-Oct-2020

Performance figures calculated in EUR

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Fund % -8.03% -0.10% N/A -0.80%
Indicative Benchmark % -8.37% 0.44% N/A -0.35%
Excess Return % 0.34% -0.54% N/A -0.45%

Inception Date 16-Jun-2017

Indicative Benchmark: Linked Benchmark

Data as of  30-Sep-2020

Performance figures calculated in EUR

Recent Performance

  Month to DateData as of 20-Nov-2020 Quarter to DateData as of 20-Nov-2020 Year to DateData as of 20-Nov-2020 1 MonthData as of 31-Oct-2020 3 MonthsData as of 31-Oct-2020
Fund % 4.37% 5.44% -5.43% 1.03% -0.10%
Indicative Benchmark % 3.50% 4.63% -6.17% 1.10% -0.44%
Excess Return % 0.87% 0.81% 0.74% -0.07% 0.34%

Inception Date 16-Jun-2017

Indicative Benchmark: Linked Benchmark

Indicative Benchmark: Linked Benchmark

Performance figures calculated in EUR

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-Oct-2020 - Andrew Keirle, Portfolio Manager,
EM local currency bonds gained in October. Despite an uptick in coronavirus cases and political uncertainty in the U.S., investors sought higher-yielding, high-quality assets. Local currency bonds' performance was driven by their generally higher yields. As a whole, EM foreign exchange was flat over the month; however, within the universe, some currencies gained and some fell. Within the portfolio, bond allocation and currency exposure each added to relative performance. Our underweight allocation to Turkish government bonds aided relative results, as the Turkish central bank kept its benchmark rate unchanged, contrary to expectations for a significant hike. Long positions in Indian and Serbian rates were also beneficial in October. In terms of currencies, an overweight to the Mexican peso helped boost performance. Mexico reported a better-than-expected fiscal deficit, including a primary balance. Our use of the South Korean won and Taiwan dollar as funders underperformed as they made gains amid market uncertainty approaching U.S. elections.

Holdings

Issuers

Top
Issuers
10
Top 10 Issuers 68.64% Was (30-Sep-2020) 67.87%
Other View Top 10 Issuers

Monthly data as of 31-Oct-2020

Holdings

Total
Holdings
106
Largest Holding China Government Bond 3.86% Was (30-Jun-2020) 1.07%
Top 10 Holdings 30.05%
Other View Full Holdings Quarterly data as of 30-Sep-2020

Quality Rating View quality analysis

  Largest Overweight Largest Underweight
Quality Rating B A
By % 3.71% -7.40%
Fund 4.42% 21.77%
Indicative Benchmark 0.71% 29.17%

Average Credit Quality

BBB

Monthly Data as of 31-Oct-2020
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 % 13.70% -17.28%
Fund 33.98% 8.73%
Indicative Benchmark 20.28% 26.01%

Weighted Average Duration

5.41 Years

Monthly Data as of 31-Oct-2020
Indicative Benchmark:  J.P. Morgan GBI - EM Global Diversified

30-Sep-2020 - Andrew Keirle, Portfolio Manager,

At the beginning of the period, the portfolio was tilted more towards EM FX risk exposure rather than duration. As the U.S. dollar briefly depreciated and risk sentiment in the market became more stretched, we trimmed our risk levels in both FX and duration in the middle of the quarter.

Bond Allocation

  • On the duration side, we continue to lean on countries that illustrate recovery in activity combined with supportive central bank policy and subdued inflation. Indonesian government bonds are among our favored positions.
  • In Latin America, we remained overweight Mexico. We view it as an attractive opportunity due to healthy fundamentals and accommodative monetary policy. Conversely, we trimmed our Brazil risk exposure amid political turmoil and increasing fiscal concerns.
  • In emerging Europe, we maintained an overweight to Russia as we believe the country offers healthy account balances and stable policy. We are underweight Poland and Czech Republic as valuations are high, rates are low, and there is limited scope for capital appreciation.
  • We hold off-index long positions in Egypt, Serbia, India, and Kenya due to cheap valuations and favorable demand dynamics.

Currency Selection

  • The strategy remains overweight EM FX positions versus the benchmark funded via a mix of dollar, developed market and EM FX funders. However, we trimmed our long EM FX exposure over the quarter as our short-term conviction on currencies declined to a more neutral position.
  • We retain our overweight position Latin American currencies, primarily via the Mexican peso, Peruvian sol, and Colombian peso.
  • In Asia, we maintain our regional overweight with preference for the Indonesian rupiah, Chinese yuan, and Malaysian ringgit. These positions are partially hedged via shorts in the South Korean won and Taiwanese dollar.
  • We are overweight Emerging Europe currencies, primarily focused on the Czech koruna, Russian ruble, and Romanian leu.

Sectors

Total
Sectors
6
Largest Sector Sovereign 95.53% Was (30-Sep-2020) 94.71%
Other View complete Sector Diversification

Monthly Data as of 31-Oct-2020

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

Largest Overweight

Corporate
By2.22%
Fund 2.22%
Indicative Benchmark 0.00%

Largest Underweight

Sovereign
By-4.47%
Fund 95.53%
Indicative Benchmark 100.00%

Monthly Data as of 31-Oct-2020

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 Asia 32.41% Was (30-Sep-2020) 31.67%
Other View complete Region Diversification

Monthly Data as of 31-Oct-2020

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

Largest Overweight

Middle East & Africa
By4.12%
Fund 11.45%
Indicative Benchmark 7.32%

Largest Underweight

Emerging Europe
By-2.81%
Fund 26.42%
Indicative Benchmark 29.24%

Monthly Data as of 31-Oct-2020

Countries

Total
Countries
33
Largest Country Indonesia 11.08% Was (30-Sep-2020) 10.45%
Other View complete Country Diversification

Monthly Data as of 31-Oct-2020

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

Largest Overweight

Egypt
By2.48%
Fund 2.48%
Indicative Benchmark 0.00%

Largest Underweight

Poland
By-4.73%
Fund 3.48%
Indicative Benchmark 8.22%

Monthly Data as of 31-Oct-2020

31-Oct-2020 - Andrew Keirle, Portfolio Manager,
We maintained positions in countries that continue to demonstrate positive reforms and a commitment to upholding stable fundamentals. For example, we maintained our out-of-benchmark exposures in India, Egypt, and Serbia. We maintained underweight positions in Thailand and Poland as we prefer to allocate funds to markets offering more attractive valuations.

Currency

Total
Currencies
34
Largest Currency Indonesian rupiah 12.49% Was (30-Sep-2020) 12.13%
Other View complete Currency Diversification

Monthly Data as of 31-Oct-2020

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

Largest Overweight

Indonesian rupiah
By 2.92%
Fund 12.49%
Indicative Benchmark 9.56%

Largest Underweight

U.S. dollar
By -9.37%
Fund -9.37%
Indicative Benchmark 0.00%

Monthly Data as of 31-Oct-2020

31-Oct-2020 - Andrew Keirle, Portfolio Manager,
Although we took profits in some positions following strong performance, we still think many EM currencies can deliver positive performance over the medium- to long-term. We are overweight the Indonesian rupiah and Malaysia ringgit, as we feel they will benefit from an improving trade outlook. We also hold off-benchmark positions in the Egyptian pound and Serbian dinar, while using a basket of developed market currencies as funders for more attractive FX opportunities.

Team (As of 01-Oct-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
    2017
  • Years at
    T. Rowe Price
    15
  • Years investment
    experience
    24

Fee Schedule

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