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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.

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SICAV

Emerging Markets Corporate Bond Fund

Accessing diversified emerging market corporate debt.

ISIN LU0596126465 WKN A1JA8L

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

4.47%
$251.8m

1YR Return
(View Total Returns)

Manager Tenure

2.65%
5yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

0.20
2.17%

Inception Date 18-May-2011

Performance figures calculated in USD

Other Literature

31-Oct-2020 - Samy Muaddi, Portfolio Manager,
While the global economic slowdown has weighed on corporate fundamentals in emerging markets, we remain encouraged by the fiscal and monetary steps taken by both developed and emerging nations to support the recovery in global economic activity. Default forecasts have come down markedly as defaults have so far been contained. The high carry profile of emerging markets corporate debt should continue to attract investors in an environment of record-low global yields and elevated equity valuations.
Samy Muaddi, CFA
Samy Muaddi, CFA, Portfolio Manager

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.

Click for Manager Outlook
 

Strategy

Manager's Outlook

Following the first quarter selloff in risk assets brought on by the coronavirus pandemic, an oil supply shock, and market illiquidity, emerging markets corporate debt has experienced a V-shaped recovery and recouped its losses over the last two quarters.

While the global economic slowdown has weighed on corporate fundamentals in emerging markets, we remain encouraged by the fiscal and monetary steps taken by both developed and emerging nations to support the recovery in global economic activity. Some fragile companies are likely to remain impaired, but most issuers are weathering the storm and will continue to gradually recover. Default forecasts have come down markedly as defaults have so far been contained.

Flows have been supportive and the new issue market has been healthy. Furthermore, EM corporate debt still offers a meaningful yield pickup across the rating spectrum compared to developed market credit. This high carry should continue to attract investors in an environment of record-low global yields and elevated equity valuations.

However, after very effective risk additions in March and April, we have started to take profits and de-risk the portfolio in recent months. Valuations have moderated, yet markets remain volatile. Risks of a second COVID-19 wave and uncertainties surrounding U.S. elections and politics persist. As a result, our outlook and posture are relatively neutral.

We currently hold above average exposure to investment grade markets such as China, Indonesia, Mexico, and Chile at the expense of frontier markets like Argentina and South Africa. Regionally, we are shifting some exposure back to the more defensive Asia region, partly funded out of our move to a neutral position in Brazil. We remain heavily underweight the cyclical energy and financials sectors while preferring domestically focused sectors such as TMT, utilities, and real restate. We continue to see the best value in the BBB to BB credit rating segment of the market, and we maintain our underweight to the highest-quality and CCC and below areas of the market.

As always, our process is centered around bottom-up, fundamental research and effective security selection. This approach will become increasingly important as the market environment becomes less beta-driven and fundamentals come back to the fore.

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 corporate bonds from emerging market issuers.

Investment Approach

  • Focus primarily on corporate debt issued by companies domiciled within emerging market countries.
  • Integrate proprietary credit research and relative value analysis.
  • Establish independent credit rating for each company and country.
  • Add value primarily through individual security selection decisions.
  • Limit risk through diversification.
  • Employ long-term investment horizon combined with low portfolio turnover.
  • Utilize collaboration across macroeconomic, equity and corporate debt teams to take a comprehensive view of corporate debt securities.
  • Diversification cannot assure a profit or protect against loss in a declining market.

Portfolio Construction

  • Diversified portfolio structure: typically 100-150 securities
  • Duration bands: managed within +/- 1 year of the benchmark
  • Expected average credit quality: BB
  • Maximum corporate issuer exposure of 3%
  • Country exposure will range between +/- 20% of index
  • Corporate sector exposure will range between +/- 20% of index
  • Expected tracking error will range between 250 - 450 bps

Performance (Class I)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Since Manager Inception
Annualised
Fund % 2.65% 4.47% 6.30% 5.28% 6.74%
Indicative Benchmark % 4.24% 4.70% 5.88% 5.28% 6.24%
Excess Return % -1.59% -0.23% 0.42% 0.00% 0.50%

Inception Date 18-May-2011

Manager Inception Date 30-Sep-2015

Indicative Benchmark: J.P. Morgan Corporate Emerging Market Bond Index Broad Diversified

