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GIPS® Information

T. Rowe Price ("TRP") claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. T. Rowe Price has been independently verified for the twenty four-year period ended June 30, 2020, by KPMG LLP. The verification report is available upon request. A firm that claims compliance with the GIPS standards must establish policies and procedures for complying with all the applicable requirements of the GIPS standards. Verification provides assurance on whether the firm’s policies and procedures related to composite and pooled fund maintenance, as well as the calculation, presentation, and distribution of performance, have been designed in compliance with the GIPS standards and have been implemented on a firm-wide basis. Verification does not provide assurance on the accuracy of any specific performance report.

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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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)

-3.46%
$99.7m

1YR Return
(View Total Returns)

Manager Tenure

-1.50%
<1yr

Information Ratio
(5 Years)

Tracking Error
(5 Years)

-0.23
5.06%

Inception Date 24-Jun-2014

Performance figures calculated in USD

Other Literature

31-Dec-2020 - Johannes Loefstrand, Portfolio Manager ,
The macroeconomic fundamentals and demographics in many frontier markets today are favourable and, in some cases, resemble those of emerging countries approximately 15 to 20 years ago. We believe these economies have the potential to grow much faster than those in the developed and emerging markets universes. Frontier markets have faced a challenging year; however, we are encouraged by the effects the rollout of vaccine programmes will have on the global economy.
Johannes Loefstrand
Johannes Loefstrand, Portfolio Manager

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.

 

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 % -1.50% -3.46% 5.39% 1.67% 1.67%
Indicative Benchmark % 2.85% 0.48% 6.55% 0.80% 0.80%
Excess Return % -4.35% -3.94% -1.16% 0.87% 0.87%

Inception Date 24-Jun-2014

Manager Inception Date 24-Jun-2014

Indicative Benchmark: Linked Benchmark Net

Data as of 31-Dec-2020

Performance figures calculated in USD

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Fund % -1.50% -3.46% 5.39% 1.67%
Indicative Benchmark % 2.85% 0.48% 6.55% 0.80%
Excess Return % -4.35% -3.94% -1.16% 0.87%

Inception Date 24-Jun-2014

Indicative Benchmark: Linked Benchmark Net

Data as of 31-Dec-2020

Performance figures calculated in USD

Recent Performance

  Month to DateData as of 15-Jan-2021 Quarter to DateData as of 15-Jan-2021 Year to DateData as of 15-Jan-2021 1 MonthData as of 31-Dec-2020 3 MonthsData as of 31-Dec-2020
Fund % 6.01% 6.01% 6.01% 5.89% 13.91%
Indicative Benchmark % 3.43% 3.43% 3.43% 5.71% 12.39%
Excess Return % 2.58% 2.58% 2.58% 0.18% 1.52%

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.

31-Dec-2020 - Johannes Loefstrand, Portfolio Manager ,
Frontier markets posted another month of solid gains in December, outperforming global developed markets. Oil exporter Kazakhstan was the best-performing individual country. The oil price hit a nine-month high on robust demand from China and India as well as an agreement between major oil producers to ease output cuts more gradually in 2021 than previously planned. Vietnam also continued to perform strongly; the country has handled the pandemic very successfully, and its economic growth was one of the world’s strongest in 2020. In the portfolio, our avoidance of Bahrain was the single biggest contributor to relative performance on a country basis, as this market was one of the weakest performing over the month. Our sizable position in Egypt-based Integrated Diagnostics Holdings also worked in our favour. Shares in the medical diagnostics company posted robust gains on the back of solid quarterly results. After a meaningful slowdown in the first half of the year, the company returned to growth in the third quarter, with the addition of branches and a recovery in patient volumes. Conversely, Bangladesh-based BRAC Bank curbed relative performance in December; its shares gave back some of their November gains that followed strong quarterly results.

