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SICAV

Global Growth Equity Fund

Seeking to select superior stocks from the broadest global equity opportunity set.

ISIN LU0867066879 WKN A1W82X

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

13.99%
$353.3m

1YR Return
(View Total Returns)

Manager Tenure

20.03%
6yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

0.90
5.53%

Inception Date 28-Aug-2013

Performance figures calculated in GBP

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31-May-2020 - Scott Berg, Portfolio Manager,
Although we do not believe we are experiencing a long-term economic crisis as a result of the coronavirus; in the short term, individuals and companies face an issue of financing rents and expenses. The path to full economic activity is uncertain, implying that we should employ prudent diversification and risk management through the stages of the recovery and any negative surprises, which will be part of that journey.
R. Scott Berg
R. Scott Berg, Lead Portfolio Manager

Scott Berg is the portfolio manager for the T. Rowe Price Global Growth Equity Strategy and a vice president of T. Rowe Price Group, Inc.

Click for Manager Outlook
 

Strategy

Manager's Outlook

The amount of volatility we have seen in markets through the first three months of the year has been striking. Investors have had to continually digest new information related to what is now being labeled as a global pandemic with the coronavirus outbreak and a monumental pullback in oil prices. The recent volatility we've experienced is understandable given markets are fearful of the unknown. However, while times like these are challenging for investors, we also believe they can help sharpen conviction in underlying investments.

We have followed this tragic and evolving pandemic closely from its early stages in China's Hubei province, analyzing its implications for regional economies, economic sectors, and individual companies. The near-term economic outlook is highly uncertain, but it is incredibly encouraging to see that governments and central banks are willing to take swift and meaningful actions to ensure we avoid a worst-case scenario. The U.S. Federal Reserve and other major central banks have sharply lowered interest rates while also pledging a return to aggressive quantitative easing measures to help with credit markets. The largest ever U.S. fiscal stimulus package was signed into law with strong bipartisan support, which should help the unemployed as well as small business owners, and other countries are also implementing fiscal stimulus measures to support their economies. While a global recession now appears likely, we think these measures should help mitigate the stresses to global economies.

In terms of the outlook for equities on a risk-adjusted basis, we have for some time viewed the world as a shade of gray as opposed to black or white. We reduced the degree of potential risk within the portfolio coming into 2020 to maintain a balanced portfolio and account for the mosaic of risk and return opportunities. We are comfortable with the durability and medium-term growth prospects for many of our holdings and have not made any wholesale or strategic changes. Most of our recent trades have been repositioning the portfolio on the margin into high-quality businesses that were trading at much more reasonable valuations.

While we certainly do not want to underestimate the near-term impact from the coronavirus outbreak, history shows that events like this tend to offer opportunities for investors that have a long-term orientation. We are likely to see more volatility in the coming weeks and months until we obtain more certainty around the outbreak's economic impact, but it should not alter the long-term fundamental thesis of many of the companies we own. Regardless of how long this challenging period lasts, we anchor our decisions in fundamental research and thoughtful analysis, as we seek to best position the portfolio for potential risks and opportunities.

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 companies that have the potential for above-average and sustainable rates of earnings growth. The companies may be anywhere in the world, including emerging markets.

Investment Approach

  • Single decision-maker provides clear accountability.
  • Identify “best ideas” by assessing companies in a global sector context, using bottom-up approach to create focused, high conviction portfolio.
  • Global research platform uses fundamental analysis to identify companies with superior and sustainable growth prospects, and improving fundamentals.
  • Macroeconomic and local market factors are integrated in stock selection decisions.
  • Valuation appeal is measured against local market and broad sector opportunity set.
  • Broad range of large-cap stocks, incorporating developed and emerging markets.

Portfolio Construction

  • Number of holdings: Typically around 130 holdings.
  • Individual positions: Typically 0.3%-3.0%, maximum 5%
  • Emerging markets exposure: +/- 15% of benchmark
  • Broad sector ranges: +/- 10% of benchmark
  • Country ranges: +/- 10% of benchmark (USA is +/- 20%)
  • Currency hedging: Currency views incorporated in stock selection
  • Cash target range: Typically less than 5%
  • Expected tracking error: 300 to 700 basis points

Performance (Class Q | GBP)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Fund % 20.03% 13.99% 14.79% 16.01%
Indicative Benchmark % 7.49% 6.72% 9.81% 10.85%
Excess Return % 12.54% 7.27% 4.98% 5.16%

Inception Date 28-Aug-2013

Indicative Benchmark: MSCI All Country World Index Net

Data as of  31-May-2020

Performance figures calculated in USD

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Fund % -2.71% 7.25% 9.64% 12.63%
Indicative Benchmark % -6.74% 1.79% 6.62% 8.68%
Excess Return % 4.03% 5.46% 3.02% 3.95%