Data as of  31-Oct-2020

Performance figures calculated in USD

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Fund % 2.48% 4.37% 6.66% 5.22%
Indicative Benchmark % 4.85% 4.73% 6.29% 5.30%
Excess Return % -2.37% -0.36% 0.37% -0.08%

Inception Date 18-May-2011

Indicative Benchmark: J.P. Morgan Corporate Emerging Market Bond Index Broad Diversified

Data as of  30-Sep-2020

Performance figures calculated in USD

Recent Performance

  Month to DateData as of 20-Nov-2020 Quarter to DateData as of 20-Nov-2020 Year to DateData as of 20-Nov-2020 1 MonthData as of 31-Oct-2020 3 MonthsData as of 31-Oct-2020
Fund % 2.64% 3.60% 4.05% 0.93% 1.69%
Indicative Benchmark % 2.20% 2.46% 5.11% 0.26% 0.67%
Excess Return % 0.44% 1.14% -1.06% 0.67% 1.02%

Inception Date 18-May-2011

Indicative Benchmark: J.P. Morgan Corporate Emerging Market Bond Index Broad Diversified

Indicative Benchmark: J.P. Morgan Corporate Emerging Market Bond Index Broad 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.

31-Oct-2020 - Samy Muaddi, Portfolio Manager,
Emerging markets corporate debt generated modest gains in October. Emerging markets corporates continued recovering as growth returned, though confidence in the sharp economic rebound waned amid increasing coronavirus infections that led to a return to lockdown restrictions in a number of countries. Within the portfolio, our selection of higher-yielding Latin American issuers within technology, media, and telecommunications was beneficial, led by strong performance from Liberty Latin America, a leading provider of both fixed and mobile telecom services in the Caribbean and South America. Selections within the utilities sector were also helpful, led by higher-yielding high-quality corporates. Manila Water Company generated gains, as did ACWA Power Management. Our selections within the metals and mining sector, however, held back relative performance, led by declines in Vedanta. The distressed issuer was unsuccessful in its attempt to delist a subsidiary to help simplify its capital structure.

Holdings

Issuers

Top
Issuers
10
Top 10 Issuers 13.07% Was (30-Sep-2020) 12.47%
Other View Top 10 Issuers

Monthly data as of 31-Oct-2020

Holdings

Total
Holdings
187
Largest Holding Egypt Government International Bond 1.25% Was (30-Jun-2020) 1.23%
Top 10 Holdings 10.92%
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 % 19.08% -14.95%
Fund 37.33% 4.34%
Indicative Benchmark 18.25% 19.30%

Average Credit Quality

BB

Monthly Data as of 31-Oct-2020
Indicative Benchmark:  J.P. Morgan Corporate Emerging Market Bond Index Broad 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 5-7 Years 1-3 Years
By % 6.74% -9.73%
Fund 23.31% 12.72%
Indicative Benchmark 16.56% 22.44%

Weighted Average Maturity

8.07 Years

Monthly Data as of 31-Oct-2020
Indicative Benchmark:  J.P. Morgan Corporate Emerging Market Bond Index Broad Diversified

Duration View duration analysis

  Largest Overweight Largest Underweight
Duration 5-7 Years 1-3 Years
By % 9.45% -12.98%
Fund 27.16% 12.11%
Indicative Benchmark 17.72% 25.09%

Weighted Average Duration

5.78 Years

Monthly Data as of 31-Oct-2020
Indicative Benchmark:  J.P. Morgan Corporate Emerging Market Bond Index Broad Diversified

30-Sep-2020 - Samy Muaddi, Portfolio Manager,

Overweight Domestically Oriented Sectors

The technology, media, and telecommunications sector remained the largest overweight, although we allowed allocation to this sector to fall. We added to core holdings of Globo Comunicacoes, Tower Bersama, and Telfon Celuar.

We added to utilities holdings in companies that offered attractive risk-adjusted value following recent market volatility, making it our significant overweight. We added to higher-quality ACWA and Cometa. We also added to higher-yielding AES Generacion.

