SICAV

Emerging Local Markets Bond Fund

Research-driven investment in emerging market local currency sovereign bonds.

ISIN LU0310189781 WKN A0M1XQ

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

0.61%
$102.9m

1YR Return
(View Total Returns)

Manager Tenure

-3.33%
7yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

0.00
1.58%

Inception Date 09-Aug-2007

Performance figures calculated in USD

Other Literature

30-Jun-2020 - Andrew Keirle, Portfolio Manager,
While emerging market (EM) local currency assets could continue to benefit from supportive monetary policies and a resumption of economic activity, the risk from the coronavirus remains high as several large economies have recently seen a rise in cases. The recovery so far has also diminished EM bond yields, and risk premia have fallen, although currency valuations and technical factors are still compelling. Bottom-up security selection will remain key to identifying names with long-term performance potential.
Andrew Keirle
Andrew Keirle, Portfolio Manager

Andrew Keirle is a senior portfolio manager in the Fixed Income Division and a member of the Global Fixed Income Investment Team. Mr. Keirle is the lead portfolio manager for the Emerging Markets Local Currency Bond Strategy and has important input on a number of emerging markets bond strategies and global fixed income 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 bonds of all types from emerging market issuers, with a focus on bonds that are denominated in the local currency.

Investment Approach

  • Focus primarily on sovereign debt denominated in the currencies of the respective emerging countries.
  • Integrate proprietary credit research and relative value analysis.
  • Establish independent credit rating by country.
  • Add value through active country, currency and individual security selection decisions.
  • Limit risk through diversification.
  • Employ long-term investment horizon combined with low portfolio turnover.

Portfolio Construction

  • Higher concentration portfolio structure: typically 100-150 securities
  • Duration bands: managed within +/- 2 years of the benchmark
  • Average Credit Quality: BBB
  • Country exposure maximum 30% per country
  • Target tracking error: 200-400 bps

Performance (Class I)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Since Manager Inception
Annualised
Fund % -3.33% 0.61% 2.34% 1.42% -0.70%
Indicative Benchmark % -2.82% 1.14% 2.34% 1.50% -0.67%
Excess Return % -0.51% -0.53% 0.00% -0.08% -0.03%

Inception Date 09-Aug-2007

Manager Inception Date 31-Oct-2012

Indicative Benchmark: Linked Benchmark

Data as of  30-Jun-2020

Performance figures calculated in USD

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Fund % -3.33% 0.61% 2.34% 1.42%
Indicative Benchmark % -2.82% 1.14% 2.34% 1.50%
Excess Return % -0.51% -0.53% 0.00% -0.08%

Inception Date 09-Aug-2007

Indicative Benchmark: Linked Benchmark

Data as of  30-Jun-2020

Performance figures calculated in USD

Recent Performance

  Month to DateData as of 05-Aug-2020 Quarter to DateData as of 05-Aug-2020 Year to DateData as of 05-Aug-2020 1 MonthData as of 30-Jun-2020 3 MonthsData as of 30-Jun-2020
Fund % 0.80% 3.74% -3.62% 0.38% 11.15%
Indicative Benchmark % 0.02% 3.04% -4.06% 0.47% 9.82%
Excess Return % 0.78% 0.70% 0.44% -0.09% 1.33%

Inception Date 09-Aug-2007

Indicative Benchmark: Linked Benchmark

Indicative Benchmark: Linked Benchmark

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.

Effective 1 January 2011, the benchmark for the sub-fund was changed to J.P. Morgan Government Bond Index-Emerging Markets (GBI-EM) Global Diversified. Prior to 1 January 2011, the benchmark was the J.P. Morgan Government Bond Index-Emerging Markets Broad Diversified Index. The benchmark change was made because the firm viewed the new benchmark to be a better representation of the investment strategy of the sub-fund. Historical benchmark representations have not been restated.

