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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

European Smaller Companies Equity Fund

Seeking to identify tomorrow’s winning European growth companies.

ISIN LU1001671582 WKN A1W963

3YR Return Annualised
(View Total Returns)

Total Assets
(EUR)

2.45%
€186.9m

1YR Return
(View Total Returns)

Manager Tenure

16.95%
4yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

0.82
6.22%

Inception Date 04-Dec-2013

Performance figures calculated in EUR

Other Literature

31-Oct-2020 - Ben Griffiths, Portfolio Manager,
Despite October’s fall, markets have surged since March on dramatic policy interventions around the world to support economies affected by the coronavirus pandemic. However, uncertainty remains as to how economies and companies will perform this year. As we navigate this uncertainty, our focus is on exploiting a broader opportunity set as well as defending existing positions where we have a high degree of confidence in their franchise, management and financial position.
Benjamin Griffiths
Benjamin Griffiths, Portfolio Manager

Ben Griffiths is the portfolio manager for the European Smaller Companies Equity Strategy in the International Equity Division, covering European small-cap stocks and co-portfolio manager of the International Small-Cap Equity Strategy.  Ben is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price International Ltd. 

Click for Manager Outlook
 

Strategy

Manager's Outlook

The global pandemic continues to have a marked impact upon countries and people around the world. Not only has it led to a sharp slowdown in economic activity, there is little visibility as to when a recovery will become established.

Key considerations will include the level of continuing policy support, how corporate and consumer confidence evolves and the efficacy and distribution of any vaccines to combat COVID-19.

There has also been a very profound impact upon the structures of economies and industries.� Many trends that were visible before the pandemic and that were expected to evolve over a much longer period have accelerated, especially in technology-related fields.

Markets have responded vigorously to the dramatic policy interventions around the world. Overall valuations have risen strongly and there has been an increasingly marked bifurcation within the market between those companies that are perceived to have been beneficiaries of the evident structural changes and those that have been more adversely affected.

Against this backdrop, we are working hard with our analysts to establish the medium- and longer-term outlook for the companies that we hold in the portfolio.

A strong positive influence on the strategy has been our exposure to companies whose relative fundamentals are judged to have improved over the recent traumatic months. We are appraising each one to ensure we have conviction in this improvement. We are typically reducing positions in those names where we feel that the impact may be more transitory rather than permanent. We are also mindful that we should have appropriate allocations to areas that will benefit from a recovery, and we have recently invested in some higher-quality industrial cyclical companies.

Investment Objective

To increase the value of its shares, over the long term, through growth in the value of its investments. The fund invests mainly in a diversified portfolio of stocks of smaller publicly traded European companies.

Investment Approach

  • Invests in European small- and mid-cap companies capable of sustaining above-average, long-term earnings growth and selling at reasonable prices.
  • Benchmark-unconstrained approach exploits diverse opportunities in developed Europe, peripheral, and European Union (EU) accession countries.
  • Exposure to companies at different stages in the growth cycle offers the potential for more consistent performance across market cycles.
  • Long-term investment horizon emphasizes bottom-up stock selection as the primary source of excess return.
  • Dedicated London-based research team seeks companies with:
    • Attractive industry structure.
    • Compelling business models.
    • Strong growth prospects.
    • Solid management teams.
    • Reasonable valuations.

Portfolio Construction

  • Typically 70-100 stock portfolio
  • Diversification at the security, country, region, and sector levels offers the potential for attractive risk-adjusted returns
  • Bias toward high-quality stocks provides the potential for downside risk protection
  • Risk parameters
    • Emerging Europe exposure: maximum 10%
    • Typical position size: 0.50% to 5.00%
    • Low turnover expected
    • Expected tracking error: 3% to 7%

Performance (Class Q)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Since Manager Inception
Annualised
Fund % 16.95% 2.45% 8.11% 10.34% 7.31%
Indicative Benchmark % -6.53% -1.59% 2.98% 6.70% 2.71%
Excess Return % 23.48% 4.04% 5.13% 3.64% 4.60%

Inception Date 04-Dec-2013

Manager Inception Date 31-Dec-2015

Indicative Benchmark: MSCI Europe Small Cap Index Net

Data as of  31-Oct-2020

Performance figures calculated in EUR

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Fund % 22.57% 4.40% 10.02% 10.82%
Indicative Benchmark % 0.19% 0.58% 5.20% 7.49%
Excess Return % 22.38% 3.82% 4.82% 3.33%

Inception Date 04-Dec-2013

Indicative Benchmark: MSCI Europe Small Cap Index Net

Data as of  30-Sep-2020

Performance figures calculated in EUR

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 % 8.72% 6.45% 18.12% -2.08% 4.23%
Indicative Benchmark % 14.46% 9.44% -1.88% -4.38% 0.45%
Excess Return % -5.74% -2.99% 20.00% 2.30% 3.78%

Inception Date 04-Dec-2013

Indicative Benchmark: MSCI Europe Small Cap Index Net

Indicative Benchmark: MSCI Europe Small Cap Index Net

Performance figures calculated in EUR

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.