Holdings

Total
Holdings
51
Largest Holding Mobile World Investment 6.49% Was (30-Sep-2020) 5.45%
Other View Full Holdings Quarterly data as of  31-Dec-2020
Top 10 Holdings 45.54% View Top 10 Holdings Monthly data as of  31-Dec-2020

Largest Top Contributor^

Mobile World Investment
By 0.33%
% of fund 6.51%

Largest Top Detractor^

Equity Group Holdings
By -0.64%
% of fund 1.52%

^Absolute

Quarterly Data as of 31-Dec-2020

Top Purchase

Vietnam Dairy Products (N)
5.22%
Was (30-Sep-2020) 0%

Top Sale

Kuwait Finance House KSCP (E)
0.00%
Was (30-Sep-2020) 9.47%

Quarterly Data as of 31-Dec-2020

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

We identified compelling investment opportunities in Kenya and Egypt. We further reduced our overweight exposure to Sri Lanka and Saudi Arabia. On a sector basis, we made some changes within financials.

Kenya and Egypt

We identified a number of what we believe are compelling investment opportunities in some of the smaller frontier markets, such as Kenya and Egypt.

  • We continued building a position in Safaricom, Kenya's leading mobile operator. Service revenue growth remains positive, and the company is benefiting from growth in mobile data and the ongoing take-up of M-Pesa, a messaging, payments, and microfinancing app, across the country. We expect additional upside for the stock from the M-Pesa rollout into Africa (with Vodacom) and a special dividend in 2021.
  • We initiated a position in Egyptian digital payment business Fawry. Fawry's digital payments business in volume terms exceeds all the other competition combined. This part state-owned payments platform is core to over 26 million consumers wishing to pay for airtime and government bills through a large merchant network. While the core is still growing at a high growth rate, it is the new, higher-margin supply chain, banking services, and microfinance services that are accelerating bottom-line growth. After the pandemic is over, we expect digital payments to continue accelerating in Egypt.

Sri Lanka

Over the course of the second quarter of 2020, we reduced our overweight position in Sri Lanka, and in the third quarter, we continued this shift.

We sold down our position in Ceylon Cold Stores, a Sri Lankan consumer staples group that manufactures and sells carbonated soft drinks and frozen confectionery food products. The pandemic has been extremely damaging to Sri Lanka's economy. The country entered this crisis with an already very high debt-to-GDP ratio and significant costs of servicing that debt. While the company's long-term outlook remains promising in its underpenetrated segments (ice cream, beverages, and grocery retail), the pandemic is proving to be a bigger-than-expected headwind to its supposed defensive categories due to the severe lockdown in Sri Lanka.

Saudi Arabia

We have a modest overweight position in Saudi Arabia, and over the course of the quarter, we slightly reduced the extent of our exposure, largely due to stock-specific reasons. For example, we reduced our holding in hospital group Al Mouwasat Medical, in part due to profit taking as valuations began to look full. Over the near term, the challenging macroeconomic backdrop is expected to be a headwind, and opening costs of new hospitals are likely to weigh on profits. Looking further ahead, we believe the company is well positioned to continue gaining market share as expansion projects are completed.

Financials

As the third quarter began, the portfolio had a significant overweight in financials names, and over the course of the review period, we adjusted this exposure. For example, we increased the size of our existing holding in Bank of Georgia and, to a lesser extent, in Bangladesh-based BRAC Bank. These purchases were partially funded through reducing our exposure to a couple of Kuwait-based financials names.

  • We topped up our position in Bank of Georgia. The country has managed to keep the spread of COVID-19, the disease caused by the coronavirus, fairly contained, and government stimulus should help to support the economy through this challenging period. Looking further ahead, tourism could be a source of upside, after being written down completely in 2020. We believe that the stock's valuation offers upside potential and several factors may boost the stock. In the medium term, efficiency gains may result from the digital push the bank has pursued as a result of the pandemic.
  • We took some profits in National Bank of Kuwait ahead of Kuwait's upgrade to emerging markets status by MSCI. The bank remains a very strong and defensively positioned franchise for this environment; however, we are likely to see ROE contraction in 2020 and 2021. We see the longer-term potential for this high-quality franchise, which continues to gain market share.
  • We continued to further reduce our position in Kuwait Finance House, again partly due to the upcoming migration of Kuwait to the MSCI Emerging Markets index. Over the period, there was speculation that the planned merger with Bahrain's Ahli United Bank was back on track. This was previously delayed on account of government measures to contain the spread of the coronavirus. As with other banks in the region, the combination of the COVID-19 pandemic and lower oil prices is likely to weigh on the stock in the near term.

