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GIPS® Information

T. Rowe Price ("TRP") claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. T. Rowe Price has been independently verified for the twenty four-year period ended June 30, 2020, by KPMG LLP. The verification report is available upon request. A firm that claims compliance with the GIPS standards must establish policies and procedures for complying with all the applicable requirements of the GIPS standards. Verification provides assurance on whether the firm’s policies and procedures related to composite and pooled fund maintenance, as well as the calculation, presentation, and distribution of performance, have been designed in compliance with the GIPS standards and have been implemented on a firm-wide basis. Verification does not provide assurance on the accuracy of any specific performance report.

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SICAV

Asian Opportunities Equity Fund

A concentrated portfolio of high-quality Asian companies.

ISIN LU1044871900 WKN A114WL

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

15.22%
$505.0m

1YR Return
(View Total Returns)

Manager Tenure

53.26%
7yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

0.68
4.40%

Inception Date 21-May-2014

Performance figures calculated in USD

31-May-2021 - Eric C. Moffett, Portfolio Manager,
We remain constructive about the outlook for the region. Most countries are on a steady path to more normalised economic activity, and domestic demand has generally recovered from the shock from the coronavirus. With the progress of the vaccine rollout in the West, expectations of a recovery in global demand augur well for Asia particularly for its exporters. However, the pace of vaccine deployment varies in Asia and reopening of borders may potentially lag the West.
Eric C. Moffett
Eric C. Moffett, Portfolio Manager

Eric Moffett is a portfolio manager in the International Equity Division. He manages the Asia Opportunities Equity Strategy and is chairman of the strategy's Investment Advisory Committee. He is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price Singapore Private Limited. 

Click for Manager Outlook
 

Strategy

Manager's Outlook

We remain constructive on the medium- to longer-term outlook for Asia ex-Japan equities. Most Asian economies are on a steady path to more normalized economic activity even as the impact of the coronavirus pandemic varies across the region. Compared to other parts of the world, much of Asia has seen more effective COVID-19 containment measures and the relative deterioration in fiscal and current account balances has been manageable. Domestic demand generally recovered quickly in the region following the initial shock from the coronavirus and the consumption recovery appears to be broadening. The significant progress of the vaccine rollout programs also boosted investor sentiment, focusing investors interest on the reopening of economies. Overall, we believe that prospects for economic and corporate profit growth in the region have improved.

In terms of valuation, while there are pockets of excessive optimism in some sectors such as in China's biotechnology and EV space, we believe that many high-quality growth businesses in Asia ex-Japan are still trading at reasonable multiples.

We expect healthier earnings growth in 2021 and beyond, although the magnitude of earnings improvement will depend on the pace of economic normalization. Hence, there are some risks of earnings downgrades should the success of the vaccines fall behind expectations.

Amid market concerns about rising inflation as economies recover, we think the impact on inflation of a "COVID-off" environment will be transitory. While we do not hold strong macro directional views, we believe that inflationary environment risks may be countered by our search for companies with robust fundamentals and good earnings visibility, high-quality businesses where multiples are not too stretched.

Aside from inflation concerns and pockets of extreme valuation, we remain cognizant of other market risks such as prolonged lockdowns and geopolitical tensions. A flaring up of tensions between the U.S. and China under President Biden's administration may disappoint investors expecting a de-escalation of fractious relations. Our base case is that friction between the U.S. and China will likely persist, with areas of contention focusing on technology, national security, and economic protectionism. Lastly, an increase in U.S. corporate tax rates under President Biden could have significance far beyond America's borders if it causes money flow out of the U.S. and into the Asian region.

We continue to build this portfolio from the bottom up and while we take the macro environment into account, our philosophy and process remain squarely centered on fundamental stock selection.

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 of companies in Asia.

Investment Approach

  • Seeking long term capital appreciation to come from owning high quality businesses that will reliably compound earnings/ cash flow generation over time.
  • In Asia, this type of company tends to exhibit three key characteristics:
    • Established companies with leading market positions.
    • Good management teams who care about shareholder returns.
    • Returns-focused capital allocation and prudent balance sheet management.
  • Fundamental research is critical in helping us to identify these characteristics and exploit market inefficiencies:
    • Focus on the long term. Be patient.
    • Gain a better understanding of the durability of a company’s prospects than the market.
    • More accurately assess a company’s intrinsic value than other market participants.
  • Environmental, social and governance ("ESG") factors with particular focus on those considered most likely to have a material impact on the performance of the holdings or potential holdings in the funds’ portfolio are assessed. These ESG factors, which are incorporated into the investment process alongside financials, valuation, macro-economics and other factors, are components of the investment decision. Consequently, ESG factors are not the sole driver of an investment decision but are instead one of several important inputs considered during investment analysis.

