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SICAV

Diversified Income Bond Fund

Formerly Global Multi-Sector Bond Fund

The fund invests mainly in a diversified portfolio of high yield corporate bonds from issuers around the world, including emerging markets.

ISIN LU1244139231 WKN A2DH6B

Since Inception Annualised
(View Total Returns)

Total Assets
(USD)

6.14%
$131.0m

1YR Return
(View Total Returns)

Manager Tenure

9.86%
<1yr

Information Ratio

Tracking Error

N/A
N/A

Inception Date 15-Dec-2016

Performance figures calculated in USD

Other Literature

31-Aug-2019 - Ken Orchard, Portfolio Manager ,
Our outlook for the coming months remains moderately cautious but credit markets appear to be confident that easing from the U.S. Federal Reserve, the European Central Bank (ECB) and China, will maintain a supportive environment. There has been a marked discrepancy in risk markets and core bond markets over the past month, as global economic data continued to deteriorate but the prospect of stimulus meant the market remained buoyant.
Kenneth A.  Orchard
Kenneth A. Orchard, Portfolio Manager

Kenneth Orchard is a senior portfolio manager in the Fixed Income Division of T. Rowe Price and a member of the Global Fixed Income Investment team, with responsibility for cochairing the Fixed Income Sector Strategy Advisory Group . He is the portfolio manager for the Global Multi-Sector Bond and Diversified Income Bond Strategies and co-portfolio manager for the International Bond Strategies . He is a vice president of T. Rowe Price Group, Inc. and T. Rowe Price International Ltd.

 

Strategy

Investment Objective

To maximise the value of its shares through both growth in the value of, and income from, its investments. The fund invests mainly in a diversified portfolio of high yield corporate bonds from issuers around the world, including emerging markets.

Investment Approach

  • To seek diversified sources of income and return by utilizing the full global opportunity set and managing risk.
    • Active tactical allocation across an expanded global opportunity set of 14 fixed income sectors, 80+ countries, and 40+ currencies.
    • Best ideas security selection from proprietary global research platform.
    • Actively diversify risk across both quantitative risk factors and qualitative investment themes.
    • Avoid concentration in any one sector or interest rate cycle.
    • Focus on risk-adjusted returns over a medium to long-term horizon.
  • Target tracking error range: 100-500 basis points

Portfolio Construction

  • High-conviction, concentrated approach targeting approximately 125-150 credit issuers across the globe with the flexibility to take meaningful over- and underweight
  • Incorporates a truly global corporate composition using a top-down overlay based on relative and absolute valuation characteristics across regions, countries, credit qualities and industries to complement core bottom-up position selections targeting the following regional allocations:
    • U.S. high yield: range of 30%-70%
    • European high yield: range of 10% to 50%
    • Emerging markets: range of 0% to 40%
  • Neutralize currency risk by hedging back into the base currency

Performance (Class I)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Since Manager Inception
Annualised
Fund % 9.86% N/A N/A 6.14% 10.58%
Indicative Benchmark % 10.65% N/A N/A 5.16% 10.86%
Excess Return % -0.79% N/A N/A 0.98% -0.28%

Inception Date 15-Dec-2016

Manager Inception Date 31-Oct-2018

Indicative Benchmark: Bloomberg Barclays Global Aggregate Bond USD Hedged Index

Data as of  30-Sep-2019

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Fund % 9.86% N/A N/A 6.14%
Indicative Benchmark % 10.65% N/A N/A 5.16%
Excess Return % -0.79% N/A N/A 0.98%

Inception Date 15-Dec-2016

Indicative Benchmark: Bloomberg Barclays Global Aggregate Bond USD Hedged Index

Data as of  30-Sep-2019

Performance figures calculated in USD

Recent Performance

  Month to DateData as of 09-Oct-2019 Quarter to DateData as of 09-Oct-2019 Year to DateData as of 09-Oct-2019 1 MonthData as of 30-Sep-2019 3 MonthsData as of 30-Sep-2019
Fund % 0.34% 0.34% 9.32% -0.42% 1.37%
Indicative Benchmark % 0.18% 0.18% 8.95% -0.46% 2.59%
Excess Return % 0.16% 0.16% 0.37% 0.04% -1.22%

Inception Date 15-Dec-2016

Indicative Benchmark: Bloomberg Barclays Global Aggregate Bond USD Hedged Index

Indicative Benchmark: Bloomberg Barclays Global Aggregate Bond USD Hedged 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.

