SICAV

Global High Yield Bond Fund

Seeks to capture enhanced returns from a diversified global portfolio of income bearing, high yield securities.

ISIN LU0133082254 Valoren 1274236

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

3.36%
$1.5b

1YR Return
(View Total Returns)

Manager Tenure

2.15%
5yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

-0.86
1.55%

Inception Date 17-Aug-2001

Performance figures calculated in USD

Other Literature

31-Aug-2020 - Michael Della Vedova, Portfolio Manager,
As high yield spreads continue to compress toward longer-term averages, we are still seeing value in corners of the market where companies can benefit from a gradual reopening of the economy or from therapeutic treatments and the development of a vaccine. With the impact of business disruptions continuing to be reflected in corporate earnings, there may be another round of market volatility, which could provide further opportunities for us to invest at attractive prices.
Michael Della Vedova
Michael Della Vedova, Portfolio Manager

Mike Della Vedova is a global high yield portfolio manager in the Fixed Income Division. He is a portfolio manager for the Europe High Yield Bond Strategy and co-portfolio manager for the Global High Yield Bond Fund and Global High Income Bond Strategy. 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

History tells us that at today's spread levels, forward returns have typically been rewarding for high yield investors. Robust positive flows to the asset class have provided technical support, buoyed secondary market prices, and created strong interest in new issues. The higher-quality portions of our market have recovered quickly, and spreads have nearly returned to pre-virus levels. However, the recovery has yet to gain traction marketwide, and spreads remain elevated in some segments, such as low-quality energy, where we expect increased default activity.

As the fallout from the pandemic and the impact of business disruptions begin to be reflected in corporate earnings, there will likely be another round of volatility, which should provide further opportunities to invest at attractive prices. We believe potential gains that can be captured on a spread basis still exist, although overall uncertainty in the economic environment and the trajectory of the global health crisis throughout the rest of the year and beyond remain important considerations.

As always, we aim to deliver high current income while seeking to contain the volatility inherent in this market. Our team maintains a commitment to credit research and risk-conscious investing that has led to favorable returns for our high yield clients over various market cycles.

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 high yield corporate bonds from issuers around the world, including emerging markets.

Investment Approach

  • Focus on BB/B securities, with a measured allocation to lower-quality bonds when valuations are compelling.
  • Proprietary fundamental research is key — emphasis on industries that enjoy stable cash flow and rational competitive environments.
  • Extensive analyst interaction across sectors and asset classes promotes broad credit perspective.
  • Disciplined risk management practices employed in conjunction with broad portfolio diversification to manage risk profile.

Portfolio Construction

  • Diversified portfolio structure of high yield corporate bonds: 250-350 issuers
  • Industry exposure typically will range +/- 3% around benchmark weight
    • Conservative exposure guidelines to individual issuers:
    • BB issuer: 3% maximum
    • B issuer: 2% maximum
    • CCC issuer: 1% maximum

Performance (Class A)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Since Manager Inception
Fund % 2.15% 3.36% 5.05% 5.64% -0.59%
Indicative Benchmark % 3.17% 4.30% 6.38% 6.89% -0.38%
Excess Return % -1.02% -0.94% -1.33% -1.25% -0.21%

Inception Date 17-Aug-2001

Manager Inception Date 31-Dec-2019

Indicative Benchmark: J.P. Morgan Global High Yield Index

Data as of  31-Aug-2020

Performance figures calculated in USD

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Fund % -1.57% 1.95% 3.31% 5.46%
Indicative Benchmark % -1.87% 2.84% 4.61% 6.66%
Excess Return % 0.30% -0.89% -1.30% -1.20%

Inception Date 17-Aug-2001

Indicative Benchmark: J.P. Morgan Global High Yield Index

Data as of  30-Jun-2020

Performance figures calculated in USD

Recent Performance

  Month to DateData as of 21-Sep-2020 Quarter to DateData as of 21-Sep-2020 Year to DateData as of 21-Sep-2020 1 MonthData as of 31-Aug-2020 3 MonthsData as of 31-Aug-2020
Fund % -0.66% 4.71% -1.25% 0.83% 5.58%
Indicative Benchmark % -0.49% 5.17% -0.86% 1.44% 7.30%
Excess Return % -0.17% -0.46% -0.39% -0.61% -1.72%

