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SICAV

Emerging Markets Corporate Bond Fund

Accessing diversified emerging market corporate debt.

ISIN LU0596126465 Valoren 13064755

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

7.06%
$159.8m

1YR Return
(View Total Returns)

Manager Tenure

13.60%
4yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

0.39
1.19%

Inception Date 18-May-2011

Performance figures calculated in USD

Other Literature

31-Dec-2019 - Samy Muaddi, Portfolio Manager,
Despite global macroeconomic risks, we remain cautiously optimistic about emerging markets corporate debt given supportive corporate fundamentals. This includes the historically low default rate, the high carry profile of the asset class, the persistent global bid for yield, and the relatively defensive nature of emerging markets corporate debt. That said, the asset class is not insulated from exogenous risk factors, highlighting the importance of bottom-up credit selection.
Samy Muaddi
Samy Muaddi, Portfolio Manager

Samy Muaddi is a portfolio manager in the Fixed Income Division of T. Rowe Price. Mr. Muaddi is the lead manager and executive vice president of the Emerging Markets Corporate Bond and Multi-Sector Account Strategies and chairman of the strategies' Investment Advisory Committees. He also manages the Asia Credit Strategy and is co-portfolio manager of the Global High Income Strategy. Mr. Muaddi is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price Associates, Inc.

 

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 corporate bonds from emerging market issuers.

Investment Approach

  • Focus primarily on corporate debt issued by companies domiciled within emerging market countries.
  • Integrate proprietary credit research and relative value analysis.
  • Establish independent credit rating for each company and country.
  • Add value primarily through individual security selection decisions.
  • Limit risk through diversification.
  • Employ long-term investment horizon combined with low portfolio turnover.
  • Utilize collaboration across macroeconomic, equity and corporate debt teams to take a comprehensive view of corporate debt securities.
  • Diversification cannot assure a profit or protect against loss in a declining market.

Portfolio Construction

  • Diversified portfolio structure: typically 100-150 securities
  • Duration bands: managed within +/- 1 year of the benchmark
  • Expected average credit quality: BB
  • Maximum corporate issuer exposure of 3%
  • Country exposure will range between +/- 20% of index
  • Corporate sector exposure will range between +/- 20% of index
  • Expected tracking error will range between 250 - 450 bps

Performance (Class I)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Since Manager Inception
Annualised
Fund % 13.60% 7.06% 6.39% 5.63% 7.77%
Indicative Benchmark % 13.09% 6.29% 5.93% 5.45% 6.80%
Excess Return % 0.51% 0.77% 0.46% 0.18% 0.97%

Inception Date 18-May-2011

Manager Inception Date 30-Sep-2015

Indicative Benchmark: J.P. Morgan Corporate Emerging Market Bond Index Broad Diversified

Data as of  31-Dec-2019

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Fund % 13.60% 7.06% 6.39% 5.63%
Indicative Benchmark % 13.09% 6.29% 5.93% 5.45%
Excess Return % 0.51% 0.77% 0.46% 0.18%

Inception Date 18-May-2011

Indicative Benchmark: J.P. Morgan Corporate Emerging Market Bond Index Broad Diversified

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 1.01% 2.04%
Indicative Benchmark % N/A N/A N/A 0.97% 2.21%
Excess Return % N/A N/A N/A 0.04% -0.17%

Inception Date 18-May-2011

Indicative Benchmark: J.P. Morgan Corporate Emerging Market Bond Index Broad Diversified

Indicative Benchmark: J.P. Morgan Corporate Emerging Market Bond Index Broad Diversified

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.