31-Aug-2019 - Ken Orchard, Portfolio Manager ,
The portfolio underperformed the Bloomberg Barclays Global Aggregate (USD Hedged) Index in August. Out-of-benchmark exposure to Argentina detracted from relative performance. Opposition candidate Alberto Fernandez won the presidential primary by a wider-than-expected margin, raising concerns about Argentina’s willingness to continue with its economic reforms and sending assets lower. Underweight duration exposure in Japan and the eurozone detracted as flight-to-quality behavior pressed government bond yields in both markets, lower. On the positive side, the portfolio’s long exposure to the Japanese yen benefited returns during August’s risk-off market environment. An underweight position in global investment-grade corporate bonds also helped. High-grade corporate spreads widened in both the U.S. and Europe as macroeconomic events spurred a flight-to-quality in August.

Holdings

Issuers

Top
Issuers
10
Top 10 Issuers 27.07% Was (31-Aug-2019) 43.12%
Other View Top 10 Issuers

Monthly data as of 30-Sep-2019

Holdings

Total
Holdings
258
Largest Holding FNMA 15 YR TBA JUL 2.83% Was (31-Mar-2019) 0.00%
Top 10 Holdings 20.33%
Other View Full Holdings Quarterly data as of 30-Sep-2019

Quality Rating View quality analysis

  Largest Overweight Largest Underweight
Quality Rating BB A
By % 19.37% -12.63%
Fund 19.88% 12.41%
Indicative Benchmark 0.51% 25.05%

Average Credit Quality

BBB+

Monthly Data as of 30-Sep-2019
Indicative Benchmark:  Bloomberg Barclays Global Aggregate Bond USD Hedged Index

Sources for Credit Quality Diversification: Moody's Investors Service and Standard & Poor's (S&P) split ratings (i.e. BB/B and B/CCC) are assigned when the Moody's and S&P ratings differ. Short-Term holdings are not rated.

Maturity View maturity analysis

  Largest Overweight Largest Underweight
Maturity 5-7 Years 10+ Years
By % 11.08% -16.08%
Fund 25.51% 9.17%
Indicative Benchmark 14.43% 25.25%

Weighted Average Maturity

5.13 Years

Monthly Data as of 30-Sep-2019
Indicative Benchmark:  Bloomberg Barclays Global Aggregate Bond USD Hedged Index

Duration View duration analysis

  Largest Overweight Largest Underweight
Duration 3-5 Years Over 10 Years
By % 10.00% -17.43%
Fund 31.43% 5.47%
Indicative Benchmark 21.42% 22.90%

Weighted Average Duration

5.48 Years

Monthly Data as of 30-Sep-2019
Indicative Benchmark:  Bloomberg Barclays Global Aggregate Bond USD Hedged Index

Sectors

Total
Sectors
7
Largest Sector Global Sovereign 45.39% Was (31-Aug-2019) 61.05%
Other View complete Sector Diversification

Monthly Data as of 30-Sep-2019

Indicative Benchmark: Bloomberg Barclays Global Aggregate Bond USD Hedged Index

Largest Overweight

Global High Yield
By13.91%
Fund 13.91%
Indicative Benchmark 0.00%

Largest Underweight

Global Sovereign
By-20.99%
Fund 45.39%
Indicative Benchmark 66.38%

Monthly Data as of 30-Sep-2019

31-Aug-2019 - Ken Orchard, Portfolio Manager ,
There were no major shifts in our sector allocations. Our conviction in European high yield remains—particularly in stable eurozone credit issuers that are less susceptible to swings in the market and are higher in the capital structure. Overall, fundamentals in the sector look steady, the ECB remains supportive, and technical factors also provide a tailwind.