Inception Date 17-Aug-2001

Indicative Benchmark: J.P. Morgan Global High Yield Index

Indicative Benchmark: J.P. Morgan Global High Yield Index

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-Aug-2020 - Michael Della Vedova, Portfolio Manager,
High yield bonds generated gains in August as improving economic data and a dovish policy shift from the U.S. Federal Reserve bolstered the performance of risk assets, and positive flows mitigated the impact of heavy new issuance. Most high yield industries posted solid gains, and returns across the ratings spectrum were positive, with CCC bonds outpacing higher qualities. Market segments significantly affected by the pandemic, including transportation and leisure, were among the top performers due to a decline in coronavirus cases and reports of progress in the development of a vaccine. Within the portfolio, credit selection in the broadcasting segment aided relative performance. Security selection in the entertainment and leisure space benefitted, although our underweight allocation partly offset the contribution. However, credit selection among utilities held back relative performance. Our overweight allocation to cable operators, which is generally considered a defensive market segment, hurt amid investors increased appetite for risk during the period.

Holdings

Issuers

Top
Issuers
10
Top 10 Issuers 15.44% Was (31-Jul-2020) 17.14%
Other View Top 10 Issuers

Monthly data as of 31-Aug-2020

Holdings

Total
Holdings
460
Largest Holding Avantor 1.85% Was (31-Mar-2020) 2.12%
Top 10 Holdings 10.00%
Other View Full Holdings Quarterly data as of 30-Jun-2020

Quality Rating View quality analysis

  Largest Overweight Largest Underweight
Quality Rating Short Term BB Rated
By % 6.18% -9.02%
Fund 6.18% 27.89%
Indicative Benchmark 0.00% 36.91%

Average Credit Quality

B+

Monthly Data as of 31-Aug-2020
Indicative Benchmark:  J.P. Morgan Global High Yield Index

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 Cash Equivalents 1-3 Years
By % 6.40% -9.58%
Fund 6.40% 5.93%
Indicative Benchmark 0.00% 15.52%

Weighted Average Maturity

6.19 Years

Monthly Data as of 31-Aug-2020
Indicative Benchmark:  J.P. Morgan Global High Yield Index

Duration View duration analysis

  Largest Overweight Largest Underweight
Duration Cash Holdings 1-3 Years
By % 6.18% -5.91%
Fund 6.18% 31.57%
Indicative Benchmark 0.00% 37.48%

Weighted Average Duration

3.07 Years

Monthly Data as of 31-Aug-2020
Indicative Benchmark:  J.P. Morgan Global High Yield Index

30-Jun-2020 - Michael Della Vedova, Portfolio Manager,

Our risk-aware and defensive positioning aided relative performance in April as the high yield market rebounded from March volatility. This recovery was led by issuers and sectors that exhibited strong fundamentals, such as higher-quality credits and defensive sectors like cable operators and utilities. In contrast, the impressive gains in May and June were led by the market's more speculative credits, many of which recovered from severely stressed levels after having sold off in March due to their exposure to the pandemic or commodity prices. Therefore, our defensive and higher-quality positioning was a headwind to relative performance as lower-quality and more speculative credits drove performance.

Selectively Participated in New Deals

As part of our fundamental research, we worked to determine which companies in our market could survive the unsettled environment created by the pandemic by introducing zero revenue scenarios into our models. When several issuers with sound fundamental credit stories came to the market to strengthen their balance sheets, we seized the opportunity to invest in these names at attractive prices. For example, we increased the fund's lodging exposure by participating in new deals from Marriott International and Hilton. In the entertainment and leisure space, we purchased secured bonds from amusement park companies Six Flags Entertainment and Cedar Fair.

Attractive Opportunities in Fallen Angels

We augmented our holdings in the energy and automotive segments by investing in fallen angels. Specifically, we purchased U.S. E&P companies Occidental Petroleum and Hess, and we added Ford Motor Company as we believed these credits presented compelling opportunities.

Financials Positioning Adjusted

In the financials segment, we used the recovery during the period as an opportunity to eliminate the portfolio's holdings of Additional Tier 1 (AT1) securities issued by European banks. We were concerned that the global pandemic and the shuttering of many businesses could cause financial institutions to experience a large accrual of bad debt. These considerations along with the subordinated status of AT1 securities prompted us to exit these investments.

