SICAV

Frontier Markets Equity Fund

Seeking to identify long-term market leaders in countries on the cusp of rapid development.

ISIN LU1079765662 WKN A11660

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

-5.37%
$108.4m

1YR Return
(View Total Returns)

Manager Tenure

-9.11%
6yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

-0.17
4.93%

Inception Date 24-Jun-2014

Performance figures calculated in USD

Other Literature

30-Sep-2020 - Oliver Bell, Portfolio Manager ,
Along with the rest of the world, frontier equity markets have been hit hard by the double impact of the global spread of coronavirus and a plummeting oil price. The economies within the frontier markets universe are not immune to the global slowdown, which is now unavoidable; however, we continue to focus on the long-term fundamentals of our individual companies, their positioning, and the strength of their balance sheets to withstand these difficult times.
Oliver Bell
Oliver Bell, Co-Portfolio Manager

Oliver Bell is a vice president of T. Rowe Price Group, Inc., associate head of Equity EMEA and the lead portfolio manager and chairman of the Investment Advisory Committee for the T. Rowe Price Middle East & Africa Equity Strategy and the Frontier Markets Equity Strategy. He is a member of the International Equity Steering Committee and a Board member of T. Rowe Price (Luxembourg) Management S.a.r.l.

 

Strategy

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 frontier markets companies.

Investment Approach

  • Invest across the entire frontier investment universe, including countries outside the MSCI Frontier Markets Index.
  • Rigorous, risk-aware approach to identify quality growing companies trading at attractive valuations.
  • Employ fundamental analysis with a focus on returns, balance sheet structure, management team and corporate governance.
  • Disciplined approach to valuation. Verify relative valuation appeal versus peers and history.
  • Consider macroeconomic and political factors to temper bottom-up enthusiasm.

Portfolio Construction

  • Number of holdings: typically 60-80 stocks
  • Individual position sizes typically range from 0.5%-10%
  • Country Ranges:
    • Index countries: Unconstrained
    • Non-index countries: Constrained – 15% limit in any one country.
  • Reserves are typically less than 5%
  • Expected Turnover range: 20-40%

Performance (Class I)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Since Manager Inception
Annualised
Fund % -9.11% -5.37% 2.99% -0.35% -0.35%
Indicative Benchmark % -2.42% -1.59% 3.83% -1.03% -1.03%
Excess Return % -6.69% -3.78% -0.84% 0.68% 0.68%

Inception Date 24-Jun-2014

Manager Inception Date 24-Jun-2014

Indicative Benchmark: Linked Benchmark Net

Data as of  30-Sep-2020

Performance figures calculated in USD

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Fund % -9.11% -5.37% 2.99% -0.35%
Indicative Benchmark % -2.42% -1.59% 3.83% -1.03%
Excess Return % -6.69% -3.78% -0.84% 0.68%

Inception Date 24-Jun-2014

Indicative Benchmark: Linked Benchmark Net

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 % 4.19% 4.19% -9.90% 1.35% 8.19%
Indicative Benchmark % 3.79% 3.79% -5.02% 0.70% 8.49%
Excess Return % 0.40% 0.40% -4.88% 0.65% -0.30%

Inception Date 24-Jun-2014

Indicative Benchmark: Linked Benchmark Net

Indicative Benchmark: Linked Benchmark Net

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.

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. 

Effective 1 January 2020, the benchmark for the sub-fund changed to MSCI Frontier Markets 10/40 Index Net. Prior to this change, the benchmark was MSCI Frontier Markets Index Net. Historical benchmark representations have not been restated.

30-Sep-2020 - Oliver Bell, Portfolio Manager ,
Frontier equities ended September in modestly positive territory. Index heavyweight Vietnam gained ground; although the country’s economy is very much geared to the rest of the world, and thus faces a difficult outlook, investors have been heartened by indications that the authorities are handling the downturn well and have been successful in keeping coronavirus infection rates very low. Kuwait also outperformed despite the death at the end of the month of the Emir and the ascension of the Crown Prince. Within the portfolio, Vietnam contributed the most to relative performance, due to both our choice of securities and to a lesser extent, our overweight stance. Our off-benchmark holding Mobile World Investment was once again a significant contributor; investors were encouraged by recent statements from the management team, highlighting that the company is performing well given the current environment. The Vietnam-based electronics retailer is now expanding into food retail stores, which are taking market share from traditional wet markets on a national scale. Our position in fast-moving consumer goods specialist Marico Bangladesh was also beneficial; its shares have performed strongly since the release of solid quarterly earnings and a hefty cash dividend.

