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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

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)

3.74%
$167.6m

1YR Return
(View Total Returns)

Manager Tenure

10.29%
8yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

0.28
1.70%

Inception Date 09-Aug-2007

Performance figures calculated in USD

30-Apr-2021 - Andrew Keirle, Portfolio Manager,
We hold a relatively optimistic medium-term view on emerging market (EM) local bonds. Valuations have improved lately, alongside our expectations for global growth. Despite some near-term headwinds from lagging vaccine rollouts and fiscal imbalances, we expect U.S. exceptionalism and global capital costs to stabilise, which should be supportive for the asset class.However, as we are mindful that further bouts of volatility are possible, the importance of security selection and active management remains imperative.
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.

Click for Manager Outlook
 

Strategy

Manager's Outlook

Following strong performance in the second half of last year, EM debt weakened in the first three months of 2021 as rising inflation and growth expectations in the U.S. led to rates volatility. In general, coronavirus cases have also risen in EM countries, and vaccine rollouts in emerging markets lag those of developed markets.

Despite the near-term headwinds, however, we believe growth will improve over 2021. While China's activity has moderated as of late and could potentially weigh on external demand for EM goods and services, the positive spillover from U.S. fiscal stimulus should compensate and help EM exports even if China's growth weakens.

Valuations for the asset class continue to look attractive over the medium term. EM currency valuations in particular appear favorable. Our expectations for a weaker dollar as U.S. economic exceptionalism fades will provide a tailwind for EM currencies, given the historic inverse relationship between U.S. dollar and EM currency performance. Global interest rates should also stabilize and further support the asset class.

While the health care crisis continues to weigh on EM fundamentals, fiscal and monetary support from developed and emerging markets are largely still in place. However, we expect EM economies to begin fiscal tightening over the remainder of 2021. As growth returns, and liquidity support is gradually removed from the global system, emerging markets with stronger balance sheets and medium-term growth prospects are likely to outperform. However, as we are mindful that further bouts of volatility are possible, the importance of security selection and active management remains imperative.

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.
  • 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

  • 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 % 10.29% 3.74% 5.17% 0.82% 0.47%
Indicative Benchmark % 8.39% 3.54% 4.69% 0.64% 0.28%
Excess Return % 1.90% 0.20% 0.48% 0.18% 0.19%

Inception Date 09-Aug-2007

Manager Inception Date 31-Oct-2012

Indicative Benchmark: Linked Benchmark

Data as of 31-May-2021

Performance figures calculated in USD

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Fund % 16.14% -0.87% 3.58% 0.68%
Indicative Benchmark % 13.03% -0.79% 3.08% 0.51%
Excess Return % 3.11% -0.08% 0.50% 0.17%

Inception Date 09-Aug-2007

Indicative Benchmark: Linked Benchmark

Data as of 31-Mar-2021

Performance figures calculated in USD

Recent Performance

  Month to DateData as of 11-Jun-2021 Quarter to DateData as of 11-Jun-2021 Year to DateData as of 11-Jun-2021 1 MonthData as of 31-May-2021 3 MonthsData as of 31-May-2021
Fund % 1.02% 6.23% -1.33% 2.30% 1.24%
Indicative Benchmark % 0.79% 5.64% -1.42% 2.50% 1.59%
Excess Return % 0.23% 0.59% 0.09% -0.20% -0.35%

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-Apr-2021 - Andrew Keirle, Portfolio Manager,
Emerging market (EM) local currency bonds generated positive returns in April, largely supported by gains in EM currencies versus the U.S. dollar. A brighter global growth outlook and the U.S. Federal Reserve’s commitment to keeping interest rates low weighed on the greenback. Falling U.S. Treasury yields also provided support to the asset class. Within the portfolio, bond allocation drove relative performance while the impact from currency exposures was broadly neutral. Poland reported higher-than-expected inflation in April, which pressured bonds and benefitted our underweight position. Our underweight in Thai duration also boosted relative returns amid a surge in coronavirus cases in the country. Meanwhile, our defensive position in U.S. treasuries hindered as yields fell. Within currencies, our off-benchmark allocations to the Serbian dinar and Egyptian pound contributed in the positive risk environment. However, a brighter European economic outlook supported the zloty, weighing on our short position.

Holdings

Issuers

Top
Issuers
10
Top 10 Issuers 73.28% Was (30-Apr-2021) 72.41%
Other View Top 10 Issuers

Monthly data as of31-May-2021

Holdings

Total
Holdings
106
Largest Holding Brazil Notas do Tesouro Nacional Serie F 3.57% Was (31-Dec-2020) 3.46%
Top 10 Holdings 26.55%
Other View Full Holdings Quarterly data as of  31-Mar-2021

Quality Rating View quality analysis

  Largest Overweight Largest Underweight
Quality Rating B A
By % 3.89% -6.98%
Fund 4.83% 22.37%
Indicative Benchmark 0.95% 29.35%

Average Credit Quality

BBB

Monthly Data as of  31-May-2021
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 3-5 Years 1-3 Years
By % 8.55% -15.00%
Fund 31.69% 11.74%
Indicative Benchmark 23.14% 26.74%

Weighted Average Duration

4.89 Years

Monthly Data as of  31-May-2021
Indicative Benchmark: J.P. Morgan GBI - EM Global Diversified

31-Mar-2021 - Andrew Keirle, Portfolio Manager,

During the period, we reduced the portfolio's duration to a relative underweight position. This was driven in part by adding to defensive short positions in light of the market turbulence. We continued to hold a constructive view on EM FX, with a bias for countries that we believe have higher growth prospects. These positions were principally funded by a basket of developed market currencies, most notably the U.S. dollar and the euro.