31-Dec-2019 - Samy Muaddi, Portfolio Manager,
Emerging markets corporate debt produced strong returns in December. Investors’ appetite for risk was bolstered by progress in trade negotiations between the U.S. and China, where a “phase one” agreement was reached. Within the portfolio, our selection within the oil and gas sector weighed on relative returns. For example, our position in Tullow declined amid reduced production expectations. Our underweight exposure to YPF also held back performance as Argentine assets partially recovered from recent weakness. Our underweight allocation to the sector further held back results, as oil and gas credits were supported by higher prices. In contrast, our financial sector positioning was beneficial. Our selection of higher-yielding BBVA Bancomer, Banco de Bogota, and Banco Nacional de Costa Rica outperformed amid investor demand for higher yields. Our underweight allocation to the more defensive sector aided performance as riskier assets rallied.

Holdings

Issuers

Top
Issuers
10
Top 10 Issuers 14.15% Was (30-Nov-2019) 14.05%
Other View Top 10 Issuers

Monthly data as of 31-Dec-2019

Holdings

Total
Holdings
164
Largest Holding Globo Comunicacao E Participacoes 1.62% Was (30-Sep-2019) 1.77%
Top 10 Holdings 11.99%
Other View Full Holdings Quarterly data as of 31-Dec-2019

Quality Rating View quality analysis

  Largest Overweight Largest Underweight
Quality Rating BB A
By % 18.77% -15.45%
Fund 38.63% 3.47%
Indicative Benchmark 19.85% 18.91%

Average Credit Quality

BB

Monthly Data as of 31-Dec-2019
Indicative Benchmark:  J.P. Morgan Corporate Emerging Market Bond Index Broad 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.

Maturity View maturity analysis

  Largest Overweight Largest Underweight
Maturity 7-10 Years 10+ Years
By % 5.96% -8.49%
Fund 23.02% 7.90%
Indicative Benchmark 17.06% 16.39%

Weighted Average Maturity

6.94 Years

Monthly Data as of 31-Dec-2019
Indicative Benchmark:  J.P. Morgan Corporate Emerging Market Bond Index Broad Diversified

Duration View duration analysis

  Largest Overweight Largest Underweight
Duration 5-7 Years 1-3 Years
By % 12.73% -6.69%
Fund 31.22% 19.61%
Indicative Benchmark 18.49% 26.30%

Weighted Average Duration

5.61 Years

Monthly Data as of 31-Dec-2019
Indicative Benchmark:  J.P. Morgan Corporate Emerging Market Bond Index Broad Diversified

30-Sep-2019 - Samy Muaddi, Portfolio Manager,

Domestic Demand Could Drive Opportunities for Growth

The technology, media, and telecommunications sector remained the portfolio's largest overweight. We participated in a new issue by investment-grade South Korean electronic component producer Hynix and added to high-quality Entel.

We remain overweight transportation and added to this sector. We initiated a new position in Ukraine Rail and added to Emirates Airlines. These higher-yielding corporates benefit from state support in countries with improving fundamentals.

We reduced holdings in the real estate sector. Following an extended period of healthy returns, we eliminated lower-quality Asian property developers, such as PCPD Capital, Evergrande, and Jababeka.

We increased our allocation to utilities and are now significantly overweight the sector. We initiated new positions in Asian utilities Mong Duong and China Oil and Gas.

We added to the portfolio's overweight allocation to the industrial sector. We initiated a position in Thai PET producer Indorama on a new issue.

Underweight Lower-Yielding and Less-Attractive Risk-Adjusted Relative Value

The financials sector remains the largest underweight, though we added to financial holdings during the quarter. We initiated a position in high-quality Thai bank Bangkok Bank and added to existing positions in Latin American Banco PTG Pactual.

Though we maintained our underweight allocation to the oil and gas sector, we added to holdings. The portfolio remains focused on quasi-sovereigns, adding to state-owned Petroleos Mexicanos and Ecopetrol.

The metals and mining sector remains a meaningful underweight, and we further reduced our allocation to the sector. We reduced holdings of JSW Steel, as Indian steel markets could face near-term headwinds amid slowing domestic demand and international pricing pressures. We captured recent gains and reduced aluminum producer Press Metal and Asahan Aluminium.