Portfolio Construction

  • Typically 40-70 stock portfolio
  • Individual positions typically range from 0.50% to 6.00%.
  • Country and sector weightings a residual of stock selection.
  • Cash position typically less than 5%.

Performance (Class I)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Since Manager Inception
Annualised
Fund % 53.26% 15.22% 18.11% 12.94% 12.94%
Indicative Benchmark % 51.52% 10.44% 15.14% 9.20% 9.20%
Excess Return % 1.74% 4.78% 2.97% 3.74% 3.74%

Inception Date 21-May-2014

Manager Inception Date 21-May-2014

Indicative Benchmark: MSCI All Country Asia ex Japan Index Net

Data as of 31-May-2021

Performance figures calculated in USD

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Fund % 64.45% 14.52% 17.65% 12.94%
Indicative Benchmark % 57.31% 8.88% 13.79% 8.85%
Excess Return % 7.14% 5.64% 3.86% 4.09%

Inception Date 21-May-2014

Indicative Benchmark: MSCI All Country Asia ex Japan Index Net

Data as of 31-Mar-2021

Performance figures calculated in USD

Recent Performance

  Month to DateData as of 11-Jun-2021 Quarter to DateData as of 11-Jun-2021 Year to DateData as of 11-Jun-2021 1 MonthData as of 31-May-2021 3 MonthsData as of 31-May-2021
Fund % -0.26% 1.78% 7.42% -0.04% 2.62%
Indicative Benchmark % -0.06% 3.67% 6.47% 1.22% 1.10%
Excess Return % -0.20% -1.89% 0.95% -1.26% 1.52%

Inception Date 21-May-2014

Indicative Benchmark: MSCI All Country Asia ex Japan Index Net

Indicative Benchmark: MSCI All Country Asia ex Japan 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. 

31-May-2021 - Eric C. Moffett, Portfolio Manager,
Most Asia ex-Japan equity markets rose in May, performing broadly in line with their developed market counterparts. The improving global economic outlook and a weaker U.S. dollar helped gains although higher-than-expected inflation U.S. soured investor sentiment. The rise in COVID-19 cases in India, Malaysia, Taiwan, and Singapore capped advances. Within the portfolio, stock selection in China drove the fund’s underperformance. Shares of Theme park operator Songcheng Performance fell after three consecutive months of gains. News that China reported its first local coronavirus transmissions in more than three weeks during the month cast a pall on the stock. China Overseas Land & Investment (COLI) also curbed returns as the shares lagged following gains in the first quarter and as concerns about a highly indebted property developer, Evergrande, being probed by regulators spread across the sector. COLI has one of the strongest balance sheets in the sector. In contrast, stock selection in South Korea, notably Mobile carrier LG Uplus, was a source of strength. Our overweight allocation to the Philippines also helped returns as the market recovered after being the worst-performing equity market in the region in the January to April period.

Holdings

Total
Holdings
67
Largest Holding Taiwan Semiconductor Manufacturing 9.29% Was (31-Dec-2020) 6.93%
Other View Full Holdings Quarterly data as of  31-Mar-2021
Top 10 Holdings 42.15% View Top 10 Holdings Monthly data as of  31-May-2021

Largest Top Contributor^

China Overseas Land & Investment
By 0.18%
% of fund 2.66%

Largest Top Detractor^

Samsung Electronics
By -0.30%
% of fund 4.86%

^Absolute

Quarterly Data as of 31-Mar-2021

Top Purchase

Taiwan Semiconductor Manufacturing
9.43%
Was (31-Dec-2020) 6.93%

Top Sale

AIA Group
1.74%
Was (31-Dec-2020) 3.18%

Quarterly Data as of 31-Mar-2021

31-Mar-2021 - Eric C. Moffett, Portfolio Manager,

We believe we are well positioned for an eventual recovery from the coronavirus pandemic and remain comfortable with our positioning, particularly as our "COVID-off" names have started to work well for the portfolio.

We reduced our holdings in stocks with demanding valuations and used the proceeds to purchase less expensive names that provide attractive potential growth prospects and are likely to gain, market share.