30-Jun-2020 - Andrew Keirle, Portfolio Manager,
EM local currency bonds delivered positive returns for the third consecutive month in June. Although the pace of the market rebound eased, market sentiment remained largely positive as major economies continued to scale back lockdown measures. The portfolio modestly outperformed the benchmark, driven by effective bond allocation. Our overweight exposure to Mexico bonds had a favourable impact as bond prices were lifted by the Bank of Mexico cutting interest rates in its ninth straight meeting. An underweight to Chilean bonds also helped. Overweight exposures to Russia and Malaysia had moderate negative impacts, however. Within currencies, our overweight to the Mexican peso hurt as the coronavirus and the interest rate cut put pressure on the currency. Our underweight position in the Thai baht also dragged amid a favourable backdrop for many Asian currencies. However, this backdrop meant our overweight in the Indonesian rupiah made a positive contribution.

Holdings

Issuers

Top
Issuers
10
Top 10 Issuers 69.43% Was (31-May-2020) 68.13%
Other View Top 10 Issuers

Monthly data as of 30-Jun-2020

Holdings

Total
Holdings
113
Largest Holding Indonesia Treasury Bond 4.03% Was (31-Mar-2020) 2.81%
Top 10 Holdings 28.98%
Other View Full Holdings Quarterly data as of 30-Jun-2020

Quality Rating View quality analysis

  Largest Overweight Largest Underweight
Quality Rating B A
By % 2.35% -6.46%
Fund 3.41% 18.72%
Indicative Benchmark 1.06% 25.18%

Average Credit Quality

BBB

Monthly Data as of 30-Jun-2020
Indicative Benchmark:  J.P. Morgan GBI - EM Global Diversified

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.

Duration View duration analysis

  Largest Overweight Largest Underweight
Duration 5-7 Years 1-3 Years
By % 12.27% -14.88%
Fund 32.15% 8.23%
Indicative Benchmark 19.88% 23.11%

Weighted Average Duration

5.38 Years

Monthly Data as of 30-Jun-2020
Indicative Benchmark:  J.P. Morgan GBI - EM Global Diversified

31-Mar-2020 - Andrew Keirle, Portfolio Manager,

Bond Allocation

  • We reduced the portfolio's overall duration exposure intraperiod as we recognized the escalation in the coronavirus outbreak and its impact on oil prices and the global economy would likely persist for the near term. However, at the end of the period we began selectively adding to some markets, such as Brazil, which we believe may have oversold and represent long-term value.�
  • We remain overweight Mexico as we see potential for the country to maintain healthy fundamentals and potentially ease policy further during the near-term volatility. Conversely, we are underweight Chile as its sensitivity to commodity prices may result in ongoing underperformance.
  • In Asia, after closing an overweight mid-period, we began moderately adding to our off-benchmark exposure in India as we believe current prices offer long-term value. We remained underweight to Thailand through the period.
  • In emerging Europe, we maintained an overweight to Russia as we believe the country offers healthy account balances and stable policy.We also moved to an overweight to Poland as we see the country's central bank likely to remain more dovish than regional counterparts. We added to an overweight to Romania as we see potential for the country to maintain a stable fiscal position. Conversely, we hold an underweight to the Czech Republic.

Currency Selection

  • We reduced the portfolio's exposure to EM local currencies during the quarter as we recognized the likelihood for weakness in the near term. We also reduced or closed short positions in currencies such as the Singapore dollar, which can show relative stability in volatile markets.
  • We moved from a neutral position in the Colombian peso to an underweight, with the low oil prices likely to make an impact in the coming weeks. We also reduced our exposure to the Chilean peso.
  • Elsewhere, we moderated an off-benchmark exposure to the Indian rupee and closed overweights to the Czech koruna and Romanian leu.
  • Following the sell-off during the first quarter, valuations in EM currencies improved. We moderately began building exposures back up in some currencies, including the Mexico peso and Indonesia rupiah, where we view current levels offering long-term value.