Regions

Total
Regions
7
Largest Region North America 38.72% Was (30-Jun-2019) 33.30%
Other View complete Region Diversification

Monthly Data as of 30-Sep-2019

Indicative Benchmark: Bloomberg Barclays Global Aggregate Bond USD Hedged Index

Largest Overweight

Latin America
By10.13%
Fund 11.26%
Indicative Benchmark 1.13%

Largest Underweight

Japan
By-14.40%
Fund 2.10%
Indicative Benchmark 16.50%

Monthly Data as of 30-Sep-2019

Countries

Total
Countries
55
Largest Country United States 36.66% Was (31-Aug-2019) 43.54%
Other View complete Country Diversification

Monthly Data as of 30-Sep-2019

Indicative Benchmark: Bloomberg Barclays Global Aggregate Bond USD Hedged Index

Largest Overweight

Brazil
By4.66%
Fund 4.72%
Indicative Benchmark 0.06%

Largest Underweight

Japan
By-14.40%
Fund 2.10%
Indicative Benchmark 16.50%

Monthly Data as of 30-Sep-2019

31-Aug-2019 - Ken Orchard, Portfolio Manager ,
We added some exposure to Israeli government debt as the bonds look compelling on a global relative value basis. The country is also set to join FTSE Russell’s World Government Bond Index in September, which may open it up to additional demand in the market.

Currency

Total
Currencies
25
Largest Currency U.S. dollar 89.83% Was (31-Aug-2019) 87.57%
Other View complete Currency Diversification

Monthly Data as of 30-Sep-2019

Indicative Benchmark : Bloomberg Barclays Global Aggregate Bond USD Hedged Index

Largest Overweight

U.S. dollar
By 44.64%
Fund 89.83%
Indicative Benchmark 45.20%

Largest Underweight

euro
By -27.68%
Fund -3.96%
Indicative Benchmark 23.72%

Monthly Data as of 30-Sep-2019

31-Aug-2019 - Ken Orchard, Portfolio Manager ,
We eliminated our long exposure in the Chinese yuan. The devaluation of the currency by the People’s Bank of China at the beginning of the period took it out of the range for our investment thesis.

Team (As of 31-Aug-2019)

Kenneth A.  Orchard

Kenneth Orchard is a senior portfolio manager in the Fixed Income Division of T. Rowe Price and a member of the Global Fixed Income Investment team, with responsibility for cochairing the Fixed Income Sector Strategy Advisory Group . He is the portfolio manager for the Global Multi-Sector Bond and Diversified Income Bond Strategies and co-portfolio manager for the International Bond Strategies . He is a vice president of T. Rowe Price Group, Inc. and T. Rowe Price International Ltd.

Mr. Orchard has 15 years of investment experience, eight of which have been with T. Rowe Price. Prior to joining the firm in 2010, he worked as a senior credit officer for the Sovereign Risk Group at Moody's Investors Service, where he helped design and review its sovereign rating methodology. Mr. Orchard also worked as a senior economist for Emerging Market Economics in London and as an assistant portfolio manager for HSBC Asset Management in Vancouver.

Mr. Orchard earned a B.A. in international relations from the University of British Columbia and an M.Sc. in public financial policy from the London School of Economics. He also has earned the Chartered Financial Analyst designation.

  • Fund manager
    since
    2018
  • Years at
    T. Rowe Price
    8
  • Years investment
    experience
    15
Terry  A.  Moore

Terry Moore is a portfolio specialist in the Fixed Income Division of T. Rowe Price. He is a member of the Global Multi-Sector, Dynamic Global Bond, International Bond, and Customized Fixed Income Solutions teams, working closely with clients, consultants, and prospects. Mr. Moore is a vice president of T. Rowe Price Group, Inc.

Mr. Moore has 22 years of investment experience, eight of which have been at T. Rowe Price. Prior to joining the firm in 2009, he was a portfolio manager and principal with Smith Breeden Associates, where he managed a variety of fixed income portfolios with a focus on residential mortgage-backed securities. He also worked at Goldman Sachs & Co. trading asset-backed securities.

Mr. Moore earned a B.A. in economics and political science from the University of North Carolina at Chapel Hill and an M.B.A. from Duke University, The Fuqua School of Business, where he was a Fuqua Scholar. He also has earned the Chartered Financial Analyst designation.

  • Years at
    T. Rowe Price
    9
  • Years investment
    experience
    23

Fee Schedule

Share Class Minimum Initial Investment and Holding Amount Minimum Subsequent Investment Minimum Redemption Amount Sales Charge (up to) Investment Management Fee (up to) Ongoing Charges
Class A $15,000 $100 $100 5.00% 100 basis points 1.17%
Class I $2,500,000 $100,000 $0 0.00% 50 basis points 0.60%
Class Q $15,000 $100 $100 0.00% 50 basis points 0.67%

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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