T. Rowe Price T. Rowe Price Trusty Logo

SICAV

US Large-Cap Value Equity Fund

Invest in large US companies with hidden value and potential overlooked by the market majority.

ISIN LU0133100338 Valoren 1274365

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

1.75%
$717.3m

1YR Return
(View Total Returns)

Manager Tenure

-3.65%
18yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

-0.23
4.08%

Inception Date 27-Mar-2002

Performance figures calculated in USD

Other Literature

29-Feb-2020 - Heather McPherson, Portfolio Manager,
We believe that investors have become more discerning following the coronavirus-driven equity market sell-off. Looking forward, we see several crosscurrents for equities. While a strong consumer and more accommodative monetary policy provide support, we believe political, regulatory, and geopolitical risks are likely to be elevated throughout 2020. Against this backdrop, opportunities are idiosyncratic, and we continue to look for companies with improving fundamentals and compelling risk/reward profiles that have been overly discounted by the market.
John D.  Linehan
John D. Linehan, Co-Portfolio Manager

John D. Linehan is the portfolio manager for the Equity Income Strategy and co-portfolio manager of the US Large-Cap Value Strategy. In addition, he is the chief investment officer of Equity and a member of the firm's U.S. Equity Steering and Equity Brokerage and Trading Control Committees. He is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price Associates, Inc.

Click for Manager Outlook
 

Strategy

Manager's Outlook

Hard economic data remains weak, but economic indicators appear to be bottoming. Moreover, the Federal Reserve's accommodative monetary policy and a warming in U.S.-China trade relations have improved investor sentiment.

Given the strength of the market over the past year, we view broad valuations as unattractive and believe investors may be too complacent. While a strong consumer and more accommodative monetary policy provide support, we believe political, regulatory, and geopolitical risks are likely to be elevated in 2020.

Given this backdrop, opportunities are more idiosyncratic, and we continue to seek out companies with improving fundamentals and compelling risk/reward profiles that have been overly discounted due to controversy or stress. As always, we seek to look past the noise to make long-term investments in higher-quality companies and maintain our positions until the expected catalysts for share price appreciation come to fruition.

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 diversified portfolio of stocks from large capitalization companies in the United States that are selling at discounted valuations relative to their historical average and/or the average of their industries.

Investment Approach

  • Focus on relative value relationships to opportunistically identify attractively valued companies.
  • Fundamental research is key to uncovering companies with potential for stock price mean reversion.
  • Integrate qualitative inputs to assess potential for improved investor perception.
  • Verify relative valuation anomalies through quantitative analysis.
  • Balance valuation analysis and qualitative overlay.

Portfolio Construction

  • Typically 70-80 stock portfolio
  • Individual positions typically are below 3%, but higher conviction ideas can range to 5%
  • Sector weights will typically vary from 0.5X to 2.0X of primary value sectors of the Russell 1000 Value Index
  • Reserves will range from 0% to 2%

Performance (Class I)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Fund % -3.65% 1.75% 3.80% 9.02%
Indicative Benchmark % -0.23% 3.00% 4.72% 9.59%
Excess Return % -3.42% -1.25% -0.92% -0.57%

Inception Date 27-Mar-2002

Indicative Benchmark: Russell 1000 Value Net 30% Index

Data as of  29-Feb-2020

Performance figures calculated in USD

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Fund % 25.17% 8.80% 7.16% 10.65%
Indicative Benchmark % 25.56% 8.87% 7.48% 10.98%
Excess Return % -0.39% -0.07% -0.32% -0.33%

Inception Date 27-Mar-2002

Indicative Benchmark: Russell 1000 Value Net 30% Index

Data as of  31-Dec-2019

Performance figures calculated in USD

Recent Performance

  Month to DateData as of 02-Apr-2020 Quarter to DateData as of 02-Apr-2020 Year to DateData as of 02-Apr-2020 1 MonthData as of 29-Feb-2020 3 MonthsData as of 29-Feb-2020
Fund % -5.68% -5.68% -32.03% -13.50% -13.23%
Indicative Benchmark % -2.41% -2.41% -28.64% -9.75% -9.37%
Excess Return % -3.27% -3.27% -3.39% -3.75% -3.86%

Inception Date 27-Mar-2002

Indicative Benchmark: Russell 1000 Value Net 30% Index

Indicative Benchmark: Russell 1000 Value Net 30% 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.