Index returns shown with reinvestment of dividends after the deduction of withholding taxes. 

Effective 1 July 2018, the "net" version of the indicative benchmark replaced the "gross" version of the indicative benchmark. The "net" version of the indicative benchmark assumes the reinvestment of dividends after the deduction of withholding taxes applicable to the country where the dividend is paid; as such, the returns of the new benchmark are more representative of the returns experienced by investors in foreign issuers. Historical benchmark performance has been restated accordingly. 

31-Oct-2020 - Ben Griffiths, Portfolio Manager,
Small-cap shares in Europe tumbled the most since the March swoon, as investors worried that lockdowns aiming to control the coronavirus’ spread could push the eurozone economy into a double-dip recession. Political uncertainty in the U.S. also weighed on sentiment. At the portfolio level, health care, communication services and consumer staples were the top-contributing sectors, mainly due to stock picking. Stock selection in consumer discretionary and real estate weighed on relative returns. In health care, Ambu, a Denmark-based provider of diagnostic and life-supporting devices for hospitals and rescue services, outperformed. The shares rose on continued strong demand for its innovative pulmonary single use endoscopes during the coronavirus pandemic. The company has achieved this year’s guidance for sales of one million endoscopes, which replace traditional reusable endoscopes. Optimism about Ambu’s progress was buoyed by Japanese approval for the company’s cystoscope and winning multiple group purchasing organisation contracts in the U.S. On the negative side, in consumer discretionary, online fashion retailer ASOS weakened on profit-taking after as-expected strong financial year 2020 results, helped by a significant increase in active customers. Preliminary results were unveiled in August, and the final numbers were slightly ahead of expectations.

Holdings

Total
Holdings
100
Largest Holding ASOS 2.34% Was (30-Jun-2020) 1.75%
Other View Full Holdings Quarterly data as of 30-Sep-2020
Top 10 Holdings 20.33% View Top 10 Holdings Monthly data as of 31-Oct-2020

Largest Top Contributor^

ASOS
By 0.14%
% of fund 2.33%

Largest Top Detractor^

Ambu
By -0.70%
% of fund 2.31%

^Absolute

Quarterly Data as of 30-Sep-2020

Top Purchase

THG Holdings (N)
0.99%
Was (30-Jun-2020) 0%

Top Sale

Kambi (E)
0.00%
Was (30-Jun-2020) 1.55%

Quarterly Data as of 30-Sep-2020

30-Sep-2020 - Ben Griffiths, Portfolio Manager,

Added to Consumer Discretionary; Pared Outperformers

We added seven new names and eliminated five in the third quarter. As well as initiating in new ideas, such as in consumer discretionary, we have been trimming names that have done exceptionally well, such as in communication services and consumer staples, as well as those where we have lost conviction.

The strategy's profile continues to reflect our focus on durable growth companies with a sustainable competitive advantage. We have maintained a bias toward health care and information technology, and we also have an overweight position in communication services, largely due to our holdings in computer gaming stocks. We remain underweight to industrials and business services and to real estate.

Although we remained overweight to micro-cap names (names with a market capitalization of less than USD 500 million), we took selective advantage of relative strength to cut our exposures if we could not identify any meaningful fundamental change. Since the start of the year, 11 of the 24 names that we exited were in the micro-cap bucket.

Industrials and Business Services

We reduced our underweight in industrials and business services as attractively valued opportunities presented themselves. We initiated positions in Headhunter, a leading Russian recruitment business, and Aalberts, a diversified industrial company operating in industrial machinery and equipment. We added to Howden Joinery, the UK's leading supplier of kitchens. However, we trimmed our position in Va-Q-Tec, which designs and manufactures customized vacuum insulation panels, booking profits after strong performance.

We are overweight in professional services and industrial conglomerates. In the former, our largest position is Intertrust, an international trust and corporate management company, followed by Alpha Financial Markets, a leading global consultant to the asset and wealth management industry. In the latter, we own shares in DCC, an ex-venture capital company that provides international sales, marketing, and support services. The company offers diversified exposure to the UK/Irish economies and has an impressive long-term record of growing earnings and dividends.