Inception Date 28-Aug-2013

Indicative Benchmark: MSCI All Country World Index Net

Data as of  31-Mar-2020

Performance figures calculated in USD

Recent Performance

  Month to DateData as of 02-Jul-2020 Quarter to DateData as of 02-Jul-2020 Year to DateData as of 02-Jul-2020 1 MonthData as of 31-May-2020 3 MonthsData as of 31-May-2020
Fund % 2.09% 2.09% 19.29% 9.17% 14.39%
Indicative Benchmark % 0.52% 0.52% 1.03% 6.46% 3.25%
Excess Return % 1.57% 1.57% 18.26% 2.71% 11.14%

Inception Date 28-Aug-2013

Indicative Benchmark: MSCI All Country World Index Net

Indicative Benchmark: MSCI All Country World Index 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. 

31-May-2020 - Scott Berg, Portfolio Manager,
Global equities gained ground in May as massive government stimulus, slowing coronavirus cases in many countries, and the gradual reopening of major economies helped buoy investor sentiment despite poor economic data. Within the portfolio, our holdings in the information technology sector contributed the most to relative returns. For example, share of Datadog, a fast-growing cloud native monitoring company, spiked after it reported strong earnings results, with solid growth in revenue, billings, and free cash flows. Datadog’s earnings illustrate the resilience of the firm’s business even during challenging times, and we continue to have high conviction in the company. Consumer discretionary names also boosted relative results. European online apparel retailer Zalando climbed after the company reported solid earnings results and issued better-than-expected guidance for 2020 as the coronavirus pandemic accelerated consumers’ online purchasing. The company’s third-party marketplace “Partner Programme” also saw robust gains over the quarter. We have high conviction in Zalando given the firm’s dominant position in the European online fashion segment, with substantial advantages over peers in terms of scale, distribution network, brand relationships, consumer traffic, technology, operational efficiency, and strategy. No sectors held back returns meaningfully on a relative basis for the month.

Holdings

Total
Holdings
161
Largest Holding Amazon.com 3.31% Was (31-Dec-2019) 2.69%
Other View Full Holdings Quarterly data as of 31-Mar-2020
Top 10 Holdings 17.20% View Top 10 Holdings Monthly data as of 31-May-2020

Largest Top Contributor^

Amazon.com
By 2.38%
% of fund 3.29%

Largest Top Detractor^

Facebook
By -1.06%
% of fund 1.81%

^Absolute

Quarterly Data as of 31-Mar-2020

Top Purchase

Evotec
1.53%
Was (31-Dec-2019) 0.50%

Top Sale

Airbus
0.26%
Was (31-Dec-2019) 0.84%

Quarterly Data as of 31-Mar-2020

31-Mar-2020 - Scott Berg, Portfolio Manager,

Even in the face of the acute market sell-off and high volatility that we saw during the quarter, we always focus on building the portfolio from the bottom up. Moving into 2020, we had already reduced the degree of potential risk within the portfolio and were "playing it down the middle of the fairway" to maintain a balanced portfolio and account for the mosaic of risk and return opportunities that we were seeing in the market. While the coronavirus outbreak was a shock to the global financial system and there remains significant uncertainty, we gradually started to add more risk to the portfolio, buying names we want to own on the other side of the pandemic at very cheap prices. We remain largely sector neutral, with most of our recent trades aimed at repositioning the portfolio on the margin into high-quality businesses that are trading at a compelling discount but still have the potential for robust returns over a two- to three-year time horizon.

Our allocations to health care, information technology, and financials increased, while exposure to consumer discretionary and utilities decreased. Regionally, our allocation to North America increased, while exposure to Pacific ex-Japan decreased. Within emerging markets, we continue to favor what we consider the more fertile and demographically advantaged regions, such as India, Indonesia, the Philippines, Peru, and Vietnam. Our exposure to China is very purposeful in areas such as artificial intelligence and health care, which we think offer long-term growth potential.

Financials

Traditional developed market financials are facing a difficult environment as leading central banks have cut rates and ramped up quantitative easing measures to help counteract the negative economic impact from the coronavirus. Therefore, we retain a focus on commercial banks in fertile emerging market economies. However, we also have exposure to nontraditional financials like security exchanges that have low correlation to the rest of the portfolio and provide support with volatility, private equity firms that benefit from low rates but are still levered to real assets, and online brokerages that don't have the credit risk exposure of banks.