Returns shown with reinvestment of dividends after the deduction of withholding taxes. 

Effective 1 June 2019, 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.

29-Feb-2020 - Heather McPherson, Portfolio Manager,
U.S. stocks fell sharply in February, as fears over the coronavirus outbreak caused steep declines over the last six trading days of the month. Markets advanced during the first half of the month amid hopes that the coronavirus epidemic would remain largely confined within China. Evidence that the virus might be transitioning into a global pandemic was a watershed moment for the markets, however. Within the portfolio, the industrials and business services sector had the most negative impact on relative performance due to stock selection. Shares of General Electric (GE) tumbled as the market reacted negatively to reports that the recent coronavirus outbreak was spreading faster outside of China than anticipated, threatening global supply chains. Stock choices in the health care sector, including Medtronic, also hurt relative returns. Conversely, the energy sector was the leading contributor to relative performance due to security choices. For example, TC Energy fell on coronavirus-related concerns but outperformed peers as investors appeared encouraged by the strong performance of its legacy assets and the announcement of several new capital projects. Stock choices, including Applied Materials, and an overweight allocation in the information technology sector also lifted relative results.

Holdings

Total
Holdings
86
Largest Holding JPMorgan Chase 3.81% Was (30-Sep-2019) 3.45%
Other View Full Holdings Quarterly data as of 31-Dec-2019
Top 10 Holdings 27.76% View Top 10 Holdings Monthly data as of 29-Feb-2020

Largest Top Contributor^

JPMorgan Chase
By 0.08%
% of fund 3.81%

Largest Top Detractor^

American International Group
By -0.06%
% of fund 2.23%

^Absolute

Quarterly Data as of 31-Dec-2019

Top Purchase

State Street (N)
1.03%
Was (30-Sep-2019) 0.00%

Top Sale

Bank of New York Mellon (E)
0.00%
Was (30-Sep-2019) 1.04%

Quarterly Data as of 31-Dec-2019

31-Dec-2019 - Heather McPherson, Portfolio Manager,

During the period, we bought shares of high-quality names that we believe are undervalued. We also identified opportunities to sell shares of companies whose risk/reward profiles have degraded in our estimation

Financials

The financials sector represents a significant absolute weighting in the portfolio, with our largest exposures to the banks and insurance industries. Our focus is on owning attractively valued idiosyncratic investments that we expect to be solid performers in most economic scenarios. We bought shares during the quarter.

  • We bought shares of State Street. We are encouraged by the trust bank's high proportion of fee-based revenue and strong expense focus. Moreover, we are optimistic that State Street's ongoing technology investments, and investments in the business, will drive higher returns.
  • We bought shares of Charles Schwab ahead of its announced acquisition of discount broker TD Ameritrade. We are optimistic that the deal will give Charles Schwab the scale to better weather a low rate market environment and will help the company extend its lead in the hyper-competitive discount brokerage space.
  • We sold shares of Bank of New York Mellon. Shares of bank stocks rose on bullish industry earnings reports and reduced worries about global growth. We took the share price appreciation as a chance to sell in favor of names that we believe feature a more attractive risk/reward upside.
  • Shares of Citigroup rose on improved sentiment for the sector after several big banks reported better-than-expected profitability despite a loosening monetary environment. We sold shares, as we believe heightened expectations and share price appreciation raise the company's execution risk. Moreover, we have reservations about recent changes to Citigroup's management team and a seeming lack of strategic vision.

Utilities

The utilities sector contains several companies that deliver durable cash flows and higher dividend yields with relatively modest downside risk. While we are attracted to the durability of this sector's earnings, we believe efforts to modernize the U.S. electric grid while shifting more power production to renewables offers a multi-year base-rate growth opportunity.

  • We sold shares of Evergy, an electric utility, in light of the stock's outperformance in recent periods. We also have reservations about the company's ability to effectively transition away from coal and capture the growth opportunity around grid modernization. We prefer other names in the sector that feature a durable growth profile and a clearly defined strategy around grid and generation modernization.
  • We bought shares of Edison International. We believe the utility is making progress on its wildfire hardening efforts, which include the installation of new spark-resistant distribution lines in high-risk areas. We are also encouraged that the recent California wildfire legislation limits the company's liabilities in the event it is deemed culpable for wildfire damages. In our view, the stock offers attractive upside as wildfire season draws to a close.
  • We bought shares of CenterPoint Energy. While the outcome of the recent Texas rate case was more negative than anticipated, we continue to believe CenterPoint Energy offers a decent risk-adjusted upside given its high-quality assets, its attractive rate base growth prospects, and the potential for continued synergies stemming from its acquisition of Vectren.

