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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.

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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SICAV

Continental European Equity Fund

Style-agnostic, quality-driven European equity investment.

ISIN LU0285832068 WKN A0MNMY

3YR Return Annualised
(View Total Returns)

Total Assets
(EUR)

11.98%
€116.2m

1YR Return
(View Total Returns)

Manager Tenure

42.09%
<1yr

Information Ratio
(5 Years)

Tracking Error
(5 Years)

0.63
2.95%

Inception Date 26-Feb-2007

Performance figures calculated in EUR

31-Mar-2021 - Tobias Mueller, Portfolio Manager ,
The coronavirus pandemic is having a dramatic impact on societies and economies in Europe, triggering far-reaching changes in activity and policy. While economic activity has slowed down sharply as a result, the development of effective vaccines now offers the hope of a recovery from deep recession, beginning later this year. A recovery will to a great extent depend on the evolution of the disease and the efficacy and distribution of any vaccines to treat it.
Tobias Mueller, CFA
Tobias Mueller, CFA, Portfolio Manager

Tobias Mueller is a regional portfolio manager for the European Select Strategy, effective October 2018, and for the Europe Equity and Europe ex-UK Equity Strategies, effective October 2020. He is a vice president of T. Rowe Price International Ltd.

 

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 diversified portfolio of stocks of companies in Europe (excluding the UK).

Investment Approach

  • Fundamental research is critical to successfully identify and assess long-term investment opportunities. We look for companies with high returns on capital and capable of providing sustainable earnings across the market cycle.
  • Style agnostic, focus on quality. By avoiding style constraints, we can invest in quality companies and maintain a balanced portfolio through market cycles.
  • Disciplined approach to valuation. We aim to buy businesses at a clear discount to their intrinsic value.
  • Risk management is essential and is assisted by diversification, quantitative analysis, and automatic stabilizers built in to our investment process.
  • 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 stocks
  • Individual position size up to 4.0% relative to the indicative benchmark
  • Sector ranges: typically +/- 10% relative to the indicative benchmark
  • Country ranges: typically +/- 10% relative to the indicative benchmark
  • Expected Tracking Error: typically 3.0% to 6.0%
  • Information Ratio objective: >0.5
  • Cash target range: fully invested, typically less than 5.0%
  • Turnover range: 40%-100%

Performance (Class I)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Since Manager Inception
Fund % 42.09% 11.98% 10.70% 10.25% 16.14%
Indicative Benchmark % 39.32% 8.80% 8.86% 7.60% N/A
Excess Return % 2.77% 3.18% 1.84% 2.65% N/A

Inception Date 26-Feb-2007

Manager Inception Date 01-Oct-2020

Indicative Benchmark: FTSE Developed Europe ex United Kingdom Index Net

Data as of 31-Mar-2021

Performance figures calculated in EUR

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Fund % 42.09% 11.98% 10.70% 10.25%
Indicative Benchmark % 39.32% 8.80% 8.86% 7.60%
Excess Return % 2.77% 3.18% 1.84% 2.65%

Inception Date 26-Feb-2007

Indicative Benchmark: FTSE Developed Europe ex United Kingdom Index Net

Data as of 31-Mar-2021

Performance figures calculated in EUR

Recent Performance

  Month to DateData as of 07-May-2021 Quarter to DateData as of 07-May-2021 Year to DateData as of 07-May-2021 1 MonthData as of 31-Mar-2021 3 MonthsData as of 31-Mar-2021
Fund % 0.78% 2.86% 10.66% 6.18% 7.58%
Indicative Benchmark % 1.72% 3.97% 11.84% 6.40% 7.57%
Excess Return % -0.94% -1.11% -1.18% -0.22% 0.01%

Inception Date 26-Feb-2007

Indicative Benchmark: FTSE Developed Europe ex United Kingdom Index Net

Indicative Benchmark: FTSE Developed Europe ex United Kingdom Index Net

Performance figures calculated in EUR

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 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.

31-Mar-2021 - Tobias Mueller, Portfolio Manager ,
The FTSE All-World Developed Europe ex UK Index rose strongly in March amid a market rotation into undervalued financials and energy stocks on growing hopes of an economic rebound. European value-orientated companies rose more than growth. Within the portfolio, stock picking in consumer staples, materials and consumer discretionary, along with an underweight in consumer staples, sapped relative performance. Conversely, our choice of securities in industrial business services and information technology were supportive. In consumer staples, while shares of Italy-based Davide Campari-Milano, a large global producer of spirits, delivered an absolute return, it made a negative contribution because it lagged the index. Not owning Nestlé, the world’s largest processed food manufacturer, which outperformed, worked against us as well. On the positive side, Rockwool International, a manufacturer of stone wool for insulation and other applications, made a positive contribution to the portfolio in industrials and business services. The shares rebounded after a profit warning in February as investors favoured cyclical stocks exposed to an economic recovery. Rockwool’s performance has been resilient during the coronavirus pandemic because it maintained output. It has opened new factories in Europe and the U.S. as well.