In the machinery industry, apart from Aalberts, we own Va-Q-Tec and Rotork, the world's leading designer and manufacturer of heavy-duty industrial valve actuators devices. We also hold Norma, a Germany-based maker of clamps, connectors, and fluid systems that we expect to benefit from the trend of engine downsizing and carbon dioxide emission control and from the stronger global focus on leakage control of gases and fluids.

  • Headhunter is a clear market leader in the expanding online recruitment market in Russia. The company owns the largest database of CVs, giving it a scale advantage over competitors, and is the best-known brand in the market, which should help it increase market share, revenues, and margins.�

Information Technology

We increased our overweight in information technology (IT), by adding CANCOM, a German provider of information technology infrastructure and services.

IT is one of our largest absolute and relative positions, which is consistent with our growth approach. We are overweight in electronic equipment, software, and semiconductors and semiconductor equipment, where we continue to favor companies with innovative and resilient business models that are supported by solid bases of recurring revenues or driven by structural trends.

In electronic equipment, our largest holding is Renishaw, a world-leading metrology company, producing best-in-class touch-trigger probes and motion encoders for the machine tool industry. First Derivatives, a provider of software and consulting services, particularly to finance, technology and energy organizations, is our main investment in software. In semiconductors and semiconductor equipment, our biggest position is Aixtron, a leading Germany-based provider of deposition equipment to the compound semiconductor industry.

  • CANCOM is a strong company in an industry on the right side of change. We believe improving fundamentals and structural growth will be driven by digitization of German small and medium-sized companies and of government functions; outsourcing of IT functions to specialists like CANCOM; and consolidation of a fragmented IT services sector.

Consumer Discretionary

We adjusted our holdings in the consumer discretionary sector, reducing our overweight allocation. We exited Kambi, a provider of outsourced online sports betting services, and Joules Group, a British clothing company, in order to pursue ideas with greater runways for growth. We recycled the funds into positions in THG Holdings, a large UK e-commerce company that specializes in consumer products, and Knaus Tabbert, Germany's leading leisure vehicles maker, participating in their initial purchase offers.

We own a broad swath of companies in the sector. Our largest industry bets are internet and direct marketing, where we hold ASOS, a leading global online fashion retailer, and Shop Apotheke Europe, an online retailer of pharmaceutical products, and leisure products, where our investments include Mips, a maker of helmets for reducing rotational forces on the brain caused by impacts to the head, and Thule, a Sweden-based company that develops and manufactures sport, outdoor, and cargo products.

  • THG Holdings is poised for strong long-term growth as e-commerce takes a larger share of the retail market. The company has begun licensing its enterprise-focused e-commerce platform that helps retailers and brands build a direct global online channel to consumers. The beauty and nutrition e-commerce businesses are already profitable and expanding rapidly.
  • Knaus-Tabbert has, in our view, a long runway for growth supported by three factors: continued organic market share gains, where the company and current management have an impressive track record over the last decade; the structural growth of the end market, in particular the higher-priced motorhome segment and the core German market; and margin expansion driven by scale and production efficiency.

Health Care

Health care sector remains a key long-term bet that contains some of the portfolio's largest relative and absolute positions. We added Morphosys, a Germany-based biotech company that specializes in the discovery and development of therapeutic antibodies.

Our largest industry allocations are:

  • health care equipment and supplies, where we own Ambu, a Denmark-based provider of diagnostic and life-supporting devices for hospitals and rescue services;
  • biotechnology, where Abcam, a Danish company engaged in producing and marketing research-grade antibodies, is our main investment;
  • life sciences tools and services, where Eurofins Scientific, a leading global provider of bioanalytical laboratory testing services, is our largest holding; and
  • health care providers and services, where we own shares in Amplifon, an Italian company that distributes, adjusts, and personalizes hearing aids.

  • We believe Morphosys and partner Incyte could generate sizable sales from tafasitamab, a drug for treating blood cancer. The U.S. Food and Drug Administration has already approved its use in combination with another drug for the treatment of relapsed or refractory large B-cell lymphoma in adult patients. We believe that it could eventually be more widely used as a front-line treatment.

Communication Services

We further reduced our overweight in communication services, taking some profits in Stillfront, a Sweden-based publisher of digital games, after strong performance and exiting Karnov, a legal information provider that has not fulfilled its promise since its initial public offering last year.

Our largest industry bet is entertainment, where we hold four games developers, one of the fastest-growing segments of the industry. Apart from Stillfront, our investments include Codemasters Group Holdings, a UK-based video game developer and publisher, and Frontier Developments, a world management games specialist.

