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SICAV

Global Aggregate Bond Fund

Risk-aware investing, exploiting inefficiencies in global bond markets.

ISIN LU1532504211 WKN A2DH5Z

Since Inception Annualised
(View Total Returns)

Total Assets
(USD)

1.61%
$476.4m

1YR Return
(View Total Returns)

Manager Tenure

5.76%
2yrs

Information Ratio

Tracking Error

N/A
N/A

Inception Date 16-Dec-2016

Performance figures calculated in EUR

Other Literature

31-Oct-2019 - Arif Husain, Portfolio Manager,
The environment for core government bonds appears mixed. Recent upticks in economic data and easing geopolitical tensions suggests some improvement in the global landscape in the medium term. However, continued accommodative measures from major central banks in recent months could push bond prices up, as could a rise in uncertainty if U.S.-China tensions re-escalate. As such, we continue to monitor data closely, seeking opportunities that can perform well in different market environments.
Arif Husain
Arif Husain, Co-Portfolio Manager

Arif Husain is head of International Fixed Income at T. Rowe Price. He is lead portfolio manager for the Dynamic Global Bond Strategies. Mr. Husain is also co-portfolio manager for the firm's International Bond, Global Aggregate Bond and Institutional International Bond Strategies. He 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 government bond rally seen earlier in the year came to a sudden stop toward the end of the third quarter. At the same time, the market returned to a "risk-on" pattern, with both credit and equity markets outperforming despite weaker economic data and renewed geopolitical risk. These factors indicate that market participants are happy to look through the current economic weakness, and instead position themselves more favorably for a better macro environment next year.

From our perspective, data is close to bottoming out, and we may start to see some improvement over the near term. Friendlier market conditions, including the looser policies adopted by major central banks globally, should also support global growth in the coming months. We will continue to monitor economic data releases closely to see if this is indeed the case. Overall, we are cautiously optimistic and are positioning the portfolio to take advantage of an upcoming-risk friendly environment, yet remain committed to deliver our diversification objective against risky markets.

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 bonds of all types from issuers around the world.

Investment Approach

  • To generate a consistent performance over benchmark by exploiting inefficiencies in the full universe of the global fixed income and currency markets:
    • Focus on successful alpha generation.
    • Importance of effective risk management.
    • Target value added: 100-200 basis points per annum above benchmark over full economic cycle. (Not a formal objective and it can be changed without prior notice. Please reference prospectus for formal objective.)
  • Target average tracking error: Between 150 basis points and 300 basis points per annum.
  • Alpha generation classified under three main performance activities:
    • Currency Management: 35% Expected contribution to value added
    • Country/Duration Management: 35% Expected contribution to value added
    • Sector Allocation/Security Selection: 30% Expected contribution to value added

Portfolio Construction

  • Currency limit: maximum +/- 40% relative to benchmark
  • Weighted duration limit: maximum +/- 3 years relative to benchmark
  • Sub-investment grade: maximum 20%
  • Above investment grade: not restricted (includes corporates and emerging markets)
  • Portfolio holdings: between 400 and 600 issuers
  • Average credit quality: A- or better

Performance (Class Ib | EUR)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Fund % 5.76% N/A N/A 1.61%
Indicative Benchmark % 7.36% N/A N/A 2.30%
Excess Return % -1.60% N/A N/A -0.69%

Inception Date 16-Dec-2016

Indicative Benchmark: Bloomberg Barclays Global Aggregate Bond EUR Hedged Index

Data as of  31-Oct-2019

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Fund % 5.92% N/A N/A 1.97%
Indicative Benchmark % 7.31% N/A N/A 2.52%
Excess Return % -1.39% N/A N/A -0.55%

Inception Date 16-Dec-2016

Indicative Benchmark: Bloomberg Barclays Global Aggregate Bond EUR Hedged Index

Data as of  30-Sep-2019

Performance figures calculated in EUR

Recent Performance

  Month to DateData as of 18-Nov-2019 Quarter to DateData as of 18-Nov-2019 Year to DateData as of 18-Nov-2019 1 MonthData as of 31-Oct-2019 3 MonthsData as of 31-Oct-2019
Fund % -0.67% -1.52% 4.31% -0.85% 0.38%
Indicative Benchmark % -0.52% -0.93% 5.35% -0.41% 0.91%
Excess Return % -0.15% -0.59% -1.04% -0.44% -0.53%

Inception Date 16-Dec-2016

Indicative Benchmark: Bloomberg Barclays Global Aggregate Bond EUR Hedged Index

Indicative Benchmark: Bloomberg Barclays Global Aggregate Bond EUR Hedged Index

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.