Holdings

Total
Holdings
52
Largest Holding National Bank of Kuwait 9.59% Was (30-Jun-2020) 9.44%
Other View Full Holdings Quarterly data as of 30-Sep-2020
Top 10 Holdings 52.24% View Top 10 Holdings Monthly data as of 30-Sep-2020

Largest Top Contributor^

National Bank of Kuwait
By 0.09%
% of fund 9.53%

Largest Top Detractor^

Label Vie
By -1.64%
% of fund 3.28%

^Absolute

Quarterly Data as of 30-Sep-2020

Top Purchase

Safaricom
3.51%
Was (30-Jun-2020) 1.31%

Top Sale

Network International Holdings
1.06%
Was (30-Jun-2020) 2.15%

Quarterly Data as of 30-Sep-2020

30-Jun-2020 - Oliver Bell, Portfolio Manager ,

Sri Lanka

We reduced our overweight position in Sri Lanka. The country's market resumed trading in May after a seven-week shutdown due to the impact of the coronavirus. We took profits in several stocks that rebounded from their lows during the month.

We also sold our holdings in Hatton National Bank and Commercial Bank of Ceylon, as we no longer believe that the banks meet our investment criteria, falling short of having a high level of core profitability as well as a strong balance sheet and capital buffers. The coronavirus is likely to lead to a further deterioration in asset quality from a tough starting point, in our view.

Kuwait

We remain underweight Kuwait but adjusted our exposures over the quarter. We reinvested in Agility, which engages in the provision of logistics and warehousing services. The company's freight-forwarding business struggled amid the global spread of the coronavirus, with global cargo capacity dropping steeply as nations moved to implement more restrictive lockdown measures. However, this was somewhat offset by Agility's infrastructure business, which benefited from increased demand for warehousing. Our view is that the company's expansion into the Saudi Arabian market is progressing well.

Conversely, we reduced our position in Kuwait Finance House, due in part to profit-taking ahead of Kuwait's upgrade to emerging markets status by MSCI in November. In the quarter, the bank announced a delay to its acquisition of Bahrain's Ahli United Bank, on account of government measures to contain the spread of the coronavirus. As with other banks in the region, the combination of the coronavirus pandemic and lower oil prices is likely to weigh on the stock in the near term.

Iceland

Iceland is set to join the MSCI Frontier Markets Index in May 2021. We initiated a position in Marel, Iceland's market-leading provider to the animal protein industry. The company supplies innovation-driven equipment, automation software, and services to meet the growing global demand for protein and processed food, while minimizing waste and increasing added value for its customers. We believe Marel can deliver strong organic growth and improving profitability.

Morocco

We remain underweight Morocco. We took some profits following strong performance of Moroccan retailer Label Vie, which offers food, furniture, children's toys, electrical appliances, and gardening tools. As the coronavirus pandemic spread and associated lockdowns were announced, panic buying led to increased sales. In the second quarter, footfall decreased but the size of baskets remained elevated. In addition, the company is benefiting from an accelerated move towards the formal economy in Morocco, due to increased demand for better hygiene measures, competitive prices, and supply chain access.

Sectors

Total
Sectors
10
Largest Sector Financials 54.13% Was (31-Aug-2020) 55.19%
Other View complete Sector Diversification

Monthly Data as of 30-Sep-2020

Indicative Benchmark: MSCI Frontier Market 10/40 Index Net

Top Contributor^

Consumer Discretionary
Net Contribution 0.88%
Sector
-0.05%
Selection 0.93%

Top Detractor^

Financials
Net Contribution -1.06%
Sector
0.13%
Selection
-1.19%

^Relative

Quarterly Data as of 30-Sep-2020

Largest Overweight

Consumer Discretionary
By8.87%
Fund 9.01%
Indicative Benchmark 0.14%

Largest Underweight

Communication Services
By-7.98%
Fund 7.12%
Indicative Benchmark 15.09%

Monthly Data as of 30-Sep-2020

30-Sep-2020 - Oliver Bell, Portfolio Manager ,
The portfolio retains an underweight position in the materials sector but over the month we raised our exposure to a copper producer that owns assets located in Kazakhstan. The company stands to benefit from a rising price of copper. This should be supported by both growing demand from China as manufacturing picks up and reduced production in Chile. The company’s half-year results were broadly in line with expectations and key projects remain on track.