We are also overweight interactive media and services, where we hold Scout24 Holding, an online classified advertising company that operates mainly in Germany, and the leading UK real estate portal, Rightmove.

Sectors

Total
Sectors
10
Largest Sector Health Care 19.85% Was (30-Sep-2020) 20.30%
Other View complete Sector Diversification

Monthly Data as of 31-Oct-2020

Indicative Benchmark: MSCI Europe Small Cap Index

Top Contributor^

Financials
Net Contribution 1.39%
Sector
0.10%
Selection 1.29%

Top Detractor^

Consumer Staples
Net Contribution -0.40%
Sector
-0.02%
Selection
-0.38%

^Relative

Quarterly Data as of 30-Sep-2020

Largest Overweight

Health Care
By10.68%
Fund 19.85%
Indicative Benchmark 9.17%

Largest Underweight

Industrials & Business Services
By-11.74%
Fund 12.38%
Indicative Benchmark 24.12%

Monthly Data as of 31-Oct-2020

31-Oct-2020 - Ben Griffiths, Portfolio Manager,
We added a Nordic software developer, but we pared our overweight allocation to the IT sector after taking profits on several stocks that have had strong runs during the market rally. We increased our overweight in health care, the fund’s largest, increasing positions in some high-conviction names. Our approach remains to look for those small growth companies that can be much larger in five to 10 years’ time, and so we maintain structural overweight allocations to sectors such as health care, IT, and the new economy tech-related areas within communication services and consumer discretionary.

Countries

Total
Countries
15
Largest Country United Kingdom 38.26% Was (30-Sep-2020) 39.29%
Other View complete Country Diversification

Monthly Data as of 31-Oct-2020

Indicative Benchmark: MSCI Europe Small Cap Index

Top Contributor^

United Kingdom
Net Contribution 3.08%
Country
-0.23%
Selection 3.31%

Top Detractor^

Denmark
Net Contribution -0.57%
Country
0.05%
Selection
-0.62%

^Relative

Quarterly Data as of 30-Sep-2020

Largest Overweight

United Kingdom
By6.92%
Fund 38.26%
Indicative Benchmark 31.33%

Largest Underweight

Sweden
By-5.58%
Fund 8.40%
Indicative Benchmark 13.98%

Monthly Data as of 31-Oct-2020

30-Sep-2018 - Ben Griffiths, Portfolio Manager,
By paring back our position in the aforementioned online payments processor, we reduced our exposure to Germany. Our country positions otherwise did not change materially during the month.

Team (As of 01-Oct-2020)

Benjamin Griffiths

Ben Griffiths is the portfolio manager for the European Smaller Companies Equity Strategy in the International Equity Division, covering European small-cap stocks and co-portfolio manager of the International Small-Cap Equity Strategy.  Ben is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price International Ltd. 

Ben’s investment experience began in 1999, and he has been with T. Rowe Price since 2006, beginning in the Equity Division. Prior to this, Ben was employed by Baillie Gifford as an investment manager. 

Ben earned a B.A. in investment analysis from Stirling University and an M.Eng. in engineering science from Oxford University. Ben also has earned the Chartered Financial Analyst® designation.

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

  • Fund manager
    since
    2016
  • Years at
    T. Rowe Price
    14
  • Years investment
    experience
    0
Andrew Clifton

Andrew Clifton is a portfolio specialist in the Equity Division at T. Rowe Price. He is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price International Ltd.

Mr. Clifton has over 30 years of investment experience, nine of which have been at T. Rowe Price. Prior to joining the firm in 2010, he was an executive director at UBS Global Asset Management. Prior to that, he was a vice president at Merrill Lynch.

Mr. Clifton earned a B.Sc. in economics from the London School of Economics and an M.Sc. in econometrics from the University of Southampton.

  • Years at
    T. Rowe Price
    10
  • Years investment
    experience
    31

Fee Schedule

Share Class Minimum Initial Investment and Holding Amount (EUR) Minimum Subsequent Investment (EUR) Minimum Redemption Amount (EUR) Sales Charge (up to) Investment Management Fee (up to) Ongoing Charges
Class A €1,000 €100 €100 5.00% 160 basis points 1.77%
Class I €2,500,000 €100,000 €0 0.00% 95 basis points 1.05%
Class Q €1,000 €100 €100 0.00% 95 basis points 1.12%

Please note that the Ongoing Charges figure is inclusive of the Investment Management Fee and is charged per annum.