SICAV

Global Natural Resources Equity Fund

Seeking to identify long-term global winners in the arena of natural resources extraction and production.

ISIN LU0272423913 Valoren 2790339

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

-5.91%
$159.5m

1YR Return
(View Total Returns)

Manager Tenure

-21.32%
6yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

0.12
5.07%

Inception Date 15-Nov-2006

Performance figures calculated in USD

Other Literature

30-Jun-2020 - Shawn T. Driscoll, Portfolio Manager,
We continue to believe that we are in a secular bear market for many commodities. However, we see a potential sharp rebound in oil prices as global economies reopen and demand normalises. Despite our positive near-term outlook for crude prices, we expect West Texas Intermediate (WTI) crude oil to settle in the mid-USD 40s per barrel over the long term.
Shawn T.  Driscoll
Shawn T. Driscoll, Portfolio Manager

Shawn Driscoll is a portfolio manager in the U.S. Equity Division of T. Rowe Price. He is the portfolio manager for the Global Natural Resources Strategy and is president and chairman of its Investment Advisory Committee. He is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price Associates, Inc.

 

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 widely diversified portfolio of stocks of natural resources or commodities-related companies. The companies may be anywhere in the world, including emerging markets.

Investment Approach

  • Focus on well-managed companies that own or develop natural resources and other basic commodities with attractive long-term supply-demand fundamentals.
  • Invest in companies that operate “downstream” from these resources, e.g., refining, paper manufacturing, steel fabrication, and petrochemicals.
  • The portfolio invests in resource companies on a global basis including — international energy, forest products, mining, and commodities.
  • Assessment of resource/commodity cycle, industry valuation, and company fundamentals is key.
  • Broadly diversify holdings to manage portfolio risk profile relative to highly concentrated energy or gold strategies.

Portfolio Construction

  • Typically 90-120 securities
  • Positions typically range to 5%
  • Reserves typically range from 0% to 5%

Performance (Class I)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Since Manager Inception
Annualised
Fund % -21.32% -5.91% -3.39% 0.30% -3.50%
Indicative Benchmark % -23.96% -6.46% -4.01% 0.79% -4.08%
Excess Return % 2.64% 0.55% 0.62% -0.49% 0.58%

Inception Date 15-Nov-2006

Manager Inception Date 30-Sep-2013

Indicative Benchmark: MSCI World Select Natural Resources Index Net

Data as of  30-Jun-2020

Performance figures calculated in USD

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Fund % -21.32% -5.91% -3.39% 0.30%
Indicative Benchmark % -23.96% -6.46% -4.01% 0.79%
Excess Return % 2.64% 0.55% 0.62% -0.49%

Inception Date 15-Nov-2006

Indicative Benchmark: MSCI World Select Natural Resources Index Net

Data as of  30-Jun-2020

Performance figures calculated in USD

Recent Performance

  Month to DateData as of 07-Aug-2020 Quarter to DateData as of 07-Aug-2020 Year to DateData as of 07-Aug-2020 1 MonthData as of 30-Jun-2020 3 MonthsData as of 30-Jun-2020
Fund % 1.75% 8.52% -16.73% 0.00% 18.89%
Indicative Benchmark % 3.62% 5.15% -21.97% 0.45% 22.50%
Excess Return % -1.87% 3.37% 5.24% -0.45% -3.61%

Inception Date 15-Nov-2006

Indicative Benchmark: MSCI World Select Natural Resources Index Net

Indicative Benchmark: MSCI World Select Natural Resources Index Net

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.

Index returns shown with reinvestment of dividends after the deduction of withholding taxes. 