31-Oct-2019 - Arif Husain, Portfolio Manager,
Core government bond yields climbed higher in October, supported by improving data and progress over U.S.-China trade talks. Regarding the portfolio’s country/duration positioning, our underweight duration bias in the eurozone, and exposure to eurozone sovereigns, benefitted relative returns. Yields in the bloc rose during the month owing to improving European data and easing concerns over Brexit and the U.S.-China dispute. Our overweight in and positioning along the U.S. Treasury curve hurt, however. Within currencies, our underweight in the British pound held back relative returns. The pound rallied in October after the UK struck a revised Brexit deal with the EU, easing fears of a no-deal Brexit. An interest rate cut by the U.S. Federal Reserve also negatively affected our U.S dollar overweight. In sector allocation and security selection, our exposure to U.S. corporate bonds dragged on returns, as did our short to a U.S. investment grade index expressed via a credit default swap position.

Holdings

Issuers

Top
Issuers
10
Top 10 Issuers 59.37% Was (30-Sep-2019) 58.06%
Other View Top 10 Issuers

Monthly data as of 31-Oct-2019

Holdings

Total
Holdings
531
Largest Holding U.S. Treasury Bonds 7.32% Was (30-Jun-2019) 5.17%
Top 10 Holdings 32.89%
Other View Full Holdings Quarterly data as of 30-Sep-2019

Quality Rating View quality analysis

  Largest Overweight Largest Underweight
Quality Rating Below Investment Grade A
By % 6.14% -10.09%
Fund 6.65% 14.57%
Indicative Benchmark 0.51% 24.66%

Average Credit Quality

AA-

Monthly Data as of 31-Oct-2019
Indicative Benchmark:  Bloomberg Barclays Global Aggregate Bond Index

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 3-5 Years 1-3 Years
By % 3.37% -8.13%
Fund 26.16% 14.71%
Indicative Benchmark 22.78% 22.84%

Weighted Average Maturity

10.28 Years

Monthly Data as of 31-Oct-2019
Indicative Benchmark:  Bloomberg Barclays Global Aggregate Bond Index

Duration View duration analysis

  Largest Overweight Largest Underweight
Duration 3-5 Years 1-3 Years
By % 5.78% -10.59%
Fund 28.16% 18.21%
Indicative Benchmark 22.38% 28.80%

Weighted Average Duration

7.46 Years

Monthly Data as of 31-Oct-2019
Indicative Benchmark:  Bloomberg Barclays Global Aggregate Bond Index

31-Dec-2018 - Arif Husain, Portfolio Manager,

The portfolio's overall duration was increased over the quarter driven in part by adding to high-quality countries, such as the U.S. and Australia. We also reduced the underweight duration position in the eurozone and moved the UK up to neutral. The changes reflected our expectations that slowing global growth, geopolitics, and trade tensions could fuel a flight into high-quality government bonds.

Country/duration positioning

  • Within developed markets, we began increasing the overweight duration position in the U.S. around mid-October. This was driven by expectations for growth to moderate and the Federal Reserve to slow the pace of interest rate hikes in 2019. Overall, our bias for a flattening of the Treasury yield curve stayed in place as inflation remained well behaved. In the eurozone, we added to Germany in the 7- to 10-year part of the curve and moved Italy back to neutral as budget concerns eased. The overall underweight duration position was reduced as economic growth continued to slow. Over the medium-term, we believe eurozone government bonds are potentially vulnerable as the markets have yet to price in the European Central Bank taking a key step toward monetary policy normalization at the end of 2018 when its quantitative easing program finished.
  • Among other developed market moves, we opened a new overweight duration position in Australia on anticipation that the central bank will keep interest rates unchanged for the foreseeable future, a factor we believe should be supportive for bonds. Meanwhile, in the UK, we closed the underweight duration position in mid-November on uncertainty surrounding the country's exit from the European Union. Toward the end of the period, we opened a new underweight duration position in Canada as we felt that the market was being too pessimistic on the outlook for interest rate hikes.
  • Our allocation to local emerging market bonds remained low during the quarter. In terms of moves, we reduced overweight positions in Mexico and Thailand and took profit on the off-benchmark position in Brazil. We also added modestly to our off-benchmark exposure in domestic Romania on anticipation that inflation pressures could recede. Throughout, we maintained overweight positions in Chile, and off-benchmark exposures in India and South Africa. To balance some of the risks, we maintain a negative bias in Eastern Europe through underweight duration positions expressed in Hungary and Poland.