We continued to pursue quality companies that can reliably compound earnings - companies that can deliver consistent earnings regardless of the economic cycle. We favor businesses which are run by a reliable management team, and which are cash-generative with an attractive dividend yield. We think the strength of domestic consumption in the region will prevail and will yield ample secular growth opportunities.

Real Estate

The portfolio substantially increased its exposure to the real estate sector. Our focus in this space are Chinese developers which will likely continue to expand market share and property management companies which are steady earnings compounders. We also have a preference for Hong Kong names, which will likely benefit from the reopening of the economy following the vaccine rollout.

  • We bought COLI on its share price weakness; the stock had been derating due to the risk of U.S. sanctions toward the end of the Trump administration, but this did not materialize. Despite the Chinese government's new leverage rules, we believe COLI is one developer which can continue increasing its market share.

Consumer Discretionary

We have a significant exposure in the consumer discretionary sector. Our preference is for cash-generative fast-food restaurants, auto dealers benefiting from China's auto demand recovery and increasing share in a fragmented market, as well as ecommerce companies gaining from people working, shopping and consuming media from home. We took advantage of the share price weakness in select ecommerce platforms after sharp gains in 2020.

  • We bought shares in Meituan Dianping, one of China's largest delivery platforms, following its share price weakness. The company, backed by Tencent Holdings, can count the synergy between its instore business and food delivery as its competitive advantage. Its instore business is for users to book restaurants, hotels, and other offline services, which it monetizes through advertising and commissions.
  • We invested in JD.com, one of China's biggest ecommerce platforms; its share price declined even after the company indicated that it had a strong first-quarter performance. JD.com's first-party (1P) model allows it to enjoy significant economies of scale, helped by a massive warehouse footprint across China. We think it can achieve margin improvement as the investment phase of its grocery and logistics operations comes to an end. Moreover, JD.com is expected to gain from the regulatory pressure on rival Alibaba.
  • We purchased shares in Coupang, which operates the largest e-commerce site in South Korea. We like its management which has built a strong moat with its USD3 billion investments and technology that allowed Coupang to disrupt offline commerce by offering faster delivery, competitive prices, and more product selections. Most Korean ecommerce and food delivery companies operate on a third-party model where a company charges commissions on products sold on its platform, while Coupang is gaining market share with its 1P model, where it takes the inventory risk and sells products at a profit.

Communication Services

The portfolio has a sizable position in the communication services sector in absolute terms. Our focus here is on social media platforms and search engine companies that are benefiting from developments such as increased remote working and consumption of goods and services from home. In the quarter, we invested in telecommunication companies with good growth and yields.

  • For example, we purchased shares of LG Uplus, a South Korean mobile company that operates in a three-player market, given its undemanding valuations. It reported a strong quarter performance, driven by its mobile revenue acceleration from 5G adoption, consolidation of cable operations and steady broadband segment. We view LGU as a market share gainer.
  • We bought shares in HKT Trust as we like the Hong Kong telecommunication company's growth prospects and high dividend yield.

Industrials and Business Services

We have a considerable position in industrials and business services. We preferred select transport and property management companies which we think are able to weather the economic difficulties wrought by the pandemic with either their strong balance sheet or increased discipline concerning new investments. They are also likely to gain once mobility restrictions are lifted. We favored companies benefiting from the trend toward increased imports created by the U.S.-China trade dispute. In the quarter we invested in companies that are increasing their share in an expanding market as well as those that will likely benefit from economic reopening.

  • We bought Hongfa Technology, a Chinese maker of relays used in autos, appliances, EV, and smart meters which we see as a share gainer in a growing industry, supported by its cost advantage and fast response ability. We view this stock as a quality, long-term growth story with an undiscounted upside margin. We think that while the rising copper price will have a negative effect on margins, the impact is likely manageable due to improving capacity utilization and favorable supply-demand situation.
  • We invested in Airports of Thailand which we view as a "COVID-off" beneficiary as borders reopen and visitor traffic recovers with the acceleration of the vaccine rollout programs. AOT operates six airports in Thailand including the Suvarnabhumi and Don Muang Airports in the capital Bangkok.

Financials

We have a sizeable absolute position in the financial sector, and own businesses across the region. This ranges from Indian and Singapore banks with high-quality lending franchises to Chailease, a Taiwanese leasing company with an increasing China and southeast Asian business, that will likely benefit from the cyclical recovery post COVID-19. In the quarter, we reduced our holdings in select stocks which turned expensive following their gains last year but which we still like in the long term.