Bond Allocation

  • Given the interest rate and yield volatility in the period, we added to our defensive positions partly via credit default swaps.
  • We added to underweight positions in Central and Eastern Europe and Thailand on the basis of higher correlations with global core rates and potentially limited scope for future capital appreciation.
  • Amid expectations for headline inflation to increase, we added to our inflation-linked debt by opening a new position in South Africa. This complemented existing inflation-linked positions in Colombia, Mexico, Brazil, and Thailand.�
  • We also moved further underweight Turkish duration due to concerns over central bank policy while reducing our modest overweight in Brazil and Russia.
  • We retained our off-benchmark positions in Egypt and Ghana, while our exposure to Serbia was trimmed after a period of strong performance.

Currency Selection

  • We remained overweight EM FX, although exposure was modestly reduced through the period. These positions continued to be principally funded by a basket of developed market currencies, primarily the U.S. dollar, although we trimmed this short exposure during the period given the country's improving economic outlook and relatively successful vaccine rollout.
  • We retained our overweight position in Latin American currencies, primarily via the Mexican peso and Peruvian sol.
  • In Asia, we maintained our regional overweight, with a preference for the Chinese yuan, Indonesian rupiah, and Malaysian ringgit.
  • We also retained an overall overweight in the Czech koruna and Romanian leu.
  • We continued to hedge some of our EM currency risk through short positions in select currencies, including the Taiwanese dollar and Canadian dollar.
  • We closed our off-benchmark position in the Ukrainian hryvnia and initiated a new position in the Korean won.

Sectors

Total
Sectors
4
Largest Sector Sovereign 95.08% Was (30-Apr-2021) 93.44%
Other View complete Sector Diversification

Monthly Data as of 31-May-2021

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

Largest Overweight

Reserves
By3.12%
Fund 3.12%
Indicative Benchmark 0.00%

Largest Underweight

Sovereign
By-4.92%
Fund 95.08%
Indicative Benchmark 100.00%

Monthly Data as of 31-May-2021

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 34.82% Was (30-Apr-2021) 34.31%
Other View complete Region Diversification

Monthly Data as of 31-May-2021

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

Largest Overweight

Middle East & Africa
By5.79%
Fund 14.10%
Indicative Benchmark 8.31%

Largest Underweight

Emerging Europe
By-8.01%
Fund 20.82%
Indicative Benchmark 28.83%

Monthly Data as of 31-May-2021

Countries

Total
Countries
32
Largest Country Indonesia 10.70% Was (30-Apr-2021) 10.37%
Other View complete Country Diversification

Monthly Data as of 31-May-2021

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

Largest Overweight

Egypt
By2.84%
Fund 2.84%
Indicative Benchmark 0.00%

Largest Underweight

Poland
By-6.55%
Fund 1.58%
Indicative Benchmark 8.13%

Monthly Data as of 31-May-2021

30-Apr-2021 - Andrew Keirle, Portfolio Manager,
We trimmed some of our defensive positions in April, which moved our overall duration position up to around flat versus the benchmark. Key themes included a positive bias for select inflation-linked bonds where price pressures are expected to rise in the near-term. We remained underweight Central and Eastern Europe due to the positive growth outlook. By contrast, we maintained our overweight position in Latin America, especially Brazil and Mexico, where we see attractive relative value. We continued to hold several off-benchmark opportunities including positions in Serbia and Egypt.

Currency

Total
Currencies
32
Largest Currency 11.17% Was (30-Apr-2021) 10.56%
Other View completeCurrency Diversification

Monthly Data as of  31-May-2021

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

Largest Overweight

Egyptian pound
By 2.86%
Fund 2.86%
Indicative Benchmark 0.00%

Largest Underweight

U.S. dollar
By -10.07%
Fund -10.07%
Indicative Benchmark 0.00%

Monthly Data as of  31-May-2021

30-Apr-2021 - Andrew Keirle, Portfolio Manager,
We remain modestly constructive on EM currencies, tilted toward countries with higher growth prospects, such as the Malaysian ringgit and Czech koruna. These positions are principally funded by a basket of developed market currencies, primarily the U.S. dollar, however, we recently trimmed this short exposure given the country’s improving economic outlook. We opened a short position in the Singapore dollar to help fund our overweight bias to Asia. We moved to underweight the Peruvian sol and Russian rouble due to rising political risks.

Team (As of 10-Jun-2021)

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.