  • We initiated a position in Wells Fargo. The company has experienced some high-profile challenges in the past few years and is therefore trading at a discounted valuation compared with peers. With a new CEO and relatively solid fundamentals, we think the market is underestimating Wells Fargo's growth potential.
  • We started a position in electronic fixed income trading platform Tradeweb Markets. Fixed income is one of the last groups of securities markets to go electronic, providing a long runway for growth in the industry. We think the firm should benefit from increased adoption of electronic fixed income trading, global bond issuance growth, and greater demand for data and analytics. The company has a history of strong revenue growth and a top-notch management team.

Health Care

While the health care sector has not been immune from the broad market sell-off, the long-term secular tailwinds for the sector remain in place. With political and regulatory noise heating up in the U.S. ahead of the 2020 presidential election, we had already been adjusting the portfolio to limit our exposure to areas that are more highly correlated to such an environment. We have largely focused our health care exposure in life sciences tools and equipment and supplies related to biologics. This crisis should lead a number of emerging markets countries to improve and modernize their health care systems, especially China. We think the crisis could also be a catalyst for developed economies that have been falling behind to revamp their systems.

  • Evotec is a core holding in the portfolio, and we took up our position meaningfully during the quarter. Evotec is a large European contract research organization, which provides support to the pharmaceutical, biotechnology, and medical device industries in the form of research services outsourced on a contract basis. The company has been producing solid double-digit earnings growth, which we think will continue, driven by secular tailwinds and deeper customer penetration as end-market businesses choose to outsource these services more often.
  • We initiated a position in Thermo Fisher Scientific, a diversified medical diagnostic and biologics company. In our view, Thermo Fisher Scientific is a high-quality, durable growth company with a compelling portfolio of offerings on the forefront of medical advances and research, including the discovery and production of new drugs, vaccines, and disease diagnosis. The stock came down amid widespread volatility, and we took the opportunity to start a position at an attractive valuation.
  • We eliminated our position in global medical technology firm Becton, Dickinson and Company. The stock has held up well amid recent volatility, and we chose to reallocate funds to names with greater upside potential.

Information Technology

Advancements in areas like artificial intelligence (AI) and enterprise software are not only affecting technology companies, but also reshaping more traditional industries once viewed as less susceptible to business model disruption. Despite the near-term uncertainty and volatility created by the coronavirus outbreak, the powerful long-run trends that we believe will drive value creation in the technology sector should remain in play. Aftereffects from the virus outbreak could also result in lasting behavioral changes, with more people working remotely and payment methods skewing more digitally. As a result, software and electronic payments are areas of focus for our sector exposure, but we also remain positioned to benefit from increasing AI adoption as well as the growing technology consumption in emerging markets.

  • We initiated a position in Global Payments. We think the firm is a well-managed, high-quality payments business that benefits from secular tailwinds of cash-to-card conversions and a shift to faster-growth, technology-enabled distribution channels. We think Global Payments can drive double-digits earnings growth over the next few years, especially as it unlocks synergies from its recent takeover of Total Systems Services.
  • Datadog is a fast-growing, cloud native monitoring company. The firm began by monitoring the performance of physical IT infrastructure in distributed public, hybrid, and private cloud environments and has since branched out to application performance management and other areas that should expand the company's total addressable market. Monitoring services are becoming increasingly important as companies' IT infrastructure becomes more complex, and Datadog's best-in-class software should help it outperform over the long term.

Consumer Discretionary

The consumer discretionary sector has become increasingly challenged as market disruption, driven in part by rapid changes in consumer behavior and e-commerce, has led to a more dramatic demarcation between winners and losers. Given the polarized structure of the sector, our focus is on high-quality names that we believe are on the right side of change and have dominant market positions. Our holdings are tilted toward online and e-commerce.

  • We trimmed our position in electric automaker Tesla. The stock held up well compared with peers in an extremely volatile period, so we elected to reallocate a portion of funds to high conviction names with compelling valuations. We continue to believe Tesla is a highly differentiated innovator that will continue to disrupt the automobile industry.
  • We exited our position in China's dominant online travel agency Trip.com. The coronavirus outbreak represents a significant headwind to the firm's business as travel remains restricted worldwide and most likely will for some time. Thus, we chose to move on the from the stock and reallocate to names where we have greater conviction.

Sectors

Total
Sectors
11
Largest Sector Information Technology 23.09% Was (30-Apr-2020) 23.18%
Other View complete Sector Diversification

Monthly Data as of 31-May-2020

Indicative Benchmark: MSCI All Country World Index

Top Contributor

N/A

Top Detractor

N/A

Largest Overweight

Financials
By4.39%
Fund 17.99%
Indicative Benchmark 13.60%

Largest Underweight

Energy
By-3.02%
Fund 0.75%
Indicative Benchmark 3.78%

Monthly Data as of 31-May-2020

31-May-2020 - Scott Berg, Portfolio Manager,
We are overweight financials. Traditional developed market financials are facing a difficult environment as leading central banks have cut rates and ramped up quantitative easing measures to help counteract the negative economic impact from the coronavirus. Therefore, we retain a focus on commercial banks in fertile emerging market economies. However, we also have exposure to non-traditional financials like security exchanges that have low correlation to the rest of the portfolio and should provide support with volatility; private equity firms that will likely benefit from low rates but are still levered to real assets; and online brokerages that do not have the credit risk exposure of banks.

