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)

4.19%
$158.4m

1YR Return
(View Total Returns)

Manager Tenure

1.30%
4yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

0.01
2.18%

Inception Date 18-May-2011

Performance figures calculated in USD

Other Literature

30-Jun-2020 - Samy Muaddi, Portfolio Manager,
The effects of this pandemic have weighed on corporate fundamentals in emerging markets, and some more fragile companies are likely to remain impaired. However, most issuers should weather the storm and continue to gradually recover. Defaults should remain reasonably contained. We are still constructive on the asset class; its high carry should continue to attract investors in an environment of record-low global yields. But, the risk-reward tradeoff is now more balanced as valuations have quickly become less extreme.
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.

 

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 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 % 1.30% 4.19% 5.16% 5.01% 6.32%
Indicative Benchmark % 3.74% 4.52% 5.13% 5.13% 6.03%
Excess Return % -2.44% -0.33% 0.03% -0.12% 0.29%

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  30-Jun-2020

Performance figures calculated in USD

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Fund % 1.30% 4.19% 5.16% 5.01%
Indicative Benchmark % 3.74% 4.52% 5.13% 5.13%
Excess Return % -2.44% -0.33% 0.03% -0.12%

Inception Date 18-May-2011

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

Data as of  30-Jun-2020

Performance figures calculated in USD

Recent Performance

  Month to DateData as of 07-Aug-2020 Quarter to DateData as of 07-Aug-2020 Year to DateData as of 07-Aug-2020 1 MonthData as of 30-Jun-2020 3 MonthsData as of 30-Jun-2020
Fund % 0.88% 3.33% 0.56% 3.38% 13.44%
Indicative Benchmark % 0.76% 3.10% 2.94% 2.75% 11.15%
Excess Return % 0.12% 0.23% -2.38% 0.63% 2.29%

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.

30-Jun-2020 - Samy Muaddi, Portfolio Manager,
Emerging markets corporate debt generated strong returns in June, climbing amid increased demand for yield, continued global economic stimulus, and optimism about a robust global economic recovery as nations reopened for business. Gains were tempered, however, by escalating tensions between the U.S. and China. Within the portfolio, our positioning in the financial sector contributed to relative performance, led by our selection of higher-yielding Shriram Transport, while Banco BTG Pactual and Banco de Bogota added further to gains. Our underweight allocation to the relatively defensive sector was helpful too amid increased investor risk appetite. Effective security selection within the consumer, metals and mining, and oil and gas sectors also supported relative returns, due to our positions in higher-yielding corporates that rebounded from oversold levels. Conversely, our selection of higher-quality utilities underperformed amid investor demand for yield.

Holdings

Issuers

Top
Issuers
10
Top 10 Issuers 14.79% Was (31-May-2020) 14.88%
Other View Top 10 Issuers

Monthly data as of 30-Jun-2020

Holdings

Total
Holdings
174
Largest Holding Globo Comunicacao E Participacoes 1.53% Was (31-Mar-2020) 1.71%
Top 10 Holdings 12.37%
Other View Full Holdings Quarterly data as of 30-Jun-2020

Quality Rating View quality analysis

  Largest Overweight Largest Underweight
Quality Rating BB A
By % 16.64% -16.41%
Fund 35.89% 4.37%
Indicative Benchmark 19.24% 20.78%

Average Credit Quality

BB

Monthly Data as of 30-Jun-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 % 3.61% -6.24%
Fund 18.24% 16.88%
Indicative Benchmark 14.62% 23.12%

Weighted Average Maturity

7.19 Years

Monthly Data as of 30-Jun-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 % 7.03% -10.52%
Fund 24.93% 16.23%
Indicative Benchmark 17.90% 26.75%

Weighted Average Duration

5.75 Years

Monthly Data as of 30-Jun-2020
Indicative Benchmark:  J.P. Morgan Corporate Emerging Market Bond Index Broad Diversified

31-Mar-2020 - Samy Muaddi, Portfolio Manager,

Overweight Domestically Oriented Sectors

The technology, media, and telecommunications sector remained the portfolio's largest overweight. We reduced positions in lower-yielding Bharti Airtel and SK Hynix and added to high-conviction, higher-yielding Globo Comunicacao, and Axtel.

We added to our overweight allocation to the real estate sector. We added to preferred high-yielding Chinese property developers CIFI, Shimao, and Times China. These companies generated strong growth last year and have proven resilient in the face of market volatility.

We added to utilities holdings in higher-quality countries, moving to an overweight allocation. We added to Chilean utility AES Gere. We also added to higher-yielding Oman Grid.

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

The financials sector remains the largest underweight, though we added to financial holdings during the quarter. We added to higher-yielding banks in countries with strong financial systems, such as Emirates Bank and Bank of East Asia, as well as higher-quality Kuwait Projects.

We increased our underweight allocation to the oil and gas sector, eliminating some lower-yielding issuers, such as Sasol, KazMunayGas, and Abu Dhabi National Energy. The portfolio remains focused on quasi-sovereigns, adding to YPF and Petroleos Mexicanos.

We reduced exposure to the metals and mining sector and are underweight. We eliminated lower-quality Vedanta, First Quantum, and Indika Energy as these companies could be stressed by lower commodities prices.

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 DP World, one of the largest container port operators in the world. �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 19.64% Was (31-May-2020) 19.83%
Other View complete Sector Diversification

Monthly Data as of 30-Jun-2020

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

Largest Overweight

TMT
By8.43%
Fund 19.64%
Indicative Benchmark 11.21%

Largest Underweight

Financial
By-14.08%
Fund 16.79%
Indicative Benchmark 30.87%

Monthly Data as of 30-Jun-2020

30-Jun-2020 - Samy Muaddi, Portfolio Manager,
We focus 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 in the portfolio, given rich valuations in some areas and poor transparency. We also have a deep underweight position in the oil and gas sector.

Countries

Total
Countries
38
Largest Country China 16.50% Was (31-May-2020) 15.77%
Other View complete Country Diversification

Monthly Data as of 30-Jun-2020

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

Largest Overweight

China
By8.98%
Fund 16.50%
Indicative Benchmark 7.51%

Largest Underweight

Hong Kong
By-3.56%
Fund 0.95%
Indicative Benchmark 4.52%

Monthly Data as of 30-Jun-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
3
Largest Currency U.S. dollar 100.00% Was (31-May-2020) 99.99%
Other View complete Currency Diversification

Monthly Data as of 30-Jun-2020

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

Largest Overweight

U.S. dollar
By 0.00%
Fund 100.00%
Indicative Benchmark 100.00%

Largest Underweight

British pound sterling
By -0.00%
Fund -0.00%
Indicative Benchmark 0.00%

Monthly Data as of 30-Jun-2020

Team (As of 05-Aug-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.

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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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