Effective 1 July 2018, 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-2020 - Shawn T. Driscoll, Portfolio Manager,
Commodity prices were mixed in June. WTI and Brent crude oil prices continued to rally, while a persistent oversupply remained a headwind for U.S. natural gas prices. Gold prices edged higher, while silver and palladium were roughly flat. Copper and iron ore prices rose on expectations that the return of economic activity would boost demand. Steel prices fell, as Chinese inventories rose after production outstripped demand growth. Within the portfolio, our underweight position and stock selection in precious metals and minerals hurt the most. Northern Star Resources’ stock pulled back from recent highs on concerns that a prolonged global recovery from the coronavirus outbreak would disrupt its operations and weigh on its output. We like the company’s playbook of acquiring and turning around struggling gold-mining operations. Our underweight position in oil and gas refining and marketing added further value. Stocks in this industry pulled back, as higher oil prices usually weigh on refiners’ profit margins. Elevated inventories of refined products and lower capacity utilisation rates also pose challenges to the industry’s profitability in the near term. Conversely, our below-benchmark allocation to diversified metals and mining was a source of weakness, as the industry rallied in sympathy with the prices of base metals on improving economic data in China.

Holdings

Total
Holdings
117
Largest Holding Total 4.48% Was (31-Mar-2020) 6.31%
Other View Full Holdings Quarterly data as of 30-Jun-2020
Top 10 Holdings 26.36% View Top 10 Holdings Monthly data as of 30-Jun-2020

Largest Top Contributor^

Air Products & Chemicals
By 0.17%
% of fund 3.21%

Largest Top Detractor^

NextEra Energy
By -1.03%
% of fund 2.74%

^Absolute

Quarterly Data as of 30-Jun-2020

Top Purchase

Enbridge
1.32%
Was (31-Mar-2020) 0.65%

Top Sale

Total
4.44%
Was (31-Mar-2020) 6.31%

Quarterly Data as of 30-Jun-2020

31-Mar-2020 - Shawn T. Driscoll, Portfolio Manager,

Our bearish outlook for oil prices and belief that we are in the middle of a secular downcycle for commodities have not changed. Accordingly, we continue to favor defensive industries and areas of the natural resources universe, such as specialty chemicals, that we believe stand to benefit from lower commodity prices that reduce their input costs. The coronavirus pandemic and efforts to contain its spread have ground global economic activity to a halt and resulted in unprecedented demand destruction for crude oil and other commodities. These developments have completely changed the macro backdrop and opportunity set relative to where we were in the fourth quarter. We have begun adjusting to this new environment, with an eye on the next two to three years. So far, these efforts have focused on high-grading the portfolio by exiting lower-conviction and late-cycle ideas while adding to high-quality names that boast strong balance sheets, exhibit some leverage to commodity prices, and have the potential to do well in the early stages of a recovery. We also increased the portfolio's exposure to paper and forest products, an industry where we believe production cost curves are rising and the supply/demand outlook appears favorable. Although we are confident than energy stocks will rebound from current depressed levels, we plan to move slowly and selectively in positioning for this opportunity. As always, we remain conscious of valuation, industry fundamentals, and longer-term risk/reward propositions for the individual companies in which we invest.

Integrated Oil and Gas

We refined our positioning within in integrated oil and gas, an industry that historically has been a relative haven during energy bear markets because of the companies' scale, financial strength, and dividend yields. However, we believe the universe of so-called safety plays in the oil and gas investment universe has shrunk, as the challenges of moving the needle on production growth become more pronounced at size. We believe some majors' fascination with pursuing low-carbon ventures could distract their�management teams and dilute returns. We favor names that should be able to grow their hydrocarbon output in a cost-conscious manner and have exhibited a commitment to returning capital to shareholders.

  • We exited BP on concerns that its strategic goal of reaching net-zero carbon emissions could hamper returns. We are also skeptical of the decision to ramp up investment in renewables at a time when the cost curve for clean energy is declining rapidly and an abundance of inexpensive capital has intensified competition in this space.
  • We eliminated Occidental Petroleum in favor of other investment opportunities. In the current environment, we believe the Permian Basin-focused oil and gas producer faces heightened execution risk and challenges deleveraging after its controversial acquisition of Anadarko Petroleum.
  • We added to Chevron and Norway-based Equinor (formerly Statoil), names with solid�balance sheets and strong management teams�that we believe offer quality exposure to�oil beta. These are early-cycle stocks that we would like to own when we emerge from the current crisis.