Countries

Total
Countries
27
Largest Country United States 52.47% Was (30-Apr-2020) 53.08%
Other View complete Country Diversification

Monthly Data as of 31-May-2020

Indicative Benchmark: MSCI All Country World Index

Largest Overweight

India
By3.64%
Fund 4.56%
Indicative Benchmark 0.92%

Largest Underweight

United States
By-5.67%
Fund 52.47%
Indicative Benchmark 58.14%

Monthly Data as of 31-May-2020

Currency

Total
Currencies
22
Largest Currency U.S. dollar 62.05% Was (30-Apr-2020) 63.23%
Other View complete Currency Diversification

Monthly Data as of 31-May-2020

Indicative Benchmark : MSCI All Country World Index

Largest Overweight

Indian rupee
By 3.69%
Fund 4.61%
Indicative Benchmark 0.92%

Largest Underweight

Japanese yen
By -5.08%
Fund 2.20%
Indicative Benchmark 7.28%

Monthly Data as of 31-May-2020

Team (As of 02-Jul-2020)

R. Scott Berg

Scott Berg is the portfolio manager for the T. Rowe Price Global Growth Equity Strategy and a vice president of T. Rowe Price Group, Inc.

Mr. Berg has 17 years of investment experience, all of which have been with T. Rowe Price. He joined the firm in 2002 as a research analyst covering the business services sector after serving as a summer intern in 2001. In 2005, he joined the global equity team as an associate portfolio manager and in 2008 launched the Global Growth Equity Strategy. Prior to T. Rowe Price, he was the manager of financial analysis and planning for Mead Consumer and Office Products. Previously, Mr. Berg was also employed by McKinsey & Company as a business analyst and was a core team member on the firm's global growth initiative.

Mr. Berg graduated first in his class from Macquarie University in Australia, with a B.Ec. in actuarial studies and finance. He also holds an M.B.A. from the Stanford Graduate School of Business, where he again graduated at the top of his class. Mr. Berg has earned the Chartered Financial Analyst designation.

  • Fund manager
    since
    2013
  • Years at
    T. Rowe Price
    18
  • Years investment
    experience
    18
Harishankar Balkrishna

Hari Balkrishna is an associate portfolio manager for the Global Growth Equity Strategy in the Equity Division of T. Rowe Price. Mr. Balkrishna is a vice president of T. Rowe Price Group, Inc. and T. Rowe Price International Ltd.

Mr. Balkrishna has 12 years of investment experience. He completed an internship at T. Rowe Price in 2009. Prior to joining the firm in 2010, he worked at Goldman Sachs, Sydney, Australia, in the financial institutions group of the Investment Banking Division.

Mr. Balkrishna has a bachelor of commerce in finance and accounting (university medal and first-class honours) from the University of New South Wales and also has earned an M.B.A., with distinction, from Harvard Business School.

  • Fund manager
    since
    2015
  • Years at
    T. Rowe Price
    9
  • Years investment
    experience
    12
Samuel Ruiz
  • Years at
    T. Rowe Price
    <1 year
  • Years investment
    experience
    0
Laurence Taylor

Laurence Taylor is a portfolio specialist in the Equity Division at T. Rowe Price, representing the firm's global equity strategies to institutional clients, consultants and prospects. Mr. Taylor is a vice president of T. Rowe Price Group, Inc. and T. Rowe Price International Ltd.

Mr. Taylor has 19 years of investment experience, 10 of which have been with T. Rowe Price. Prior to joining the firm in 2008, Mr. Taylor was a quantitative portfolio manager at AXA Rosenberg, with responsibility for European institutional clients, and began his career at Hewitt Associates in the UK investment practice. At Hewitt, Mr. Taylor provided investment advice to European institutions as a client-facing consultant before specializing in the research and selection of global and regional equity managers in the manager research team.

Mr. Taylor obtained his B.A., with honours, from Greenwich University and has earned the Chartered Financial Analyst designation.

  • Years at
    T. Rowe Price
    11
  • Years investment
    experience
    20

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% 160 basis points 1.77%
Class I $2,500,000 $100,000 $0 0.00% 75 basis points 0.81%
Class Q $1,000 $100 $100 0.00% 75 basis points 0.92%
Class S $10,000,000 $0 $0 0.00% 0 basis points 0.06%

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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