Holdings

Total
Holdings
60
Largest Holding ASML Holding 4.36% Was (31-Dec-2020) 3.78%
Other View Full Holdings Quarterly data as of  31-Mar-2021
Top 10 Holdings 27.58% View Top 10 Holdings Monthly data as of  31-Mar-2021

Largest Top Contributor^

ASML Holding
By 1.17%
% of fund 4.35%

Largest Top Detractor^

Iberdrola
By -0.02%
% of fund 2.15%

^Absolute

Quarterly Data as of 31-Mar-2021

Top Purchase

Airbus (N)
2.37%
Was (31-Dec-2020) 0%

Top Sale

Novartis (E)
0.00%
Was (31-Dec-2020) 3.14%

Quarterly Data as of 31-Mar-2021

31-Dec-2020 - Tobias Mueller, Portfolio Manager ,

Mueller Repositions Portfolio on the Right Side of Change

Tobias Mueller, the manager of the European Select Equity Strategy, succeeded Dean Tenerelli as sole portfolio manager of the Europe ex-UK Equity Strategy on October 1, 2020.

Mr. Mueller continued to reposition the strategy in line with his process and philosophy of seeking quality businesses that benefit from change where the team has an insight on the key drivers for the stock.

During the fourth quarter we increased the portfolio's cyclical exposure and added to existing positions that are likely to benefit from the reopening and normalization of economies and where the valuation opportunity is still attractive. �

  • We moved from a neutral weight to an overweight in financials, opening a position in Topdanmark.
  • We increased our overweight in materials, building up our position in Stora Enso.
  • We reduced our overweight in consumer discretionary, paring our holding in Zalando.
  • We moved from a modest overweight to an underweight in IT again, exiting SAP.
  • We increased our underweight in utilities, exiting multi-utility Hera, although we added to Terna.

Financials

We moved from a neutral weight to an overweight in financials, adding Topdanmark, a high-quality traditional property and casualty insurance business, on share price weakness. Other recent investments include Finnish holding company Sampo, which owns a non-life business, a domestic life insurer, and a stake in Nordea Bank, and Sweden-based Swedbank, a leading high-quality retail bank.

After these moves, we remain neutral to banks, where our largest position is Erste Group Bank, one of the largest banks in Austria and Central Europe. We have moved to an overweight exposure to insurance, dominated by our position in Zurich Insurance, a global insurer based in Switzerland. We remain overweight in capital markets with our holding in Julius Baer, a global private bank based in Switzerland.

  • Topdanmark has a commanding share of the Danish property and casualty insurance market, where retention rates are high, and pays an attractive dividend. The company, whose majority shareholder is Finnish insurer Sampo, is improving efficiencies, strengthening partnerships, and building up digital distribution.

Materials

We increased our overweight in materials, building up our position in Stora Enso, a Sweden-based integrated paper, board, and wood products producer.

Our largest industry exposure is to metal and glass containers, where we own Verallia, Europe's largest maker of glass containers. Our largest holdings are Koninklijke DSM, a leading vitamin maker and performance materials business, and Air Liquide, a major industrial gases company based in France

  • Stora Enso is benefiting from the shift away from plastic used in containers to bio-based paper and board products and from the greater focus on environmental, social, and governance-themed investments. It is also one of the world's largest owners of forests and has a big net long pulp position. We believe the share price should increase on an imminent revaluation of the company's forests and higher earnings driven by an increase in pulp prices next year.

Consumer Discretionary

We reduced our overweight in consumer discretionary, paring our holding in Zalando, Europe's largest online fashion retailer.

We are overweight the household appliances, leisure products, and internet and direct retail marketing industries. We also have investments in apparel, accessories, and luxury goods; auto parts and equipment; and automobile manufacturers.

Our largest overweight positions are Zalando; Prada, an iconic luxury fashion company; and Ferrari, an Italian maker of high-performance supercars and a constructor team in F1 racing.

  • Ferrari, a relatively recent addition to the portfolio, has a strong brand image as a unique maker of luxury autos with lucrative pricing power and a long waiting list among high-net-worth individuals. We believe earnings growth will be strong and sustainable over the medium term.

Information Technology

We moved from a modest overweight to an underweight in information technology (IT) again, exiting SAP, a leading enterprise software vendor, due to a broken thesis. Many stocks in the sector rallied strongly during the year and look overextended.

Our largest position in the sector is ASML Holding, the dominant supplier of lithography equipment for semiconductor manufacturing. We also own the stock of Amadeus IT, a leading provider of global distribution systems and IT solutions for the travel industry, and Infineon Technologies, a German semiconductor company.

  • Infineon Technologies, a relatively recent addition, is the leading global supplier of power semiconductors. We expect earnings per share to rebound to low-teens growth as economies recover from the coronavirus crisis. Infineon is the second-largest supplier of chips to the auto industry, one of the fastest-growing end markets in semiconductors. It is also building a second factory in Austria that will give it unmatched scale and scope in power semiconductor manufacturing.

Utilities

We increased our underweight in utilities, exiting multi-utility Hera and completing the sale of Italian utilities in which we have no differentiated insights. However, we added to Terna, an independent Italian electricity grid operator.

