SICAV
European High Yield Bond Fund
Research-driven, targeting consistent high income.
Since Inception Annualised
(View Total Returns)
Total Assets
(EUR)
1YR Return
(View Total Returns)
Manager Tenure
Information Ratio
Tracking Error
Inception Date 16-Mar-2017
Performance figures calculated in GBP
Strategy
Many of the drivers of European high yield's strong year-to-date performance should persist heading into the end of the year. The favorable technical environment will likely remain in place. The asset class has seen positive inflows in every quarter so far in 2019 and while the primary market has been active, much of the new supply has gone towards refinancing outstanding bonds, meaning net supply has been broadly neutral.
�
The ECB's accommodative policies, including the planned restart of corporate bond purchases in November, should lend further support to the market technicals. Although the purchases will not include high yield bonds, the added liquidity would impact the entire corporate market and boost demand for higher-yielding assets.
�
Despite this supportive technical backdrop, we see reasons for caution heading into the final months of the year. The European high yield asset class has significantly outperformed market expectations year-to-date, and some investors may look to take profits ahead of potential bouts of volatility. U.S.-China trade and Brexit continue to pose risks in the near term.
�
Additionally, global economic growth remains a key area to watch. In Europe, the manufacturing sector weakness could increasingly impact overall growth. So far, corporate fundamentals remain broadly stable with default rates low. However, a deepening slowdown could start to weigh on the asset class. On the positive side, we see signs that the eurozone economy will improve in the coming months, helped by the ECB's stimulus and slightly looser fiscal policies from some eurozone governments.
�
Overall, we think the European high yield markets contain many attractive medium- to long-term opportunities. However, investors should exercise discipline and remain selective in the wake of the recent strong technical-driven performance. We will continue to look for names with strong fundamentals with long-term performance potential identified through our bottom-up research.�
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 high yield corporate bonds that are denominated in European currencies.Investment Approach
- The fund focuses primarily on European currency-denominated corporate debt issued by below investment-grade companies.
- Invests mainly in BB and B rated bonds, with the ability to purchase lower-quality securities when compelling valuation and risk/reward opportunities arise.
- The fund integrates fundamental proprietary research at the corporate bond, sovereign, and equity levels. This integral collaboration provides a holistic view of a company’s capital structure and management team, as well as its position in the larger market environment unique to each country.
- Research focuses on quantitative and qualitative factors that drive an independent credit rating. Analysts look to identify long-term potential for balance sheet and external rating improvements while adhering to strict risk management practices.
- Target excess-return will be primarily driven by individual security selection and, secondarily, by relative sector and credit quality allocations.
Portfolio Construction
- At least 80% of assets will be invested in securities denominated in European currencies—mainly the euro and the pound.
- Currency exposure is fully hedged back to the euro.
- Up to 20% of assets may be invested outside of European currencies, including U.S. dollar high yield and investment-grade corporate bonds.
- Target excess return: 100–150 basis points over a full market cycle. (Not a formal objective and it can be changed without prior notice. Please reference prospectus for formal objective.)
- Target tracking error: 200–400 basis points
Performance (Class Qdh | GBP)
Annualised Performance
| 1 YR | 3 YR Annualised |
5 YR Annualised |
Since Inception Annualised |
|
|---|---|---|---|---|
| Fund % | 11.23% | N/A | N/A | 2.81% |
| Indicative Benchmark % | 10.25% | N/A | N/A | 4.99% |
| Excess Return % | 0.98% | N/A | N/A | -2.18% |
| 1 YR | 3 YR Annualised |
5 YR Annualised |
Since Inception Annualised |
|
|---|---|---|---|---|
| Fund % | 5.37% | N/A | N/A | 2.74% |
| Indicative Benchmark % | 5.94% | N/A | N/A | 4.85% |
| Excess Return % | -0.57% | N/A | N/A | -2.11% |
Recent Performance
| Month to DateData as of 10-Dec-2019 | Quarter to DateData as of 10-Dec-2019 | Year to DateData as of 10-Dec-2019 | 1 MonthData as of 30-Nov-2019 | 3 MonthsData as of 30-Nov-2019 | |
|---|---|---|---|---|---|
| Fund % | 0.42% | 1.05% | 13.51% | 0.84% | 0.88% |
| Indicative Benchmark % | 0.37% | 1.55% | 11.28% | 1.13% | 1.06% |
| Excess Return % | 0.05% | -0.50% | 2.23% | -0.29% | -0.18% |
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.