Credit Quality Considerations

From a secular perspective, we find the most value in BBB, BB, and B credits. These segments generally offer opportunities to identify companies with improving fundamentals that are rating upgrade candidates or provide a stable and attractive risk-adjusted yield.

We increased our holdings of BBB rated names that offer attractive risk-adjusted value, such as Mexican bank BBVA Bancomer. We continue to generally avoid distressed issuers in the CCC and below segment given their increased volatility and history of poor risk-adjusted returns.

Sectors

Total
Sectors
14
Largest Sector TMT 18.63% Was (30-Nov-2019) 18.45%
Other View complete Sector Diversification

Monthly Data as of 31-Dec-2019

Indicative Benchmark: J.P. Morgan Corporate Emerging Market Bond Index Broad Diversified

Largest Overweight

TMT
By6.56%
Fund 18.63%
Indicative Benchmark 12.07%

Largest Underweight

Financial
By-14.41%
Fund 15.45%
Indicative Benchmark 29.86%

Monthly Data as of 31-Dec-2019

31-Dec-2019 - Samy Muaddi, Portfolio Manager,
We focus on companies that we believe are well-positioned to benefit from domestic economic growth, such as those in real estate and consumer-related sectors. In contrast, we continue to have a lower exposure to financials in the portfolio, given rich valuations in some areas and poor transparency. We also maintain underweight allocations to extractive industries, such as the oil and gas sector.

Countries

Total
Countries
36
Largest Country China 12.96% Was (30-Nov-2019) 11.95%
Other View complete Country Diversification

Monthly Data as of 31-Dec-2019

Indicative Benchmark: J.P. Morgan Corporate Emerging Market Bond Index Broad Diversified

Largest Overweight

Brazil
By5.37%
Fund 10.82%
Indicative Benchmark 5.46%

Largest Underweight

Qatar
By-3.18%
Fund 0.00%
Indicative Benchmark 3.18%

Monthly Data as of 31-Dec-2019

31-Dec-2016 - Samy Muaddi, Portfolio Manager,
Countries with strong reform agendas including Brazil, Argentina, and Indonesia, remain a key focus of the strategy. On the other hand, we have trimmed our exposure to Mexico, largely through longer-maturity industrials, given the uncertainties around the potential renegotiation of North American free trade agreements

Currency

Total
Currencies
3
Largest Currency U.S. dollar 100.00% Was (30-Nov-2019) 100.00%
Other View complete Currency Diversification

Monthly Data as of 31-Dec-2019

Indicative Benchmark : J.P. Morgan Corporate Emerging Market Bond Index Broad Diversified

Largest Overweight

Canadian dollar
By 0.00%
Fund 0.00%
Indicative Benchmark 0.00%

Largest Underweight

U.S. dollar
By -0.00%
Fund 100.00%
Indicative Benchmark 100.00%

Monthly Data as of 31-Dec-2019

Team (As of 06-Jan-2020)

Samy Muaddi

Samy Muaddi is a portfolio manager in the Fixed Income Division of T. Rowe Price. Mr. Muaddi is the lead manager and executive vice president of the Emerging Markets Corporate Bond Strategy and chairman of the strategy's Investment Advisory Committee. He also manages the Asia Credit Strategy and is co-portfolio manager of the Global High Income Strategy. Mr. Muaddi is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price Associates, Inc.

Mr. Muaddi has 13 years of investment experience, all of which have been with T. Rowe Price. He joined the firm in 2006.

Mr. Muaddi earned a B.A., summa cum laude, in economics from the University of Maryland. He also has earned the Chartered Financial Analyst designation. Mr. Muaddi is an adjunct professor at Georgetown University in the Walsh Graduate School of Foreign Service.

  • Fund manager
    since
    2015
  • Years at
    T. Rowe Price
    13
  • Years investment
    experience
    13

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 A $15,000 $100 $100 5.00% 135 basis points 1.52%
Class I $2,500,000 $100,000 $0 0.00% 70 basis points 0.80%
Class Q $15,000 $100 $100 0.00% 70 basis points 0.87%
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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