Our other position in the sector is Iberdrola, a Spain-based integrated energy company that operates in the renewables, electricity transmission, and distribution markets.

  • As an electricity grid operator, Terna is on the right side of change. We believe that investing in transmission networks is one of the best ways to gain exposure to renewable energy and steady income. The company enjoys a natural monopolistic position within a regulated market and has no retail market exposure, which helps to limit business risk. The regulatory and policy frameworks are favorable in Italy: No major regulatory changes are anticipated over the medium term, while fiscal stimulus with a strong green component is high on the political agenda.�We expect at least 5% growth of the regulated asset base over the medium term.

Sectors

Total
Sectors
10
Largest Sector Industrials & Business Services 21.20% Was (28-Feb-2021) 20.74%
Other View complete Sector Diversification

Monthly Data as of 31-Mar-2021

Indicative Benchmark: FTSE Developed Europe ex United Kingdom Index

Top Contributor^

Information Technology
Net Contribution 0.58%
Sector
-0.04%
Selection 0.62%

Top Detractor^

Consumer Discretionary
Net Contribution -0.90%
Sector
0.11%
Selection
-1.01%

^Relative

Quarterly Data as of 31-Mar-2021

Largest Overweight

Industrials & Business Services
By4.51%
Fund 21.20%
Indicative Benchmark 16.68%

Largest Underweight

Consumer Staples
By-5.20%
Fund 4.82%
Indicative Benchmark 10.03%

Monthly Data as of 31-Mar-2021

31-Mar-2021 - Tobias Mueller, Portfolio Manager ,
We further adjusted our positioning in March. We took profits or trimmed our holdings in materials and industrials and business services which have done well or in which our conviction has weakened in order to recycle the funds into new ideas that should prosper longer term in an economic recovery. We added a large paints producer, raising our overweight in industrials. We no longer have any energy positions, after exiting our only holding, Koninklijke Vopak, the world’s largest tank terminal operator. The company is likely to underperform as it adjusts to meet demand for greener forms of energy.

Countries

Total
Countries
11
Largest Country Germany 19.87% Was (28-Feb-2021) 21.11%
Other View complete Country Diversification

Monthly Data as of 31-Mar-2021

Indicative Benchmark: FTSE Developed Europe ex United Kingdom Index

Top Contributor^

Finland
Net Contribution 0.47%
Country
-0.11%
Selection 0.58%

Top Detractor^

Germany
Net Contribution -0.94%
Country
0.01%
Selection
-0.96%

^Relative

Quarterly Data as of 31-Mar-2021

Largest Overweight

Italy
By5.06%
Fund 10.27%
Indicative Benchmark 5.21%

Largest Underweight

France
By-8.94%
Fund 13.16%
Indicative Benchmark 22.10%

Monthly Data as of 31-Mar-2021

30-Sep-2019 - Dean Tenerelli, Portfolio Manager ,
We deepened our underweight allocation in consumer staples, the largest in the portfolio, by selling Essity Aktiebolag, a global hygiene products company, taking profits after a strong run. In our view, the margin-improvement thesis has largely played out and is factored into the share price. Raw material prices have also started to decline, and the company could find it more challenging to maintain price increases. Consequently, the shares may struggle to rise much further. In contrast, we increased our overweight exposure to industrial and business services, health care and real estate.

Team (As of 30-Apr-2021)

Tobias Mueller, CFA

Tobias Mueller is a regional portfolio manager for the European Select Strategy, effective October 2018, and for the Europe Equity and Europe ex-UK Equity Strategies, effective October 2020. He is a vice president of T. Rowe Price International Ltd.

Tobias’s investment experience began in 2006, and he has been with T. Rowe Price since 2011, beginning in the medical technology and exchange sectors as a research analyst in the Equity Division. Prior to this, Tobias completed an internship at the firm in 2010 and was employed by Lehman Brothers in the Principal Finance Group in London, where he focused on distressed fixed income assets.

Tobias earned an M.B.A. from the University of Chicago, Booth School of Business and is a graduate of business administration from the University of Applied Sciences in Munich, Germany. He 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
    9
  • Years investment
    experience
    14
Andrew Clifton

Andrew Clifton is a portfolio specialist in the Equity Division at T. Rowe Price. He is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price International Ltd.

Mr. Clifton has over 30 years of investment experience, nine of which have been at T. Rowe Price. Prior to joining the firm in 2010, he was an executive director at UBS Global Asset Management. Prior to that, he was a vice president at Merrill Lynch.

Mr. Clifton earned a B.Sc. in economics from the London School of Economics and an M.Sc. in econometrics from the University of Southampton.

  • Years at
    T. Rowe Price
    10
  • Years investment
    experience
    31

Fee Schedule

Share Class Minimum Initial Investment and Holding Amount (EUR) Minimum Subsequent Investment (EUR) Minimum Redemption Amount (EUR) Sales Charge (up to) Investment Management Fee (up to) Ongoing Charges
Class I €2,500,000 €100,000 €0 0.00% 65 basis points 0.75%
Class Q €1,000 €100 €100 0.00% 65 basis points 0.82%

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