  • We reduced our allocation to Hong Kong financials as we trimmed our positions in AIA and Hong Kong Exchanges & Clearing, the largest vertically integrated exchange in the region, on the back of their demanding valuations. However, we continue to believe that these are good businesses. AIA is a life insurer with a unique footprint in southeast Asia and a growing China business, a strong management team and sound capital position.

Sectors

Total
Sectors
10
Largest Sector Consumer Discretionary 28.15% Was (30-Apr-2021) 27.83%
Other View complete Sector Diversification

Monthly Data as of 31-May-2021

Indicative Benchmark: MSCI All Country Asia ex Japan Index

Top Contributor^

Real Estate
Net Contribution 1.34%
Sector
0.23%
Selection 1.11%

Top Detractor^

Financials
Net Contribution -0.36%
Sector
-0.19%
Selection
-0.17%

^Relative

Quarterly Data as of 31-Mar-2021

Largest Overweight

Consumer Discretionary
By10.61%
Fund 28.15%
Indicative Benchmark 17.55%

Largest Underweight

Financials
By-6.19%
Fund 12.09%
Indicative Benchmark 18.28%

Monthly Data as of 31-May-2021

31-May-2021 - Eric C. Moffett, Portfolio Manager,
We have a considerable position in industrials and business services. We preferred transport and property management companies, which we think are able to weather the difficulties wrought by the pandemic with either their strong balance sheet or increased discipline concerning new investments. We believe they are likely to gain once mobility restrictions are lifted. We favour companies benefitting from the increased import substitution trend created by the U.S.-China trade dispute. For example, we have a position in Hongfa Technology, a Chinese maker of relays used in autos and appliances, which we view as a market share gainer in a growing industry.

Countries

Total
Countries
10
Largest Country China 42.92% Was (30-Apr-2021) 42.42%
Other View complete Country Diversification

Monthly Data as of 31-May-2021

Indicative Benchmark: MSCI All Country Asia ex Japan Index

Top Contributor^

China
Net Contribution 2.43%
Country
0.02%
Selection 2.41%

Top Detractor^

Philippines
Net Contribution -0.63%
Country
-0.44%
Selection
-0.19%

^Relative

Quarterly Data as of 31-Mar-2021

Largest Overweight

Hong Kong
By4.56%
Fund 11.93%
Indicative Benchmark 7.38%

Largest Underweight

South Korea
By-4.38%
Fund 10.44%
Indicative Benchmark 14.82%

Monthly Data as of 31-May-2021

31-May-2021 - Eric C. Moffett, Portfolio Manager,
While we do not have strong country views as we build the portfolio from the bottom up and strive to own the best businesses across the region that meet our investment framework, China remained our biggest absolute country position. We own a variety of quality names in China, which includes property developer COLI. We believe COLI can continue to increase its market share even with the new leverage rules.

Team (As of 10-Jun-2021)

Eric C. Moffett

Eric Moffett is a portfolio manager in the International Equity Division. He manages the Asia Opportunities Equity Strategy and is chairman of the strategy's Investment Advisory Committee. He is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price Singapore Private Limited. 

Eric’s investment experience began in 2007, and he has been with T. Rowe Price since 2007, beginning in the Equity department. Prior to this, Eric was employed by Fayez Sarofim & Company as an analyst.

Eric earned an A.B., magna cum laude, in economics from Princeton University and an M.B.A. from Harvard Business School.

  • Fund manager
    since
    2014
  • Years at
    T. Rowe Price
    13
  • Years investment
    experience
    20
Nick Beecroft, CFA

Nick Beecroft is the APAC head of the Investment Specialist Group and a portfolio specialist in the Equity Division. He also is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price International Ltd.

Nick’s investment experience began in 2001, and he has been with T. Rowe Price since 2005, beginning in the Equity Division. Prior to this, Nick was employed by Mercer Investment Consulting as an investment analyst.

Nick earned a B.A., with honors, in contemporary European studies from the University of Southampton. He also has earned the Chartered Financial Analyst® designation.

CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.

  • Years at
    T. Rowe Price
    16
  • Years investment
    experience
    20

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 1.77%
Class I $2,500,000 $100,000 $0 0.00% 75 basis points 0.85%
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.