SICAV

Emerging Markets Bond Fund

Active investment in mainly sovereign emerging-market bonds.

ISIN LU0207127753 WKN A0DP3A

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

0.26%
$284.1m

1YR Return
(View Total Returns)

Manager Tenure

-3.26%
15yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

-0.28
3.36%

Inception Date 31-Dec-2004

Performance figures calculated in USD

Other Literature

30-Sep-2020 - Michael Conelius, Portfolio Manager ,
The global slowdown and health care crisis have weighed on fundamentals in emerging markets; some of the more fragile countries are likely to remain impaired, but most countries should weather the storm and continue to gradually recover. Valuations have moderated in recent months, and technicals are now more balanced. However, the high carry provided by emerging markets debt should continue to attract investors in an environment of record-low global yields and elevated equity valuations.
Michael J.  Conelius, CFA
Michael J. Conelius, CFA, Co-Portfolio Manager

Michael Conelius is a portfolio manager in the International Fixed Income Division. He co-manages the Emerging Markets Bond and the Institutional Emerging Markets Bond Funds and is chairman of each fund’s Investment Advisory Committee. Michael is an executive vice president of the Global Funds and International Funds, a vice president and an Investment Advisory Committee member of the Global Multi-Sector Bond Fund, a vice president of the Institutional Income Funds and Multi-Sector Account Portfolios, and a member of the Distressed Advisory Committee. He also is a vice president of T. Rowe Price Group, Inc., T. Rowe Price Associates, Inc., T. Rowe Price Trust Company, 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.

Investment Approach

  • Focus primarily on sovereign debt.
  • Integrate proprietary credit research and relative value analysis.
  • Establish independent credit rating at the country and corporate issuer level.
  • Add value through active country allocation and individual security selection decisions.
  • Limit risk through diversification.
  • Employ long-term investment horizon.

Portfolio Construction

  • Diversified portfolio structure: typically 200-300 securities
  • Duration bands: managed within +/- 1 year of the benchmark
  • Average credit quality: BB
  • Country exposure will range between 0% and 10%
  • Expected 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 % -3.26% 0.26% 5.21% 4.33% 5.97%
Indicative Benchmark % 1.29% 3.49% 6.15% 5.43% 6.87%
Excess Return % -4.55% -3.23% -0.94% -1.10% -0.90%

Inception Date 31-Dec-2004

Manager Inception Date 31-Dec-2004

Indicative Benchmark: J.P. Morgan Emerging Markets Bond Index Global Diversified

Data as of  30-Sep-2020

Performance figures calculated in USD

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Fund % -3.26% 0.26% 5.21% 4.33%
Indicative Benchmark % 1.29% 3.49% 6.15% 5.43%
Excess Return % -4.55% -3.23% -0.94% -1.10%

Inception Date 31-Dec-2004

Indicative Benchmark: J.P. Morgan Emerging Markets Bond Index Global Diversified

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 % 0.80% 0.80% -4.92% -3.19% 2.47%
Indicative Benchmark % 0.48% 0.48% -0.03% -1.85% 2.32%
Excess Return % 0.32% 0.32% -4.89% -1.34% 0.15%

Inception Date 31-Dec-2004

Indicative Benchmark: J.P. Morgan Emerging Markets Bond Index Global Diversified

Indicative Benchmark: J.P. Morgan Emerging Markets Bond Index Global Diversified

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.

30-Sep-2020 - Michael Conelius, Portfolio Manager ,
Emerging markets debt generated negative returns in September as uninspiring economic data, equity market losses, and political uncertainty all weighed on investors’ risk appetite. Within the portfolio, our overweight allocation to Argentina held back returns. Argentina's newly restructured bonds came under pressure as foreign exchange outflows led to capital controls. Similarly, our overweight allocation to Sri Lanka worked against us. The higher-yielding frontier sovereign underperformed as investors sought haven assets. During the month Sri Lanka's credit rating was downgraded by Moody's. In contrast, our selection of corporate issuers in Brazil outperformed, led by advances in Azul. The airline's securities partially recovered from distressed levels as air travel increased in Brazil, and Azul received permission to utilise some aircraft for cargo purposes. Our out-of-benchmark holdings in Venezuela also generated gains. The sanctioned bonds largely do not trade, yet mark-to-market pricing is ongoing. We see long-term upside potential in an eventual restructuring, as there are significant assets backing these low dollar-priced bonds. Ongoing volatility is anticipated until this time.