Sectors

Total
Sectors
5
Largest Sector Sovereign 93.90% Was (31-May-2020) 91.76%
Other View complete Sector Diversification

Monthly Data as of 30-Jun-2020

Indicative Benchmark: J.P. Morgan GBI - EM Global Diversified

Largest Overweight

Corporate
By2.55%
Fund 2.55%
Indicative Benchmark 0.00%

Largest Underweight

Sovereign
By-6.10%
Fund 93.90%
Indicative Benchmark 100.00%

Monthly Data as of 30-Jun-2020

30-Nov-2015 - Andrew Keirle, Portfolio Manager,
We maintain off-benchmark allocations to selected U.S. dollar-denominated and euro-denominated sovereign and quasi-sovereign bonds that hold attractive relative value.

Regions

Total
Regions
5
Largest Region Asia 30.51% Was (31-May-2020) 31.07%
Other View complete Region Diversification

Monthly Data as of 30-Jun-2020

Indicative Benchmark: J.P. Morgan GBI - EM Global Diversified

Largest Overweight

Middle East & Africa
By4.45%
Fund 11.84%
Indicative Benchmark 7.39%

Largest Underweight

Emerging Europe
By-5.85%
Fund 26.26%
Indicative Benchmark 32.11%

Monthly Data as of 30-Jun-2020

Countries

Total
Countries
33
Largest Country Indonesia 10.52% Was (31-May-2020) 10.69%
Other View complete Country Diversification

Monthly Data as of 30-Jun-2020

Indicative Benchmark: J.P. Morgan GBI - EM Global Diversified

Largest Overweight

South Africa
By2.19%
Fund 9.58%
Indicative Benchmark 7.39%

Largest Underweight

Poland
By-4.74%
Fund 3.82%
Indicative Benchmark 8.55%

Monthly Data as of 30-Jun-2020

30-Jun-2020 - Andrew Keirle, Portfolio Manager,
We maintained positions in countries that demonstrate positive reforms processes and a commitment to upholding stable fundamentals. For example, we maintained out-of-benchmark exposures in India, Ukraine, and Serbia. We also added to our Mexico overweight position where we see supportive monetary policies. Conversely, we moved further underweight Czech Republic where we see a more hawkish monetary outlook.

Currency

Total
Currencies
34
Largest Currency Mexican peso 12.32% Was (31-May-2020) 13.66%
Other View complete Currency Diversification

Monthly Data as of 30-Jun-2020

Indicative Benchmark : J.P. Morgan GBI - EM Global Diversified

Largest Overweight

Czech koruna
By 3.04%
Fund 8.04%
Indicative Benchmark 5.00%

Largest Underweight

U.S. dollar
By -6.49%
Fund -6.49%
Indicative Benchmark 0.00%

Monthly Data as of 30-Jun-2020

30-Jun-2020 - Andrew Keirle, Portfolio Manager,
We continued to add to some risk positions as many EM currencies remain undervalued. We moved to an overweight exposure to the Malaysian ringgit where an improving trade outlook could boost the currency over the course of the year. We hold an overweight position in the Czech koruna as the country’s maintains a more hawkish monetary stance relative to regional peers. We used the relatively defensive Korean won and the Singapore dollar as funding currencies for more attractive relative value opportunities elsewhere.

Team (As of 05-Aug-2020)

Andrew Keirle

Andrew Keirle is a senior portfolio manager in the Fixed Income Division and a member of the Global Fixed Income Investment Team. Mr. Keirle is the lead portfolio manager for the Emerging Markets Local Currency Bond Strategy and has important input on a number of emerging markets bond strategies and global fixed income strategies. He is a vice president of T. Rowe Price Group, Inc. and T. Rowe Price International Ltd.

Mr. Keirle has 23 years of investment experience, 14 of which have been with T. Rowe Price. Prior to joining the firm in 2005, he was a portfolio manager and analyst at Lazard Asset Management. Prior to joining Lazard, Mr. Keirle spent seven years as a global portfolio manager at Gulf International Bank in London.

Mr. Keirle is a qualified member of the Institute of Investment Management and Research, and he also holds a diploma from the Society of Technical Analysts. He graduated with a B.Sc. in economics and politics from the University of Swansea at the University of Wales.

  • Fund manager
    since
    2012
  • Years at
    T. Rowe Price
    15
  • Years investment
    experience
    24

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 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%
Class Sd $10,000,000 $0 $0 0.00% 0 basis points 0.10%

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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