SICAV

Global High Yield Bond Fund

Seeks to capture enhanced returns from a diversified global portfolio of income bearing, high yield securities.

ISIN LU0133083492 WKN 767352

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

3.30%
$1.4b

1YR Return
(View Total Returns)

Manager Tenure

0.88%
5yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

-0.53
1.56%

Inception Date 04-Mar-2002

Performance figures calculated in USD

Other Literature

30-Sep-2020 - Michael Della Vedova, Portfolio Manager,
As high yield spreads continue to compress toward longer-term averages, we are still seeing value in corners of the market where companies can benefit from a gradual reopening of the economy or from therapeutic treatments and development of a vaccine. However, overall uncertainty in the economic environment, a contentious U.S. election, and the trajectory of the global health crisis throughout the rest of the year and beyond remain important considerations.
Michael Della Vedova
Michael Della Vedova, Portfolio Manager

Mike Della Vedova is a global high yield portfolio manager in the Fixed Income Division. He is a portfolio manager for the Europe High Yield Bond Strategy and co-portfolio manager for the Global High Yield Bond Fund and Global High Income Bond Strategy. He is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price International Ltd.

 

Strategy

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 high yield corporate bonds from issuers around the world, including emerging markets.

Investment Approach

  • Focus on BB/B securities, with a measured allocation to lower-quality bonds when valuations are compelling.
  • Proprietary fundamental research is key — emphasis on industries that enjoy stable cash flow and rational competitive environments.
  • Extensive analyst interaction across sectors and asset classes promotes broad credit perspective.
  • Disciplined risk management practices employed in conjunction with broad portfolio diversification to manage risk profile.

Portfolio Construction

  • Diversified portfolio structure of high yield corporate bonds: 250-350 issuers
  • Industry exposure typically will range +/- 3% around benchmark weight
    • Conservative exposure guidelines to individual issuers:
    • BB issuer: 3% maximum
    • B issuer: 2% maximum
    • CCC issuer: 1% maximum

Performance (Class I)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Since Manager Inception
Fund % 0.88% 3.30% 5.93% 5.86% -1.46%
Indicative Benchmark % 1.83% 3.72% 6.77% 6.51% -1.12%
Excess Return % -0.95% -0.42% -0.84% -0.65% -0.34%

Inception Date 04-Mar-2002

Manager Inception Date 31-Dec-2019

Indicative Benchmark: J.P. Morgan Global High Yield Index

Data as of  30-Sep-2020

Performance figures calculated in USD

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Fund % 0.88% 3.30% 5.93% 5.86%
Indicative Benchmark % 1.83% 3.72% 6.77% 6.51%
Excess Return % -0.95% -0.42% -0.84% -0.65%

Inception Date 04-Mar-2002

Indicative Benchmark: J.P. Morgan Global High Yield Index

Data as of  30-Sep-2020

Performance figures calculated in USD

Recent Performance

  Month to DateData as of 28-Oct-2020 Quarter to DateData as of 28-Oct-2020 Year to DateData as of 28-Oct-2020 1 MonthData as of 30-Sep-2020 3 MonthsData as of 30-Sep-2020
Fund % 0.87% 0.87% -0.60% -1.26% 4.19%
Indicative Benchmark % 0.52% 0.52% -0.60% -0.75% 4.90%
Excess Return % 0.35% 0.35% 0.00% -0.51% -0.71%

Inception Date 04-Mar-2002

Indicative Benchmark: J.P. Morgan Global High Yield Index

Indicative Benchmark: J.P. Morgan Global High Yield Index

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.

30-Sep-2020 - Michael Della Vedova, Portfolio Manager,
High yield bonds posted a loss in September amid weakness in equity markets. Gridlock in Washington over another round of stimulus, the runup to the U.S. presidential election, and concerns over a rise in coronavirus infections diminished investors’ appetite for risk, while heavy new issuance and negative flows challenged the technical support the asset class has enjoyed most of the year. Oil prices retreated, causing energy to significantly underperform as most high yield industries ended in the red, and CCC bonds held up best as all rating tiers declined. Within the portfolio, our underweight allocation and credit selection in the building and real estate segment benefitted. Security selection in information technology and manufacturing was also supportive. However, credit selection in metals and mining held back returns, as did security selection and our overweight in cable operators. Credit selection in energy was another drag, but our underweight allocation partly offset the negative impact.