Materials

Although the portfolio retained an overall underweight position in materials over the course of the review period, we raised our exposure to Kaz Minerals, the 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.

Sectors

Total
Sectors
10
Largest Sector Financials 35.54% Was (30-Nov-2020) 31.21%
Other View complete Sector Diversification

Monthly Data as of 31-Dec-2020

Indicative Benchmark: MSCI Frontier Market 10/40 Index Net

Top Contributor^

Financials
Net Contribution 2.76%
Sector
-0.18%
Selection 2.94%

Top Detractor^

Materials
Net Contribution -1.74%
Sector
-1.79%
Selection
0.05%

^Relative

Quarterly Data as of 31-Dec-2020

Largest Overweight

Information Technology
By14.44%
Fund 14.44%
Indicative Benchmark 0.00%

Largest Underweight

Materials
By-8.87%
Fund 0.00%
Indicative Benchmark 8.87%

Monthly Data as of 31-Dec-2020

31-Dec-2020 - Johannes Loefstrand, Portfolio Manager ,
We have significant absolute position in financials. Within the sector, we recently added to our holding in a large Slovenian banking group. The stock typically offers a high dividend, which we expect to resume in 2021, following the European Union’s banking regulator’s ban on payouts amid the pandemic. We also expect provisions to normalise as the impact of the health crisis subsides. In our recent meeting with the bank’s management team, we were reassured about Slovenia’s gradual economic normalisation following coronavirus restrictions, which led to a very weak second quarter of 2020.

Regions

Total
Regions
5
Largest Region Pacific Ex Japan 47.44% Was (30-Nov-2020) 39.66%
Other View complete Region Diversification

Monthly Data as of 31-Dec-2020

Indicative Benchmark: MSCI Frontier Market 10/40 Index Net

Top Contributor^

EM EMEA
Net Contribution 2.23%
Region
0.61%
Selection 1.62%

Top Detractor^

Pacific ex Japan
Net Contribution -0.45%
Region
0.89%
Selection
-1.34%

^Relative

Quarterly Data as of 31-Dec-2020

Largest Overweight

Pacific Ex Japan
By15.49%
Fund 47.44%
Indicative Benchmark 31.95%

Largest Underweight

Middle East & Africa
By-24.19%
Fund 23.52%
Indicative Benchmark 47.71%

Monthly Data as of 31-Dec-2020

Countries

Total
Countries
22
Largest Country Vietnam 36.11% Was (30-Nov-2020) 31.72%
Other View complete Country Diversification

Monthly Data as of 31-Dec-2020

Indicative Benchmark: MSCI Frontier Market 10/40 Index Net

Top Contributor^

Bahrain
Net Contribution 0.87%
Country
0.87%
Selection 0.00%

Top Detractor^

Nigeria
Net Contribution -0.96%
Country
-0.96%
Selection
0.00%

^Relative

Quarterly Data as of 31-Dec-2020

Largest Overweight

Vietnam
By7.85%
Fund 36.11%
Indicative Benchmark 28.27%

Largest Underweight

Bahrain
By-7.99%
Fund 0.00%
Indicative Benchmark 7.99%

Monthly Data as of 31-Dec-2020

31-Dec-2020 - Johannes Loefstrand, Portfolio Manager ,
Having sold out of the portfolio’s exposure to Kuwait in November following the country’s upgrade to emerging markets status by MSCI and its removal from the frontier markets index, we continued to redeploy the proceeds of these sales into other opportunities. For example, we added to our existing position in a Vietnam-based dairy producer. With a significant domestic market share of over 60% and a solid return on capital, we expect steady sales growth in the near-term and for margins to be supported by lower raw material prices.

Team (As of 15-Jan-2021)

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.