Holdings

Issuers

Top
Issuers
10
Top 10 Issuers 30.05% Was (31-Aug-2020) 30.99%
Other View Top 10 Issuers

Monthly data as of 30-Sep-2020

Holdings

Total
Holdings
205
Largest Holding Bahamas Government International Bond 2.42% Was (30-Jun-2020) 2.42%
Top 10 Holdings 20.65%
Other View Full Holdings Quarterly data as of 30-Sep-2020

Quality Rating View quality analysis

  Largest Overweight Largest Underweight
Quality Rating BB A
By % 9.61% -12.84%
Fund 26.81% 4.02%
Indicative Benchmark 17.20% 16.86%

Average Credit Quality

BB-

Monthly Data as of 30-Sep-2020
Indicative Benchmark:  J.P. Morgan Emerging Markets Bond Index 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.

Maturity View maturity analysis

  Largest Overweight Largest Underweight
Maturity Cash Equivalents 3-5 Years
By % 5.18% -6.13%
Fund 5.18% 8.83%
Indicative Benchmark 0.00% 14.96%

Weighted Average Maturity

12.56 Years

Monthly Data as of 30-Sep-2020
Indicative Benchmark:  J.P. Morgan Emerging Markets Bond Index Global Diversified

Duration View duration analysis

  Largest Overweight Largest Underweight
Duration Cash Equivalents 1-3 Years
By % 5.06% -11.07%
Fund 5.06% 3.96%
Indicative Benchmark 0.00% 15.03%

Weighted Average Duration

7.94 Years

Monthly Data as of 30-Sep-2020
Indicative Benchmark:  J.P. Morgan Emerging Markets Bond Index Global Diversified

30-Jun-2020 - Michael Conelius, Portfolio Manager ,

We are overweight countries pursuing reform agendas that target long-term growth.

Brazil

While we remain overweight Brazil, political challenges caused us to reduce holdings. We trimmed our sovereign positions and notably reduced holdings in quasi-sovereign oil company Petrobras. We also pared positions in some corporate holdings, such as banks, while maintaining our holdings of high-conviction consumer issues. �

Mexico

Mexico remains an overweight in the portfolio. We adjusted positioning by adding sovereign debt, and we continue to find attractive relative value in quasi-sovereign Petroleos Mexicanos. We trimmed Mexico City Airport Trust and our holdings in the deep corporate market.

Argentina

We have added to our position in Argentina, making it a notable overweight. The distressed issuer offers attractive relative value. The assets were oversold as it defaulted on some payments in May. The government has been negotiating with creditor groups, and we are optimistic about a beneficial agreement.

We remain underweight countries that offer limited risk-adjusted return potential.

Peru

We deepened our underweight allocation to Peru. The higher-quality sovereign offers relatively low yields. Additionally, we eliminated a position in Peru LNG as its fundamentals had weakened and the company's credit rating was downgraded.

Kazakhstan

We remain underweight Kazakhstan amid political changes. President Tokayev dismissed the speaker of the National Parliament. While this could be an indication that the country is moving to a more open economy, any transition would likely be bumpy amid social and political tensions.

Malaysia and The Philippines

We remain underweight the Philippines and Malaysia as the higher-quality Asian issuers' external debt provides generally uninspiring relative value due to its lower yields.

Sectors

Total
Sectors
4
Largest Sector Sovereign 64.76% Was (31-Aug-2020) 64.13%
Other View complete Sector Diversification

Monthly Data as of 30-Sep-2020

Indicative Benchmark: J.P. Morgan Emerging Markets Bond Index Global Diversified

Largest Overweight

Corporate
By16.92%
Fund 17.34%
Indicative Benchmark 0.42%

Largest Underweight

Sovereign
By-16.70%
Fund 64.76%
Indicative Benchmark 81.46%

Monthly Data as of 30-Sep-2020

30-Sep-2020 - Michael Conelius, Portfolio Manager ,
We are finding value in fundamentally attractive quasi-sovereigns and select corporates in mainstream markets that offer yield premiums over their respective sovereign. However, our corporate exposure has decreased recently. We maintained our local currency exposure at near zero as emerging market currencies are likely to remain volatile in the near term.