Holdings
Holdings
Total
Holdings
93
Quality Rating View quality analysis
| Largest Overweight | Largest Underweight | |
|---|---|---|
| Quality Rating | B Rated | BB Rated |
| By % | 17.70% | -42.50% |
| Fund | 43.69% | 25.14% |
| Indicative Benchmark | 25.99% | 67.65% |
Average Credit Quality
B+Maturity View maturity analysis
| Largest Overweight | Largest Underweight | |
|---|---|---|
| Maturity | 5-7 Years | 1-3 Years |
| By % | 12.49% | -12.26% |
| Fund | 41.38% | 6.37% |
| Indicative Benchmark | 28.88% | 18.64% |
Weighted Average Maturity
5.83 YearsDuration View duration analysis
| Largest Overweight | Largest Underweight | |
|---|---|---|
| Duration | Under 1 Year | 3-5 Years |
| By % | 9.81% | -15.83% |
| Fund | 27.33% | 19.42% |
| Indicative Benchmark | 17.51% | 35.25% |
Weighted Average Duration
2.30 Years
Industry
Total
Industries
25
Largest Overweight
Financial Services
Largest Underweight
Telecom - Wireline Integrated & Services
Countries
Total
Countries
19
Largest Overweight
United States
Largest Underweight
Italy
Currency
Total
Currencies
5
Largest Overweight
euro
Largest Underweight
British pound sterling
The fund is fully hedged back to euro, although direct exposure may total less than 100%. It is important to note that there can be no assurances that the currency hedging employed will fully eliminate the shareholder's exposure to exchange rate fluctuations.
Team (As of 31-Aug-2019)
Michael Della Vedova is a global high yield portfolio manager in the Fixed Income Division at T. Rowe Price. Mr. Della Vedova is a portfolio manager of the European High Yield Strategy and co-portfolio manager for the firm's Global High Yield Strategy. He is a vice president of T. Rowe Price Group, Inc. and T. Rowe Price International Ltd.
Mr. Della Vedova has 26 years of investment experience, 10 of which have been with T. Rowe Price. Prior to joining the firm in 2009, he was a cofounder and partner of Four Quarter Capital, a credit hedge fund focusing on below investment-grade European corporate debt. Mr. Della Vedova also spent six years as a senior analyst and assistant portfolio manager with Muzinich & Company Limited in London.
Mr. Della Vedova earned both an LL.B. and a B.Com. in finance from the University of New South Wales and a G.D.L.P. from the University of Technology, Sydney, Australia. He also was admitted as a solicitor to the Supreme Court of New South Wales, Sydney.
- Fund manager2017
since - Years at10
T. Rowe Price - Years investment26
experience
Michael Lesesne is a global high yield portfolio specialist in the Fixed Income Division at T. Rowe Price. He supports the High Yield, Bank Loan, and Credit Opportunities Strategies, working closely with clients, prospects, and consultants. Mr. Lesesne is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price Associates, Inc.
Mr. Lesesne has 28 years of investment experience, seven of which have been with T. Rowe Price. Prior to joining the firm in 2012, Mr. Lesesne was a partner and director of credit research at Lord Abbett and, before that, a senior high yield credit analyst at Weiss, Peck & Greer and TIAA-CREF.
Mr. Lesesne earned a B.A. in business economics from Brown University and an M.B.A. in finance from Columbia Business School.
- Years at7
T. Rowe Price - Years investment28
experience
Fee Schedule
| Share Class | Minimum Initial Investment and Holding Amount | Minimum Subsequent Investment | Minimum Redemption Amount | Sales Charge (up to) | Investment Management Fee (up to) | Ongoing Charges |
|---|---|---|---|---|---|---|
| Class A | €15,000 | €100 | €100 | 5.00% | 115 basis points | 1.29% |
| Class I | €2,500,000 | €100,000 | €0 | 0.00% | 60 basis points | 0.68% |
| Class Q | €15,000 | €100 | €100 | 0.00% | 60 basis points | 0.74% |
| 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.
Michael Della Vedova is a global high yield portfolio manager in the Fixed Income Division at T. Rowe Price. Mr. Della Vedova is a portfolio manager of the European High Yield Strategy and co-portfolio manager for the firm's Global High Yield Strategy. He is a vice president of T. Rowe Price Group, Inc. and T. Rowe Price International Ltd.