We minimized our overweight allocation to the real estate sector by reducing exposure to Chinese high yield property developers. We trimmed CIFI, Times China, Kaisa, Country Garden, and Evergrande.

We have grown our holdings within the industrial sector and are overweight. We added to high quality Israel Chemicals and Indorama.

Underweight Lower-Yielding and Less-Attractive Risk-Adjusted Relative Value

The financials sector remains the largest underweight, and we further reduced financial holdings during the quarter. We trimmed holdings in South African bank FirstRand.

We remain underweight the oil and gas sector but added to higher-quality names Leviathan and HPCL Mittal. The portfolio remains focused on quasi-sovereigns, adding to Petroleos Mexicanos and PTTEP.

We added to the metals and mining sector but are underweight. We added to higher-yielding Hudbay. The Peruvian miner has ample liquidity and offers attractive yields.

Credit Quality Considerations

From a secular perspective, we find the most value in BBB and BB credits. These segments generally offer opportunities to identify companies with improving fundamentals that are rating upgrade candidates or provide a stable and attractive risk-adjusted yield.

We increased our holdings of BBB rated names that offer attractive risk-adjusted value, such as Equate Petrochemical, the sole operator of the petrochemical complex in Kuwait. The bonds have lagged advances in other comparable names and offer improved relative value. We also added to BB rated quasi-sovereign Georgian Railway. The vertically integrated railroad company is the largest employer in the country and indirectly owned by the state. We continue to generally avoid distressed issuers in the CCC and below segment given their increased volatility, history of poor risk-adjusted returns and elevated default risk in the current environment.

Sectors

Total
Sectors
14
Largest Sector TMT 17.18% Was (30-Sep-2020) 18.44%
Other View complete Sector Diversification

Monthly Data as of 31-Oct-2020

Indicative Benchmark: J.P. Morgan Corporate Emerging Market Bond Index Broad Diversified

Largest Overweight

TMT
By6.62%
Fund 17.18%
Indicative Benchmark 10.56%

Largest Underweight

Financial
By-14.39%
Fund 16.12%
Indicative Benchmark 30.51%

Monthly Data as of 31-Oct-2020

31-Oct-2020 - Samy Muaddi, Portfolio Manager,
Our focus is on companies that we believe are well positioned to benefit from domestic economic growth, such as those in real estate and consumer-related sectors. In contrast, we continue to have a lower exposure to financials given rich valuations in some areas and poor transparency. We also maintain a significant underweight exposure to the oil and gas sector.

Countries

Total
Countries
36
Largest Country China 12.64% Was (30-Sep-2020) 12.22%
Other View complete Country Diversification

Monthly Data as of 31-Oct-2020

Indicative Benchmark: J.P. Morgan Corporate Emerging Market Bond Index Broad Diversified

Largest Overweight

India
By5.37%
Fund 9.41%
Indicative Benchmark 4.03%

Largest Underweight

Hong Kong
By-3.40%
Fund 1.10%
Indicative Benchmark 4.50%

Monthly Data as of 31-Oct-2020

31-Dec-2016 - Samy Muaddi, Portfolio Manager,
Countries with strong reform agendas including Brazil, Argentina, and Indonesia, remain a key focus of the strategy. On the other hand, we have trimmed our exposure to Mexico, largely through longer-maturity industrials, given the uncertainties around the potential renegotiation of North American free trade agreements

Currency

Total
Currencies
2
Largest Currency U.S. dollar 99.99% Was (30-Sep-2020) 100.00%
Other View complete Currency Diversification

Monthly Data as of 31-Oct-2020

Indicative Benchmark : J.P. Morgan Corporate Emerging Market Bond Index Broad Diversified

Largest Overweight

euro
By 0.01%
Fund 0.01%
Indicative Benchmark 0.00%

Largest Underweight

U.S. dollar
By -0.01%
Fund 99.99%
Indicative Benchmark 100.00%

Monthly Data as of 31-Oct-2020

Team (As of 01-Oct-2020)

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
    2015
  • 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% 135 basis points 1.52%
Class I $2,500,000 $100,000 $0 0.00% 70 basis points 0.80%
Class Q $1,000 $100 $100 0.00% 70 basis points 0.87%
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.