Countries

Total
Countries
54
Largest Country Mexico 8.69% Was (31-Aug-2020) 8.58%
Other View complete Country Diversification

Monthly Data as of 30-Sep-2020

Indicative Benchmark: J.P. Morgan Emerging Markets Bond Index Global Diversified

Largest Overweight

Brazil
By4.13%
Fund 7.17%
Indicative Benchmark 3.04%

Largest Underweight

Malaysia
By-2.74%
Fund 0.00%
Indicative Benchmark 2.74%

Monthly Data as of 30-Sep-2020

30-Sep-2020 - Michael Conelius, Portfolio Manager ,
We are focused on high-conviction frontier names that have been excessively punished, such as Ukraine and Sri Lanka. On the other hand, we have reduced our exposure to more structurally vulnerable names, such as Turkey and South Africa. We also continued steadily trimming our overweight position in Brazil in response to a deteriorating fiscal picture. We maintain our structural underweight in low-beta countries, such as Russia, China, and the Gulf States.

Currency

Total
Currencies
7
Largest Currency U.S. dollar 99.28% Was (31-Aug-2020) 99.56%
Other View complete Currency Diversification

Monthly Data as of 30-Sep-2020

Indicative Benchmark : J.P. Morgan Emerging Markets Bond Index Global Diversified

Largest Overweight

Egyptian pound
By 0.49%
Fund 0.49%
Indicative Benchmark 0.00%

Largest Underweight

U.S. dollar
By -0.72%
Fund 99.28%
Indicative Benchmark 100.00%

Monthly Data as of 30-Sep-2020

31-Oct-2015 - Michael Conelius, Portfolio Manager ,
Given our expectations for continued U.S. dollar strength, we maintained a low and defensive level of non-benchmark currency exposure.

Team (As of 01-Oct-2020)

Michael J.  Conelius, CFA

Michael Conelius is a portfolio manager in the International Fixed Income Division. He co-manages the Emerging Markets Bond and the Institutional Emerging Markets Bond Funds and is chairman of each fund’s Investment Advisory Committee. Michael is an executive vice president of the Global Funds and International Funds, a vice president and an Investment Advisory Committee member of the Global Multi-Sector Bond Fund, a vice president of the Institutional Income Funds and Multi-Sector Account Portfolios, and a member of the Distressed Advisory Committee. He also is a vice president of T. Rowe Price Group, Inc., T. Rowe Price Associates, Inc., T. Rowe Price Trust Company, and T. Rowe Price International Ltd.

Michael has been with T. Rowe Price since 1988, beginning as a financial analyst in the Corporate Finance department. After that, he was a credit analyst and portfolio manager on the Emerging Markets team before assuming his current role. Prior to T. Rowe Price, he was employed by Booz Allen Hamilton as a consultant.

Michael earned a B.S. in finance from Towson University and an M.S. in finance from Loyola University Maryland. He also has earned the Chartered Financial Analyst® designation. 

CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.

  • Fund manager
    since
    2004
  • Years at
    T. Rowe Price
    32
  • Years investment
    experience
    26
Samy Muaddi, CFA

Samy Muaddi is a portfolio manager in the International Fixed Income Division. He is the lead manager of the Emerging Markets Corporate Bond and Asia Credit Bond Strategies and co-manages the Emerging Markets Bond and Global High Income Bond Strategies. Samy also is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price Associates, Inc.

Samy’s investment experience began in 2006 when he joined T. Rowe Price, beginning as an associate analyst in the Fixed Income Division. After that, he was a credit analyst and then an associate portfolio manager on the Emerging Markets team before assuming his current role.

Samy earned a B.A., summa cum laude, in economics from the University of Maryland. He also has earned the Chartered Financial Analyst® designation. Samy is an adjunct professor at Georgetown University in the Walsh Graduate School of Foreign Service.

CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.

  • Fund manager
    since
    2020
  • Years at
    T. Rowe Price
    14
  • Years investment
    experience
    14

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 A $1,000 $100 $100 5.00% 125 basis points 1.42%
Class I $2,500,000 $100,000 $0 0.00% 65 basis points 0.73%
Class Q $1,000 $100 $100 0.00% 65 basis points 0.81%
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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