SICAV

Asian Opportunities Equity Fund

A concentrated portfolio of high-quality Asian companies.

ISIN LU1071374836 WKN A114WK

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

9.60%
$235.5m

1YR Return
(View Total Returns)

Manager Tenure

20.82%
6yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

0.73
4.14%

Inception Date 21-May-2014

Performance figures calculated in USD

Other Literature

30-Sep-2020 - Eric C. Moffett, Portfolio Manager,
We remain constructive on the long-term outlook for Asia ex-Japan equities and, even as global growth may be slower, we expect domestic demand in the region to hold up. Earnings visibility remains low in the near term and volatility in global markets could increase as a result of the U.S. elections and the further spread of the coronavirus in the winter. We believe that our focus on higher-quality companies will serve the portfolio well in the longer term.
Eric C. Moffett
Eric C. Moffett, Portfolio Manager

Eric Moffett is a vice president of T. Rowe Price Group, Inc. and T. Rowe Price Hong Kong Limited. He is the portfolio manager for the firm's Asia Opportunities equity strategy and chairman of the strategy's Investment Advisory Committee. 

Click for Manager Outlook
 

Strategy

Manager's Outlook

We remain constructive on the long-term outlook for Asia ex-Japan equities and even though global growth may be slower, we expect domestic demand in the region to hold up if unemployment remains in check.

We expect increased volatility in global markets in the near term as a result of the U.S. elections and the further spread of the coronavirus in the winter months.

We recognize that earnings visibility remains low. Given the fresh waves of coronavirus cases in parts of the region and the rest of the world, we think recovery from the coronavirus pandemic will likely be gradual and the notion of a return to normalcy in 2021 may be premature.

We are encouraged by the significant monetary and fiscal measures that most countries deployed in recent months to support their economies amid the pandemic. We think that the Asia ex-Japan economies may weather the coronavirus outbreak better with the help of these stimulus packages compared to the U.S. and Europe, where massive stimulus efforts are expected to raise tax rates and weigh on corporate earnings.

We believe that Asia ex-Japan equity markets continue to offer opportunities to investors looking for attractively valued, high-quality companies that can successfully navigate this period of market uncertainty. In China, we expect that the outbreak may hasten consolidation in many industries, and we are focusing on companies that potentially stand to benefit from this acceleration.��

We maintain a cautious outlook on the frayed relations between the U.S. and China, which will likely remain one of the key risks to Asian markets. We also observed that some Asian companies are benefiting from import substitution due to the trade conflict with the U.S. The trade issue has prompted Chinese companies to source products locally and given the vulnerability of the global supply chain this trend will likely prevail. These domestic-focused companies could potentially emerge as global players over time.

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.

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 Q)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Since Manager Inception
Annualised
Fund % 20.82% 9.60% 13.63% 10.00% 10.00%
Indicative Benchmark % 17.83% 4.90% 10.60% 6.23% 6.23%
Excess Return % 2.99% 4.70% 3.03% 3.77% 3.77%

Inception Date 21-May-2014

Manager Inception Date 21-May-2014

Indicative Benchmark: MSCI All Country Asia ex Japan Index Net

Data as of  30-Sep-2020

Performance figures calculated in USD

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Fund % 20.82% 9.60% 13.63% 10.00%
Indicative Benchmark % 17.83% 4.90% 10.60% 6.23%
Excess Return % 2.99% 4.70% 3.03% 3.77%

Inception Date 21-May-2014

Indicative Benchmark: MSCI All Country Asia ex Japan Index Net

Data as of  30-Sep-2020

Performance figures calculated in USD

Recent Performance

  Month to DateData as of 30-Oct-2020 Quarter to DateData as of 30-Oct-2020 Year to DateData as of 30-Oct-2020 1 MonthData as of 30-Sep-2020 3 MonthsData as of 30-Sep-2020
Fund % 3.27% 3.27% 11.41% -1.77% 9.04%
Indicative Benchmark % 2.79% 2.79% 8.36% -1.50% 10.66%
Excess Return % 0.48% 0.48% 3.05% -0.27% -1.62%

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. 

30-Sep-2020 - Eric C. Moffett, Portfolio Manager,
Asia ex-Japan equities retreated in September amid elevated friction between the U.S. and China. Positive economic data out of China softened the fall, however. Within the portfolio, stock selection and our overweight position in Hong Kong held back returns. In particular, Hong Kong-listed Macau casino operator Galaxy Entertainment, fell on concerns that visitor arrivals during the Golden Week Chinese holidays in October may not be as strong as expected. We think Galaxy has a stronger balance sheet compared to its rivals and we see it benefitting from pent-up demand. Stock selection in India also impeded performance as the broader market lagged amid rising coronavirus cases. Owning Kotak Mahindra Bank (KMB) crimped returns but we expect KMB to pull through the coronavirus pandemic given its underlying earnings power and franchise value. Sector-wise, our stock choices in consumer discretionary, such as Yum China, hurt as the fastfood operator took a breather following its year-to-date gains. In contrast, stock selection in South Korea and the materials sector, notably steelmaker POSCO, lifted relative returns. We think the potential for a steel upcycle next year has not been reflected in the stock price.