Industrials and Business Services

Within the industrials and business services sector, we invest in companies that reach many different end markets and have solid business models and/or an ability to generate strong cash flows.

  • We sold shares of Fortune Brands Home & Security, a manufacturer of home and security products. Markets reacted positively to news of several leadership changes intended to spur organic growth. While we continue to like Fortune Brands Home & Security's positioning within the home repair and remodeling market, we believe the valuation is elevated given the uncertainty surrounding new management's ability to engineer a turnaround of the company's pivotal cabinets segment.

Sectors

Total
Sectors
11
Largest Sector Financials 23.05% Was (31-Jan-2020) 23.29%
Other View complete Sector Diversification

Monthly Data as of 29-Feb-2020

Indicative Benchmark: Russell 1000 Value Index

Top Contributor^

Real Estate
Net Contribution 0.47%
Sector
0.24%
Selection 0.23%

Top Detractor^

Health Care
Net Contribution -0.30%
Sector
0.05%
Selection
-0.35%

^Relative

Quarterly Data as of 31-Dec-2019

Largest Overweight

Information Technology
By3.85%
Fund 10.39%
Indicative Benchmark 6.54%

Largest Underweight

Consumer Discretionary
By-3.65%
Fund 2.37%
Indicative Benchmark 6.02%

Monthly Data as of 29-Feb-2020

29-Feb-2020 - Heather McPherson, Portfolio Manager,
We have a varied view of the health care sector, considering the myriad challenges and opportunities health care companies face, including the potential for drug-pricing reform and a single-payer health care system, mergers and acquisitions, and an aging U.S. population. In February, we bought shares of several companies that we believe carry an attractive risk/reward profile. We also sold shares of select names that have outperformed recently.

Team (As of 31-Mar-2020)

John D.  Linehan

John D. Linehan is the portfolio manager for the Equity Income Strategy and co-portfolio manager of the US Large-Cap Value Strategy. In addition, he is the chief investment officer of Equity and a member of the firm's U.S. Equity Steering and Equity Brokerage and Trading Control Committees. He is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price Associates, Inc.

Mr. Linehan has 30 years of investment experience, 21 of which have been at T. Rowe Price. From February 2009 to June 2014, Mr. Linehan was head of U.S. Equity and chairman of the U.S. Equity Steering Committee. From April 2003 to December 2009, he was the portfolio manager of the US Value Strategy. He started at the firm in 1998 as an equity analyst, covering the paper and forest products and airline industries. Prior to joining T. Rowe Price, between 1990 and 1996, he was an executive in the oil trading and consulting industry, first as vice president and managing director for Delaney Petroleum, then as vice president and managing director for E.T. Petroleum. Mr. Linehan began his investment career in 1987 at Bankers Trust NY Corporation, where he was an associate in mortgage-backed securities trading.

Mr. Linehan earned a B.A. in economics from Amherst College and an M.B.A. from Stanford Graduate School of Business, where he was a Henry Ford II Scholar, an Arjay Miller Scholar, and the winner of the Alexander A. Robichek Award in finance. Mr. Linehan also has earned the Chartered Financial Analyst designation.

  • Fund manager
    since
    2002
  • Years at
    T. Rowe Price
    21
  • Years investment
    experience
    30
Mark S.  Finn

Mark Finn is the portfolio manager of the US Value Equity Strategy and is also co-portfolio manager of the US Large-Cap Value Equity Strategy. Mr. Finn is a vice president of T. Rowe Price Group, Inc.

Mr. Finn has 21 years of investment experience, all of which have been with T. Rowe Price. From 2005 to 2009, Mr. Finn was an equity research analyst specializing in electric power generation, utilities, and coal. Prior to this, he was an analyst in T. Rowe Price's Fixed Income Division, where he also covered utilities and power generation. From 1998 to 2001, Mr. Finn worked with the T. Rowe Price Recovery Strategy team, where he evaluated financially distressed companies. Mr. Finn began his career with T. Rowe Price in 1990 in the Finance Division, where he served as controller of T. Rowe Price Investment Services, Inc., and as the principal accounting officer for the T. Rowe Price realty income strategies. Prior to joining the firm, he had five years of auditing experience with Price Waterhouse LLP, where he worked on engagements for both public and private companies.