Industry

Total
Industries
32
Largest Industry Energy 10.94% Was (31-Jul-2020) 10.53%
Other View complete Industry Diversification

Monthly Data as of 31-Aug-2020

Indicative Benchmark: J.P. Morgan Global High Yield Index

Largest Overweight

Cable Operators
By6.20%
Fund 10.57%
Indicative Benchmark 4.37%

Largest Underweight

Services
By-2.68%
Fund 4.76%
Indicative Benchmark 7.44%

Monthly Data as of 31-Aug-2020

31-Aug-2020 - Michael Della Vedova, Portfolio Manager,
We are currently overweight cable operators, relative to the market index, because these issuers generally exhibit more defensive characteristics due to subscription-based, recurring-revenue business models. We are also overweight utilities, a more defensive industry given current market conditions. Conversely, we have an underweight position in energy as weaker global demand is keeping oil prices suppressed. We are also underweight the retail segment, which faces secular headwinds and continues to operate in a challenging environment governed by social distancing requirements.

Countries

Total
Countries
20
Largest Country United States 77.65% Was (31-Jul-2020) 78.64%
Other View complete Country Diversification

Monthly Data as of 31-Aug-2020

Indicative Benchmark: J.P. Morgan Global High Yield Index

Largest Overweight

United States
By5.62%
Fund 77.65%
Indicative Benchmark 72.03%

Largest Underweight

Brazil
By-2.76%
Fund 1.53%
Indicative Benchmark 4.29%

Monthly Data as of 31-Aug-2020

Currency

Total
Currencies
4
Largest Currency U.S. dollar 99.87% Was (31-Jul-2020) 99.92%
Other View complete Currency Diversification

Monthly Data as of 31-Aug-2020

Indicative Benchmark : J.P. Morgan Global High Yield Index

Largest Overweight

euro
By 0.07%
Fund 0.07%
Indicative Benchmark 0.00%

Largest Underweight

U.S. dollar
By -0.13%
Fund 99.87%
Indicative Benchmark 100.00%

Monthly Data as of 31-Aug-2020

Team (As of 05-Aug-2020)

Michael Della Vedova

Mike Della Vedova is a global high yield portfolio manager in the Fixed Income Division. He is a portfolio manager for the Europe High Yield Bond Strategy and co-portfolio manager for the Global High Yield Bond Fund and Global High Income Bond Strategy. He is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price International Ltd.

Mike’s investment experience began in 1994, and he has been with T. Rowe Price since 2009, beginning in the Fixed Income department. Prior to this, Mike was cofounder and partner of Four Quarter Capital, a credit hedge fund focusing on below investment-grade European corporate debt. Mike also was employed by Muzinich & Company as a senior analyst and assistant portfolio manager in London.

Mike earned an LL.B. and a B.Com. in finance from the University of New South Wales and a Graduate Diploma in Legal Practice (GDLP) from the University of Technology, Sydney. He also was admitted as a solicitor to the Supreme Court of New South Wales.

  • Fund manager
    since
    2015
  • Years at
    T. Rowe Price
    11
  • Years investment
    experience
    27
Rodney M.  Rayburn, CFA

Rodney Rayburn is a portfolio manager in the Fixed Income Division, managing the Credit Opportunities and High Yield Bond Strategies. He is president of the Credit Opportunities Fund, Inc. He also is executive vice president of the High Yield Fund, Inc., and Institutional Income Funds, Inc., and chairman of their respective Investment Advisory Committees. He is a member of the Investment Advisory Committee for the Balance Fund. Rodney is a vice president of T. Rowe Price Associates, Inc., T. Rowe Price Group, Inc., and T. Rowe Price Trust Company.

Rodney’s investment experience began in 1999, and he has been with T. Rowe Price since 2014, beginning in the Fixed Income Division as a high yield analyst focused on distressed and special situations. In 2015, he was promoted to portfolio manager on the High Yield team. Prior to T. Rowe Price, Rodney was employed by Värde Partners as a managing director, and he was actively involved in performing and nonperforming loans, bonds, and reorganized equities across a variety of industries. He also was a senior investment analyst at Stark Investments.

Rodney earned a B.S. in economics from the Georgia Institute of Technology and an M.B.A. in finance and economics from The University of Chicago, Booth School of Business. Rodney 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
    6
  • Years investment
    experience
    21

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 A $1,000 $100 $100 5.00% 115 basis points 1.24%
Class I $2,500,000 $100,000 $0 0.00% 60 basis points 0.64%
Class Jd $10,000,000 $0 $0 0.00% 0 basis points 0.02%
Class Q $1,000 $100 $100 0.00% 60 basis points 0.68%
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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