Holdings

Total
Holdings
59
Largest Holding Alibaba Group Holding 10.20% Was (30-Jun-2020) 8.80%
Other View Full Holdings Quarterly data as of 30-Sep-2020
Top 10 Holdings 48.37% View Top 10 Holdings Monthly data as of 30-Sep-2020

Largest Top Contributor^

Alibaba Group Holding
By 3.38%
% of fund 10.32%

Largest Top Detractor^

Treasury Wine Estates
By -0.27%
% of fund 2.78%

^Absolute

Quarterly Data as of 30-Sep-2020

Top Purchase

Alibaba Group Holding
10.31%
Was (30-Jun-2020) 8.8%

Top Sale

China Yongda Automobiles Services Hldgs
1.91%
Was (30-Jun-2020) 3.59%

Quarterly Data as of 30-Sep-2020

30-Sep-2020 - Eric C. Moffett, Portfolio Manager,

During the third quarter, we remained comfortable with our positioning following the significant changes we made to our holdings in the first half the year. We continued to take the opportunity to invest in 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 increased our positions in the core quality names that we own in China while lock in gains in select consumer holdings and deployed the funds released to increase exposure to Taiwanese IT names. Outside of technology, we also initiated positions in companies where we think the recovery story is intact.

We believe our portfolio is well positioned for an eventual recovery from the coronavirus pandemic. We think the strength of domestic consumption in the region will prevail and will yield ample secular growth opportunities.

We Increased our Stake in Core Quality Positions in China

In China, the portfolio's largest country position, we added to our holdings in Chinese internet giants Tencent and the abovementioned Alibaba, driven by their attractive long-term prospects in the China ecommerce and internet space. We had cut our positions in these names in the first quarter when we used them to fund portfolio additions.

  • Tencent announced strong quarterly results that demonstrated the durability of its growth with the China-U.S. friction having a limited impact on its core business. Its gaming revenues grew despite user time spent on mobile games coming down sequentially as many users went back to school and work, demonstrating that the coronavirus disruption had a positive impact on long-term game monetization potential. We think Tencent's future growth will be driven by game innovation, improving monetization capability in advertising and the launch of new fintech products.
  • We also increased our position in Yum China, which operates the KFC and Pizza Hut chains in the country, and which has been a top holding in the portfolio since inception. Its fast-food business remained resilient during the coronavirus outbreak. We continue to like its cash-generative business model and strong balance sheet as well as the quality of its corporate governance.
  • While increasing these exciting core holdings, we also established new positions in ecommerce firm Meituan Dianping, which we earlier discussed, and in Pinduoduo, which has a differentiated positioning as a marketplace for value-for-money products. It counts Tencent as a shareholder.

We Added to Taiwanese Positions Largely in Semiconductors

We increased our stake in Taiwan during the quarter, adding mostly to our positions in semiconductor names. We started to invest in Vanguard International which focuses on 8-inch wafer fabrication foundry services. We view it as a well-managed company with good corporate governance and steady dividend growth over time. Over the longer term, 8-inch wafer supply may be tight owing to limited incremental 8-inch wafer capacity expansion mainly due to the lack of depreciated tools in the market. Moreover, Vanguard may be less affected by U.S.-China trade tensions which centers more on leading-edge technology. We also boosted our position in TSMC, which we have discussed earlier, and in MediaTek, a fabless design house which in our view remains a key 5G solution provider for Chinese smartphone makers even as the U.S. expanded its curbs on Huawei Technologies. MediaTek is the only non-US independent 5G solution supplier globally.

Outside of these IT stocks, we increased our stake in Chailease Holding, a well-run leasing company catering to small- and medium-sized enterprises. It delivered a solid set of quarterly results, with asset quality remaining stable. Chailease has a good track record as it has been operating in Taiwan for decades and has weathered several major downturns. It has delivered a high return-on-equity through the cycle, driven by its high-quality and stable leasing franchise in Taiwan and growing China business.

Industrials and Business Services Allocation Boosted

We established a position in Beijing Capital International Airport, one of China's largest airports, as we are betting on an earnings acceleration and potential valuation re-rating in 2021 to 2023. The recovery should be driven by better-than-expected international passenger volume and duty-free spending.

We also added to our positions in Greentown Service, a Chinese property management company, and ComfortDelGro, a Singapore land transport company. We increased our stake in Greentown given its increased discipline concerning new investments as well as its focus on profitability with an expanding margin, a reversal of the negative trend in the past three years.