Mr. Finn earned a B.S. from the University of Delaware and has earned the Chartered Financial Analyst designation. He is also a certified public accountant.

  • Fund manager
    since
    2010
  • Years at
    T. Rowe Price
    29
  • Years investment
    experience
    22
Heather K. McPherson

Heather McPherson is the co-portfolio manager for the US Large-Cap Value Equity Strategy and an associate portfolio manager of the Equity Income Strategy in the U.S. Equity Division of T. Rowe Price. Ms. McPherson is also a vice president and Investment Advisory Committee member of the Equity Income, Growth & Income, Global Technology, Large-Cap Core, New Era, Mid-Cap Value, and Value Strategies. Ms. McPherson is a member of the firm's U.S. Equity Steering Committee. She is a vice president of T. Rowe Price Group, Inc.

Ms. McPherson has 19 years of investment experience, 17 of which have been with T. Rowe Price. Prior to joining the firm in 2002, she worked as a summer intern in 2001 at Salomon Smith Barney, covering the storage area networking industry. Prior to this, she was a vice president of finance and administration for Putnam Lovell Securities, Inc.

Ms. McPherson earned a B.S. in managerial economics from the University of California-Davis and an M.B.A. from Duke University, The Fuqua School of Business.

  • Fund manager
    since
    2015
  • Years at
    T. Rowe Price
    17
  • Years investment
    experience
    19
William D. Nolan

William D. Nolan is a portfolio specialist in the U.S. Equity Division of T. Rowe Price. He acts as a proxy for equity portfolio managers with institutional clients, consultants, and prospects. Mr. Nolan supports T. Rowe Price's large-cap value strategies, focusing on the US Large-Cap Equity Income and US Value Equity Strategies. He is a vice president of T. Rowe Price Associates, Inc.

Mr. Nolan has 26 years of investment experience. Before joining the firm, he was most recently a managing director of institutional equity sales for Wachovia Corporation where he also served as director of institutional research marketing. Prior to this, Mr. Nolan was director of equity institutional sales for Alex Brown and was the Washington, D.C., branch manager in the National Accounts Division of IBM.

Mr. Nolan earned a B.S. in social and behavioral sciences from Johns Hopkins University.

  • Years at
    T. Rowe Price
    11
  • Years investment
    experience
    29
Eric Papesh

Eric Papesh is a portfolio specialist in the U.S. Equity Division of T. Rowe Price. He is based in London and serves as a proxy for equity portfolio managers with institutional clients, consultants and prospects. Mr. Papesh supports T. Rowe Price's US Smaller Companies Equity and US Large-Cap Equity Strategies offered in the Europe, Middle East and Africa (EMEA) and Asia-Pacific (APAC) regions. He is a vice president of T. Rowe Price Group, Inc. and T. Rowe Price International Ltd.

Mr. Papesh has 22 years of financial services experience, two of which have been with T. Rowe Price. Before joining the firm in 2014, he was a senior research analyst with Russell Investments, where he focused on US equity investment strategies.

Mr. Papesh earned a B.A. in business administration and an M.B.A. from the University of Washington. He has also earned the Chartered Financial Analyst designation.

  • Years at
    T. Rowe Price
    5
  • Years investment
    experience
    25

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 $15,000 $100 $100 5.00% 150 basis points 1.61%
Class I $2,500,000 $100,000 $0 0.00% 65 basis points 0.70%
Class J $10,000,000 $0 $0 0.00% 0 basis points 0.03%
Class Q $15,000 $100 $100 0.00% 65 basis points 0.77%

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

Dismiss
Tap to dismiss

Download

Latest Date Range
Audience for the document: Share Class: Language of the document:
Download Cancel

Download

Share Class: Language of the document:
Download Cancel
Sign in to manage subscriptions for products, insights and email updates.
Continue with sign in?
To complete sign in and be redirected to your registered country, please select continue. Select cancel to remain on the current site.
Continue Cancel
Once registered, you'll be able to start subscribing.

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