Currency selection

  • On the currency front, we shifted to an underweight position in the U.S. dollar toward the end of the quarter. This was driven in part by adding to the overweight position in the Swiss franc and opening a new overweight position in the Swedish krona after the central bank raised interest rates for the first time since 2011 in December. Overall, we felt that with U.S. growth slowing and the Fed potentially delivering fewer hikes in 2019, the dollar could be vulnerable to a correction. In other moves, underweight positions in the euro and Australian dollar were closed. Throughout, we maintained an overweight position in the Japanese yen and underweight allocations to the Singapore dollar and Taiwanese dollar.
  • In emerging markets, we added tentatively to a select number of currencies. This included the Mexican peso, the Argentine peso, the South African rand, and the Malaysian ringgit. These complemented existing exposures in the Romania leu and the Colombian peso. The overweight position in the Czech koruna was closed.

Sector allocation and security selection

  • We maintain an allocation to hard currency emerging market sovereign debt as the income stream remains attractive. We also hold modest exposure to European high yield bonds.
  • To reduce portfolio risk, we continue to hold defensive positions in credit markets. The majority of this is expressed through short credit default swap positions in a U.S. investment-grade bond index. In emerging markets, except for Mexico, we closed the credit default swap positions at an individual country level in Turkey, South Africa, and Indonesia.

Sectors

Total
Sectors
6
Largest Sector Government 66.42% Was (30-Sep-2019) 65.52%
Other View complete Sector Diversification

Monthly Data as of 31-Oct-2019

Indicative Benchmark: Bloomberg Barclays Global Aggregate Bond Index

Largest Overweight

Government
By8.26%
Fund 66.42%
Indicative Benchmark 58.16%

Largest Underweight

Agency/Supranationals
By-8.00%
Fund 0.33%
Indicative Benchmark 8.33%

Monthly Data as of 31-Oct-2019

31-Oct-2019 - Arif Husain, Portfolio Manager,
We maintain low credit risk beta in the portfolio by using credit derivative instruments to act as insurance. We continue, however, to hold a modest overweight position in European high yield.

Countries

Total
Countries
49
Largest Country United States 36.46% Was (30-Sep-2019) 34.52%
Other View complete Country Diversification

Monthly Data as of 31-Oct-2019

Indicative Benchmark: Bloomberg Barclays Global Aggregate Bond Index

Largest Overweight

United Kingdom
By7.18%
Fund 12.28%
Indicative Benchmark 5.10%

Largest Underweight

Japan
By-8.34%
Fund 7.72%
Indicative Benchmark 16.06%

Monthly Data as of 31-Oct-2019

31-Oct-2019 - Arif Husain, Portfolio Manager,
We reduced our overweight duration stance in the U.S. amid more positive economic data and signs of continued progress in U.S.-China relations. In the eurozone, meanwhile, we trimmed our underweight duration stance, in particularly by moving to an overweight in Italy and opening an overweight duration stance in Ireland. Despite dovish messaging from the European Central Bank, we see little value in core eurozone bonds at negative yields. We increased our Japanese underweight duration stance, meanwhile.

Currency

Total
Currencies
32
Largest Currency U.S. dollar 47.63% Was (30-Sep-2019) 46.49%
Other View complete Currency Diversification

Monthly Data as of 31-Oct-2019

Indicative Benchmark : Bloomberg Barclays Global Aggregate Bond Index

Largest Overweight

U.S. dollar
By 2.50%
Fund 47.63%
Indicative Benchmark 45.13%

Largest Underweight

Offshore Chinese renminbi
By -4.28%
Fund -4.28%
Indicative Benchmark 0.00%

Monthly Data as of 31-Oct-2019

31-Oct-2019 - Arif Husain, Portfolio Manager,
Through active currency management we hold overweight positions in the U.S. dollar, Swiss franc, euro, Israeli shekel, Mexican peso, Polish zloty and Serbian dinar. These holdings are funded by underweight positions in currencies such as the Chinese yuan, Australian dollar, Hungarian forint, Thai baht, Taiwanese dollar, and the South African rand.

Team (As of 31-Aug-2019)

Arif Husain

Arif Husain is head of International Fixed Income at T. Rowe Price. He is lead portfolio manager for the Dynamic Global Bond Strategies. Mr. Husain is also co-portfolio manager for the firm's International Bond, Global Aggregate Bond and Institutional International Bond Strategies. He is a vice president of T. Rowe Price Group, Inc. and T. Rowe Price International Ltd.