Diversified Metals and Mining

We remained underweight the industry and defensively positioned with the metals and mining names held in the portfolio, focusing on companies with solid balance sheets and records of�sound capital allocation. Even before the coronavirus outbreak, we believed that a global oversupply of many base metals could be a headwind through much of what we regard as a secular bear market in commodities. Nevertheless, we have a favorable medium- to long-term outlook for copper prices because of the potential for demand to expand as adoption of electric vehicles grows.

  • We added to BHP, one of the largest diversified miners. The stock sold off and underperformed some of its peers on concerns about the company's exposure to crude oil and copper, a base metal whose price historically has exhibited sensitivity to the global economy's growth rate. We believe BHP's near-term price dislocation created an opportunity to add quality beta that could do well in the early stages of a recovery.
  • We initiated a position in OZ Minerals, an Australia-based miner that will ramp up copper production from a second project in 2020, setting the stage for a potential inflection in cash flow once this operation is running smoothly. We also like the company's strong development pipeline, which includes potential mining projects targeting copper, nickel, and cobalt.
  • We exited Teck Resources, a diversified miner that generates a meaningful proportion of its cash flow from metallurgical coal.

Paper and Forest Products

We increased the portfolio's allocation to this industry, with an emphasis on U.S. and European producers of containerboard, a commodity where we view the longer-term supply/demand outlook as favorable.

  • We initiated a position in Westrock and added to Packaging Corporation of America, two of the leading U.S. containerboard producers. Although we acknowledge that the macroeconomic challenges stemming from the coronavirus pandemic create near-term uncertainties for these companies, our long-term investment theses remain intact. We believe industry consolidation should help to moderate the cyclicality in containerboard pricing, while the increasing penetration of e-commerce and the trend toward paper-for-plastic substitution in packaging create long-term demand tailwinds.

Diversified Chemicals

We refined the portfolio's position in diversified chemicals to upgrade our exposure and emphasize our highest-conviction investment ideas.

  • We exited DuPont de Nemours, a specialty chemicals conglomerate spun out from the former DowDuPont, in favor of investments that we believe offer better risk/reward profiles.
  • We eliminated Eastman Chemical. Although we appreciate the relative resilience of the mid-cap chemical conglomerate's growing portfolio of specialty chemicals, recent market volatility has created more attractive risk/reward profiles elsewhere in our investment universe.
  • We initiated a position in Huntsman, a polyurethane company with a relatively clean balance sheet that we believe has improved the return profile of its underlying business mix by expanding its presence in downstream applications. In our view, Huntsman's growing portfolio of intermediate chemicals should generate more consistent returns through the cycle than its legacy operations, creating the potential for the stock to rerate to a higher valuation multiple as the market comes around to this change.

Oil and Gas Refining and Marketing

The portfolio remained underweight oil and gas refining and marketing, an industry that tends to do better toward the middle of�an economic cycle. The extent of the fuel demand destruction stemming from the global response to the coronavirus pandemic and its macroeconomic ramifications mean that refining stocks likely will not be a haven during this downcycle. In the intermediate term, we have concerns about potential supply-side risks stemming from Saudi Arabia's plans to add refining capacity.

  • We eliminated Valero Energy. Although we appreciate the U.S.-based independent refiner's flexibility to process a wide range of different crude grades and easy access to export markets from the Gulf Coast, we exited this position in favor of opportunities that we believe offer better risk/reward profiles.