Regions

Total
Regions
3
Largest Region Middle East & Africa 47.29% Was (31-Aug-2020) 46.90%
Other View complete Region Diversification

Monthly Data as of 30-Sep-2020

Indicative Benchmark: MSCI Frontier Market 10/40 Index Net

Top Contributor^

Pacific ex Japan
Net Contribution 2.15%
Region
0.18%
Selection 1.97%

Top Detractor^

EM EMEA
Net Contribution -2.20%
Region
0.04%
Selection
-2.24%

^Relative

Quarterly Data as of 30-Sep-2020

Largest Overweight

Pacific Ex Japan
By13.77%
Fund 37.17%
Indicative Benchmark 23.40%

Largest Underweight

Middle East & Africa
By-15.98%
Fund 47.29%
Indicative Benchmark 63.27%

Monthly Data as of 30-Sep-2020

Countries

Total
Countries
20
Largest Country Vietnam 27.65% Was (31-Aug-2020) 27.02%
Other View complete Country Diversification

Monthly Data as of 30-Sep-2020

Indicative Benchmark: MSCI Frontier Market 10/40 Index Net

Top Contributor^

Vietnam
Net Contribution 2.03%
Country
0.01%
Selection 2.01%

Top Detractor^

Bahrain
Net Contribution -0.98%
Country
-0.98%
Selection
0.00%

^Relative

Quarterly Data as of 30-Sep-2020

Largest Overweight

Vietnam
By7.73%
Fund 27.65%
Indicative Benchmark 19.93%

Largest Underweight

Nigeria
By-6.27%
Fund 0.00%
Indicative Benchmark 6.27%

Monthly Data as of 30-Sep-2020

30-Sep-2020 - Oliver Bell, Portfolio Manager ,
We reduced the extent of our exposure to Sri Lanka in September by trimming back the size of our position in a local consumer staples group. The pandemic has been extremely damaging to the country’s economy. Sri Lanka went into the crisis with an already very high debt-to-GDP ratio and significant costs of servicing that debt. Despite this, we continue to see stock-specific pockets of opportunity in this market. In Kenya, we increased the size of our existing position in a leading mobile operator in the country.

Team (As of 01-Oct-2020)

Oliver Bell

Oliver Bell is a vice president of T. Rowe Price Group, Inc., associate head of Equity EMEA and the lead portfolio manager and chairman of the Investment Advisory Committee for the T. Rowe Price Middle East & Africa Equity Strategy and the Frontier Markets Equity Strategy. He is a member of the International Equity Steering Committee and a Board member of T. Rowe Price (Luxembourg) Management S.a.r.l.

Mr. Bell has 21 years of investment experience, seven of which have been with T. Rowe Price. Prior to joining the firm in 2011, Mr. Bell was head of emerging markets equities research at Pictet Asset Management (the institutional asset management arm of Pictet & Cie, the largest private bank in Switzerland), where his responsibilities included managing several funds, as well as a team of analysts. During his time at Pictet, Mr. Bell was directly responsible for managing investments in the emerging Europe, Middle East and Africa region as part of the global emerging markets and the standalone Middle East and Africa portfolios. Mr. Bell also managed the Global Emerging Markets High Dividend Yield Equity Strategy.

Mr. Bell has earned a bachelor of science degree in chemistry from Exeter University and also has earned the Investment Management Certificate.

  • Fund manager
    since
    2014
  • Years at
    T. Rowe Price
    9
  • Years investment
    experience
    23
Johannes Loefstrand

Johannes Loefstrand is the Co-Portfolio Manager on the Frontier Markets Fund in the Equity Division of T. Rowe Price. He is a vice president of T. Rowe Price Group, Inc. and T. Rowe Price International Ltd.

Johannes’s investment experience began in 2012 and he has been with T. Rowe Price since 2015, beginning in the Emerging Markets Equity Division. Prior to this, he was an investment analyst at Arisaig Partners in Singapore and in Cape Town.

Johannes earned a master of laws degree from the London School of Economics and a bachelor of laws degree from the University of Groningen, Netherlands.

  • Fund manager
    since
    2020
  • Years at
    T. Rowe Price
    5
  • Years investment
    experience
    0

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% 200 basis points 2.17%
Class I $2,500,000 $100,000 $0 0.00% 110 basis points 1.20%
Class Q $1,000 $100 $100 0.00% 110 basis points 1.27%
Class S $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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