Mr. Husain has 24 years of investment experience, six of which have been with T. Rowe Price. Prior to joining the firm in 2013, he spent 14 years as director of both European Fixed Income and Euro Portfolio Management at AllianceBernstein. He was also a member of the global fixed income and absolute return portfolio management teams. Mr. Husain previously worked as assistant director of European Derivatives Trading at Greenwich NatWest and also traded interest rate swaps at Bank of America National Trust & Savings Association.

Mr. Husain received a B.Sc. (hons.) in banking and international finance from the City University, London Business School. He also has earned the Chartered Financial Analyst designation.

  • Fund manager
    since
    2016
  • Years at
    T. Rowe Price
    6
  • Years investment
    experience
    23
Quentin S. Fitzsimmons

Quentin Fitzsimmons is a senior portfolio manager in the Fixed Income Division of T. Rowe Price and a member of the global fixed income investment team. He is co-portfolio manager for the Global Aggregate Bond Strategy. He is actively involved in the discussion around country and duration positioning, currency management and sector allocation, with a particular expertise in interest rate management.

Mr. Fitzsimmons has 28 years of investment experience, four of which have been with T. Rowe Price. Prior to joining the firm in 2015, Mr. Fitzsimmons was head of liquidity portfolio investment management, Treasury markets, for the Royal Bank of Scotland Group, where he managed the liquid fixed income "tier one" capital on its balance sheet on an absolute return basis. Previously, he also worked as head of rates and as executive director of fixed income for Threadneedle Investments, where he ran global fixed income portfolios from 2002 to 2012. Prior to Threadneedle he held various fixed income portfolio management and research roles with F&C Investments, the Equitable Life Assurance Society and Sun Life Assurance Company of Canada.

Mr. Fitzsimmons earned a B.Sc. in economics and economic history from the University of Bristol.

  • Fund manager
    since
    2016
  • Years at
    T. Rowe Price
    4
  • Years investment
    experience
    28
Stephane Fertat

Stephane Fertat is a fixed income portfolio specialist for T. Rowe Price. He is a member of the Global Fixed Income team, supporting all global/international fixed income strategies. He represents the portfolio management team, presenting strategies as well as market outlooks in meetings and conferences. Mr. Fertat has broad knowledge of fixed income, currency, credit and derivative instruments - leading him to assist in the development of customized fixed income solutions - and he has helped launch a number of new strategies since joining the firm in 2007. Mr. Fertat is a vice president of T. Rowe Price Group, Inc. and T. Rowe Price International Ltd.

Mr. Fertat has 22 years of investment experience, 12 of which have been at T. Rowe Price. Prior to joining the firm in 2007, he was employed by Fischer Francis Trees and Watts, a global fixed income asset management company, where he worked as a European fixed income fund manager before moving to a product manager role. Mr. Fertat was also a director of client service and business development for Southern Europe and worked previously at Societe Generale Fimat Investment Management in Chicago.

Mr. Fertat holds a master's degree in finance from Ecole Superieure de Commerce de Paris (ESCP-EAP). He also has earned the Chartered Financial Analyst designation.

  • Years at
    T. Rowe Price
    12
  • Years investment
    experience
    22
Christopher Dillon

Chris Dillon is an investment specialist in the Multi-Asset Division at T. Rowe Price. He provides broad insight across the various views that T. Rowe Price has across the Equity and Fixed Income Divisions. Mr. Dillon is also responsible for communicating how the firm's Multi-Asset team is allocating across asset classes from longer- and shorter-term perspectives. Mr. Dillon is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price Associates, Inc.

Mr. Dillon has 22 years of investment experience, 13 of which have been with T. Rowe Price. Prior to joining the firm in 2006, he was an investment advisory research consultant for PNC Advisors. Prior to that, Mr. Dillon directed fixed income management research for Smith Barney Consulting Group.

Mr. Dillon earned a B.A., cum laude, in history/economics from the University of Delaware and an M.B.A. in business administration from Wilmington University. He also has earned the Chartered Financial Analyst designation.

  • Years at
    T. Rowe Price
    13
  • Years investment
    experience
    22

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% 75 basis points 1.07%
Class I $2,500,000 $100,000 $0 0.00% 45 basis points 0.53%
Class Q $15,000 $100 $100 0.00% 45 basis points 0.62%
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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