Holdings

Issuers

Top
Issuers
10
Top 10 Issuers 16.12% Was (31-Aug-2020) 15.44%
Other View Top 10 Issuers

Monthly data as of 30-Sep-2020

Holdings

Total
Holdings
513
Largest Holding iHeartCommunications 1.02% Was (30-Jun-2020) 1.00%
Top 10 Holdings 8.53%
Other View Full Holdings Quarterly data as of 30-Sep-2020

Quality Rating View quality analysis

  Largest Overweight Largest Underweight
Quality Rating BB/B Rated BB Rated
By % 3.41% -7.54%
Fund 17.27% 28.80%
Indicative Benchmark 13.86% 36.34%

Average Credit Quality

B+

Monthly Data as of 30-Sep-2020
Indicative Benchmark:  J.P. Morgan Global High Yield 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 5-7 Years 1-3 Years
By % 8.49% -10.10%
Fund 38.12% 5.60%
Indicative Benchmark 29.63% 15.70%

Weighted Average Maturity

6.24 Years

Monthly Data as of 30-Sep-2020
Indicative Benchmark:  J.P. Morgan Global High Yield Index

Duration View duration analysis

  Largest Overweight Largest Underweight
Duration Under 1 Year 3-5 Years
By % 5.97% -5.23%
Fund 15.90% 32.58%
Indicative Benchmark 9.93% 37.82%

Weighted Average Duration

3.37 Years

Monthly Data as of 30-Sep-2020
Indicative Benchmark:  J.P. Morgan Global High Yield Index

30-Jun-2020 - Michael Della Vedova, Portfolio Manager,

Our risk-aware and defensive positioning aided relative performance in April as the high yield market rebounded from March volatility. This recovery was led by issuers and sectors that exhibited strong fundamentals, such as higher-quality credits and defensive sectors like cable operators and utilities. In contrast, the impressive gains in May and June were led by the market's more speculative credits, many of which recovered from severely stressed levels after having sold off in March due to their exposure to the pandemic or commodity prices. Therefore, our defensive and higher-quality positioning was a headwind to relative performance as lower-quality and more speculative credits drove performance.

Selectively Participated in New Deals

As part of our fundamental research, we worked to determine which companies in our market could survive the unsettled environment created by the pandemic by introducing zero revenue scenarios into our models. When several issuers with sound fundamental credit stories came to the market to strengthen their balance sheets, we seized the opportunity to invest in these names at attractive prices. For example, we increased the fund's lodging exposure by participating in new deals from Marriott International and Hilton. In the entertainment and leisure space, we purchased secured bonds from amusement park companies Six Flags Entertainment and Cedar Fair.

Attractive Opportunities in Fallen Angels

We augmented our holdings in the energy and automotive segments by investing in fallen angels. Specifically, we purchased U.S. E&P companies Occidental Petroleum and Hess, and we added Ford Motor Company as we believed these credits presented compelling opportunities.

Financials Positioning Adjusted

In the financials segment, we used the recovery during the period as an opportunity to eliminate the portfolio's holdings of Additional Tier 1 (AT1) securities issued by European banks. We were concerned that the global pandemic and the shuttering of many businesses could cause financial institutions to experience a large accrual of bad debt. These considerations along with the subordinated status of AT1 securities prompted us to exit these investments.

Industry

Total
Industries
31
Largest Industry Energy 11.23% Was (31-Aug-2020) 10.94%
Other View complete Industry Diversification

Monthly Data as of 30-Sep-2020

Indicative Benchmark: J.P. Morgan Global High Yield Index

Largest Overweight

Cable Operators
By6.46%
Fund 11.07%
Indicative Benchmark 4.61%

Largest Underweight

Building & Real Estate
By-2.08%
Fund 1.19%
Indicative Benchmark 3.27%

Monthly Data as of 30-Sep-2020

30-Sep-2020 - Michael Della Vedova, Portfolio Manager,
Overall, we are defensively positioned relative to the market index. For example, we are overweight cable operators and utilities, segments that generally exhibit more stable fundamentals. We are also maintaining an underweight position and high-quality bias within energy as weaker global demand is keeping oil prices suppressed. However, we are finding value in recovery themes and have selectively increased our exposure within segments such as leisure and transportation.