ComfortDelGro, on the other hand, has the balance sheet and cashflows to weather the near-term difficulties brought about by the coronavirus outbreak, supported by a decent dividend yield. We see an earnings recovery in 2021 once the work-from-home restrictions ease. As the recovery thesis remains intact, free cash flow generation remains strong.

We Reduced our Allocation to Consumer Discretionary

Consumer discretionary remained our biggest sector position in absolute and relative terms, but we decreased our overweight to this segment during the quarter.

We decreased our holdings in China Yongda Automobiles, the country's largest BMW and Porsche dealer, locking in some of the year-to-date gains brought about by expectations of a recovery in auto demand. We continue to view Yongda as a share gainer in a fragmented auto dealer industry that may benefit from growth in aftermarket revenue and potential merger and acquisition deals. Its management is executing well and is becoming more focused on returns, with inventory turnover now a key metric for a store manager. These improvements should support the stock's re-rating.

Within the China auto opportunity set, we prefer auto dealers that can benefit from the shift towards higher return and less volatile aftermarket services. We favor dealers with favorable brand and geographic exposure, strong operational capability and sound capital allocation. China's auto sector will likely witness more consolidation as well as an upgrade in quality going forward.

Sectors

Total
Sectors
8
Largest Sector Consumer Discretionary 31.09% Was (31-Aug-2020) 31.51%
Other View complete Sector Diversification

Monthly Data as of 30-Sep-2020

Indicative Benchmark: MSCI All Country Asia ex Japan Index (unhedged)

Top Contributor^

Industrials & Business Services
Net Contribution 0.58%
Sector
0.06%
Selection 0.53%

Top Detractor^

Consumer Staples
Net Contribution -2.03%
Sector
-0.41%
Selection
-1.62%

^Relative

Quarterly Data as of 30-Sep-2020

Largest Overweight

Consumer Discretionary
By10.22%
Fund 31.09%
Indicative Benchmark 20.87%

Largest Underweight

Health Care
By-4.76%
Fund 0.00%
Indicative Benchmark 4.76%

Monthly Data as of 30-Sep-2020

30-Sep-2020 - Eric C. Moffett, Portfolio Manager,
We remained largely comfortable with our positioning following the significant changes we made in the first half of the year. Consumer discretionary remained our largest country position. Here, we increased our holdings in the core quality names we own such as a Chinese ecommerce platform and one of the most diversified as well as a fast-food operator which has been a top holding of the portfolio since its inception. The latter’s fast-food business remained resilient during the coronavirus outbreak. We continue to like its cash-generative business model and strong balance sheet as well as the quality of its corporate governance.

Countries

Total
Countries
11
Largest Country China 40.45% Was (31-Aug-2020) 41.07%
Other View complete Country Diversification

Monthly Data as of 30-Sep-2020

Indicative Benchmark: MSCI All Country Asia ex Japan Index (unhedged)

Top Contributor^

Taiwan
Net Contribution 0.59%
Country
-0.18%
Selection 0.78%

Top Detractor^

India
Net Contribution -0.77%
Country
-0.02%
Selection
-0.76%

^Relative

Quarterly Data as of 30-Sep-2020

Largest Overweight

Hong Kong
By5.43%
Fund 13.15%
Indicative Benchmark 7.72%

Largest Underweight

China
By-6.50%
Fund 40.45%
Indicative Benchmark 46.95%

Monthly Data as of 30-Sep-2020

30-Sep-2020 - Eric C. Moffett, Portfolio Manager,
We increased our allocation to Taiwan, largely in semiconductors, including one that has a strong execution in leading-edge advanced semiconductors given the favourable supply/demand dynamics. We also increased our stake in another company, which focuses on 8-inch wafer fabrication foundry services and is well-managed with good corporate governance and steady dividend growth over time. We also boosted our position in a chip designer which we view as a key 5G solutions provider for Chinese smartphone makers. Outside of technology, we added to our position in a well-run leasing company in Taiwan as well as a growing China business.

Team (As of 01-Oct-2020)

Eric C. Moffett

Eric Moffett is a vice president of T. Rowe Price Group, Inc. and T. Rowe Price Hong Kong Limited. He is the portfolio manager for the firm's Asia Opportunities equity strategy and chairman of the strategy's Investment Advisory Committee. 

Mr. Moffett has 19 years of investment experience, 12 of which have been with T. Rowe Price. Prior to joining the firm in 2007, Mr. Moffett was an analyst with Fayez Sarofim & Company, where he covered the household products, communications equipment and lodging/leisure industries. Mr. Moffett also was employed as an associate at Audax Group and as a management consultant with Bain & Company.

Mr. Moffett 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
    12
  • Years investment
    experience
    19
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
    15
  • Years investment
    experience
    19

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.

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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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