Sectors

Total
Sectors
9
Largest Sector Chemicals 19.47% Was (31-May-2020) 19.29%
Other View complete Sector Diversification

Monthly Data as of 30-Jun-2020

Indicative Benchmark: MSCI World Select Natural Resources Index

Largest Overweight

Other
By6.11%
Fund 8.84%
Indicative Benchmark 2.73%

Largest Underweight

Energy Services & Processors
By-15.48%
Fund 9.15%
Indicative Benchmark 24.63%

Monthly Data as of 30-Jun-2020

30-Jun-2020 - Shawn T. Driscoll, Portfolio Manager,
Our bearish long-term outlook for oil prices has not changed. Accordingly, we favour defensive industries, such as electric utilities, and areas of the natural resources universe that tend to benefit from lower commodity prices. We upgraded the portfolio by trimming lower-conviction ideas while adding to high-quality companies that look attractive now and that we’d like to own on the other side of the economic cycle. Although we see the potential for a strong countercyclical rally in oil prices and energy stocks over the next 12 months, we remain selective in how we position for this trade.

Countries

Total
Countries
18
Largest Country United States 58.18% Was (31-May-2020) 58.58%
Other View complete Country Diversification

Monthly Data as of 30-Jun-2020

Indicative Benchmark: MSCI World Select Natural Resources Index

Largest Overweight

United States
By8.08%
Fund 58.18%
Indicative Benchmark 50.10%

Largest Underweight

Canada
By-6.05%
Fund 7.58%
Indicative Benchmark 13.63%

Monthly Data as of 30-Jun-2020

31-Jul-2015 - Shawn T. Driscoll, Portfolio Manager,
From a country perspective, our allocation to Norway saw the largest percentage increase during the month of July. There were no notable reductions for the period.

Currency

Total
Currencies
10
Largest Currency U.S. dollar 63.46% Was (31-May-2020) 64.55%
Other View complete Currency Diversification

Monthly Data as of 30-Jun-2020

Indicative Benchmark : MSCI World Select Natural Resources Index

Largest Overweight

U.S. dollar
By 13.10%
Fund 63.46%
Indicative Benchmark 50.36%

Largest Underweight

Canadian dollar
By -9.80%
Fund 3.83%
Indicative Benchmark 13.63%

Monthly Data as of 30-Jun-2020

Team (As of 05-Aug-2020)

Shawn T.  Driscoll

Shawn Driscoll is a portfolio manager in the U.S. Equity Division of T. Rowe Price. He is the portfolio manager for the Global Natural Resources Strategy and is president and chairman of its Investment Advisory Committee. He is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price Associates, Inc.

Mr. Driscoll has 16 years of investment experience, 13 of which have been with T. Rowe Price. Prior to joining the firm in 2006, he was employed by MTB Investment Advisors as an equity research analyst. He also worked for MPower Communications as an information technology project manager.

Mr. Driscoll earned a B.A. in economics and mathematics from the University of Rochester and an M.B.A. in finance and global business from New York University, Leonard N. Stern School of Business.

  • Fund manager
    since
    2013
  • Years at
    T. Rowe Price
    14
  • Years investment
    experience
    17
Brian Dausch

Brian Dausch is a portfolio specialist in the U.S. Equity Division of T. Rowe Price. He is a member of the Global Natural Resources Equity, US Mid-Cap Growth Equity, US Small-Cap Growth Equity, QM US Small-Cap Growth Equity, and Health Sciences Strategy teams, working closely with institutional clients, consultants, and prospects. Mr. Dausch is a vice president of T. Rowe Price Group, Inc.

Mr. Dausch has 22 years of investment experience, 21 of which have been at T. Rowe Price. He joined the firm in 1998; prior to his current position, he managed the U.S. Equity Portfolio Analysis Group. Mr. Dausch also served as an associate research analyst in the U.S. Equity Division in health care, specializing in biotechnology and pharmaceutical company research.

Mr. Dausch earned a B.S. in business administration, with a concentration in finance, from the University of Delaware. He also has earned the Chartered Financial Analyst designation.

  • Years at
    T. Rowe Price
    21
  • Years investment
    experience
    22

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% 160 basis points 1.74%
Class I $2,500,000 $100,000 $0 0.00% 75 basis points 0.84%
Class Q $1,000 $100 $100 0.00% 75 basis points 0.92%

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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