Countries

Total
Countries
19
Largest Country United States 82.36% Was (31-Aug-2020) 77.65%
Other View complete Country Diversification

Monthly Data as of 30-Sep-2020

Indicative Benchmark: J.P. Morgan Global High Yield Index

Largest Overweight

United States
By9.92%
Fund 82.36%
Indicative Benchmark 72.45%

Largest Underweight

Brazil
By-2.63%
Fund 1.65%
Indicative Benchmark 4.28%

Monthly Data as of 30-Sep-2020

Currency

Total
Currencies
3
Largest Currency U.S. dollar 99.92% Was (31-Aug-2020) 99.87%
Other View complete Currency Diversification

Monthly Data as of 30-Sep-2020

Indicative Benchmark : J.P. Morgan Global High Yield Index

Largest Overweight

euro
By 0.08%
Fund 0.08%
Indicative Benchmark 0.00%

Largest Underweight

U.S. dollar
By -0.08%
Fund 99.92%
Indicative Benchmark 100.00%

Monthly Data as of 30-Sep-2020

Team (As of 01-Oct-2020)

Michael Della Vedova

Mike Della Vedova is a global high yield portfolio manager in the Fixed Income Division. He is a portfolio manager for the Europe High Yield Bond Strategy and co-portfolio manager for the Global High Yield Bond Fund and Global High Income Bond Strategy. He is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price International Ltd.

Mike’s investment experience began in 1994, and he has been with T. Rowe Price since 2009, beginning in the Fixed Income department. Prior to this, Mike was cofounder and partner of Four Quarter Capital, a credit hedge fund focusing on below investment-grade European corporate debt. Mike also was employed by Muzinich & Company as a senior analyst and assistant portfolio manager in London.

Mike earned an LL.B. and a B.Com. in finance from the University of New South Wales and a Graduate Diploma in Legal Practice (GDLP) from the University of Technology, Sydney. He also was admitted as a solicitor to the Supreme Court of New South Wales.

  • Fund manager
    since
    2015
  • Years at
    T. Rowe Price
    11
  • Years investment
    experience
    27
Rodney M.  Rayburn, CFA

Rodney Rayburn is a portfolio manager in the Fixed Income Division, managing the Credit Opportunities and High Yield Bond Strategies. He is president of the Credit Opportunities Fund, Inc. He also is executive vice president of the High Yield Fund, Inc., and Institutional Income Funds, Inc., and chairman of their respective Investment Advisory Committees. He is a member of the Investment Advisory Committee for the Balance Fund. Rodney is a vice president of T. Rowe Price Associates, Inc., T. Rowe Price Group, Inc., and T. Rowe Price Trust Company.

Rodney’s investment experience began in 1999, and he has been with T. Rowe Price since 2014, beginning in the Fixed Income Division as a high yield analyst focused on distressed and special situations. In 2015, he was promoted to portfolio manager on the High Yield team. Prior to T. Rowe Price, Rodney was employed by Värde Partners as a managing director, and he was actively involved in performing and nonperforming loans, bonds, and reorganized equities across a variety of industries. He also was a senior investment analyst at Stark Investments.

Rodney earned a B.S. in economics from the Georgia Institute of Technology and an M.B.A. in finance and economics from The University of Chicago, Booth School of Business. Rodney also has earned the Chartered Financial Analyst® designation.

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

  • Fund manager
    since
    2020
  • Years at
    T. Rowe Price
    6
  • Years investment
    experience
    21

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% 115 basis points 1.24%
Class I $2,500,000 $100,000 $0 0.00% 60 basis points 0.64%
Class Jd $10,000,000 $0 $0 0.00% 0 basis points 0.02%
Class Q $1,000 $100 $100 0.00% 60 basis points 0.68%
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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