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)

-0.39%
$99.5m

1YR Return
(View Total Returns)

Manager Tenure

-1.32%
7yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

0.14
1.60%

Inception Date 09-Aug-2007

Performance figures calculated in USD

Other Literature

30-Sep-2020 - Andrew Keirle, Portfolio Manager,
Whilst the uncertainty about the trajectory of the COVID-pandemic continues to weigh on risk sentiment, financial conditions remain broadly favorable for EM assets and are likely to remain this way in the coming months. The recovery in EM currencies has lagged other non-dollar counterparts recently, and near-term risks may support the U.S. dollar, but valuations and technicals are supportive for EM currencies in the medium term. Bond yields remain compelling, although risk premia have fallen, meaning bottom-up security selection is key.
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 % -1.32% -0.39% 5.00% 0.48% -0.59%
Indicative Benchmark % -1.45% 0.17% 4.78% 0.57% -0.58%
Excess Return % 0.13% -0.56% 0.22% -0.09% -0.01%

Inception Date 09-Aug-2007

Manager Inception Date 31-Oct-2012

Indicative Benchmark: Linked Benchmark

Data as of  30-Sep-2020

Performance figures calculated in USD

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Fund % -1.32% -0.39% 5.00% 0.48%
Indicative Benchmark % -1.45% 0.17% 4.78% 0.57%
Excess Return % 0.13% -0.56% 0.22% -0.09%

Inception Date 09-Aug-2007

Indicative Benchmark: Linked Benchmark

Data as of  30-Sep-2020

Performance figures calculated in USD

Recent Performance

  Month to DateData as of 23-Oct-2020 Quarter to DateData as of 23-Oct-2020 Year to DateData as of 23-Oct-2020 1 MonthData as of 30-Sep-2020 3 MonthsData as of 30-Sep-2020
Fund % 2.60% 2.60% -4.03% -2.54% 0.67%
Indicative Benchmark % 1.92% 1.92% -4.52% -2.02% 0.61%
Excess Return % 0.68% 0.68% 0.49% -0.52% 0.06%

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-Sep-2020 - Andrew Keirle, Portfolio Manager,
EM local currency bonds declined in September. Lackluster economic data, an uptick in coronavirus cases in Europe, equity losses, and political uncertainty weighed on investor risk sentiment as investors became more concerned about the durability of the global economic recovery. The U.S. dollar strengthened amid a bid for safe haven assets, driving losses in EM local currency assets. Within the portfolio, bond allocation detracted from relative performance, while currency exposure was about neutral. Our underweight allocation to Polish government bonds weighed on relative results, as did our underweight allocation to Czech Republic. An uptick in coronavirus cases in Europe led to concerns about subsequent lockdowns that could hamper economic recoveries in the region. Conversely, our overweight to Romanian government bonds was beneficial. An overweight to the Russian ruble hindered performance. The ruble weakened amid increased geopolitical tensions stemming from fighting between Azerbaijan and Armenia, and the poisoning of a leading opposition figure in Europe. Lower oil further weighed on the currency.

Holdings

Issuers

Top
Issuers
10
Top 10 Issuers 67.87% Was (31-Aug-2020) 66.82%
Other View Top 10 Issuers

Monthly data as of 30-Sep-2020

Holdings

Total
Holdings
106
Largest Holding China Government Bond 3.86% Was (30-Jun-2020) 1.07%
Top 10 Holdings 30.05%
Other View Full Holdings Quarterly data as of 30-Sep-2020

Quality Rating View quality analysis

  Largest Overweight Largest Underweight
Quality Rating B A
By % 3.45% -6.96%
Fund 4.28% 21.56%
Indicative Benchmark 0.83% 28.52%

Average Credit Quality

BBB

Monthly Data as of 30-Sep-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 % 12.37% -14.73%
Fund 32.60% 8.47%
Indicative Benchmark 20.23% 23.20%

Weighted Average Duration

5.29 Years

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

30-Jun-2020 - Andrew Keirle, Portfolio Manager,

We added to the portfolio's risk profile early in the�quarter in anticipation of a market rebound, which played out over the period. We then reduced some of our exposure to higher beta markets later in the period following strong performance.�

Bond Allocation

  • We increased our exposure to the Asia-Pacific region where our outlook is improving. Indonesia and the Philippines government bonds are among our favored positions.
  • We were overweight to South Africa as we saw compelling value following the early-year selloffs. However, we began trimming this toward the end of the period following the strong performance over the quarter.
  • We remained overweight Mexico through the period. We viewed it as a strong rebound candidate due to healthy fundamentals and accommodative monetary policy. Conversely, we moderated an overweight to Brazil as political turmoil and rising coronavirus cases could trigger near-term volatility. We also maintained an underweight to Chile.
  • In emerging Europe, we maintained an overweight to Russia as we believe the country offers healthy account balances and stable policy. We are underweight Poland and Czech Republic as we see less long-term value in these countries' bonds relative to other regions. We moderately increased an off-benchmark exposure to Serbia.� ��

Currency Selection

  • We began selectively adding back to our positions in local currencies during the quarter as our outlook improved following the selloff in March. We maintained overweight exposures to the Mexico peso and Indonesia rupiah, which we believe still offer long-term value.
  • We also added or maintained off-benchmark exposures in the Indian rupee, Egyptian pound, and Serbian dinar as we see improving fundamentals in these countries.�
  • The Czech koruna remains one of our largest overweights due to the Czech National Bank's relative hawkish policy outlook compared to regional peers. Conversely, we opened an underweight to the Polish zloty during the period, partly due to its central bank's more accommodative stance.
  • Late in the first quarter, we moderated or closed overweights to defensive currencies, such as the Korean won and Singapore dollar, as we prefer to use these currencies as funding currencies for more attractive value opportunities.

Sectors

Total
Sectors
6
Largest Sector Sovereign 94.71% Was (31-Aug-2020) 91.04%
Other View complete Sector Diversification

Monthly Data as of 30-Sep-2020

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

Largest Overweight

Reserves
By2.33%
Fund 2.33%
Indicative Benchmark 0.00%

Largest Underweight

Sovereign
By-5.29%
Fund 94.71%
Indicative Benchmark 100.00%

Monthly Data as of 30-Sep-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 31.67% Was (31-Aug-2020) 30.92%
Other View complete Region Diversification

Monthly Data as of 30-Sep-2020

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

Largest Overweight

Middle East & Africa
By4.16%
Fund 11.39%
Indicative Benchmark 7.23%

Largest Underweight

Emerging Europe
By-3.57%
Fund 26.31%
Indicative Benchmark 29.88%

Monthly Data as of 30-Sep-2020

Countries

Total
Countries
32
Largest Country Indonesia 10.45% Was (31-Aug-2020) 11.20%
Other View complete Country Diversification

Monthly Data as of 30-Sep-2020

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

Largest Overweight

India
By2.31%
Fund 2.31%
Indicative Benchmark 0.00%

Largest Underweight

Poland
By-4.57%
Fund 3.73%
Indicative Benchmark 8.31%

Monthly Data as of 30-Sep-2020

30-Sep-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, Egypt, and Serbia. We maintained underweight positions in Thailand, and Poland as we prefer to allocate funds in markets offering more attractive valuations.

Currency

Total
Currencies
34
Largest Currency Mexican peso 12.35% Was (31-Aug-2020) 11.93%
Other View complete Currency Diversification

Monthly Data as of 30-Sep-2020

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

Largest Overweight

Indonesian rupiah
By 2.76%
Fund 12.13%
Indicative Benchmark 9.37%

Largest Underweight

U.S. dollar
By -9.18%
Fund -9.18%
Indicative Benchmark 0.00%

Monthly Data as of 30-Sep-2020

30-Sep-2020 - Andrew Keirle, Portfolio Manager,
Although we took profits in some positions following strong performance, we still think many EM currencies can deliver good performance over the medium- to long-term. We are overweight the Indonesian rupiah and Malaysia ringgit, which could benefit from an improving trade outlook. We also hold off-benchmark positions in the Egyptian pound and Serbian dinar, while using the relatively defensive Korean won and Taiwan dollar as funding currencies for more attractive opportunities.

Team (As of 01-Oct-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.

Download

Latest Date Range
Audience for the document: Share Class: Language of the document:
Download Cancel

Download

Share Class: Language of the document:
Download Cancel
Sign in to manage subscriptions for products, insights and email updates.
Continue with sign in?
To complete sign in and be redirected to your registered country, please select continue. Select cancel to remain on the current site.
Continue Cancel
Once registered, you'll be able to start subscribing.

Change Details

If you need to change your email address please contact us.
Subscriptions
OK
You are ready to start subscribing.
Get started by going to our products or insights section to follow what you're interested in.

Products Insights

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

Other Literature

You have successfully subscribed.

Notify me by email when
regular data and commentary is available
exceptional commentary is available
new articles become available

Thank you for your continued interest