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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

Global Natural Resources Equity Fund

Seeking to identify long-term global winners in the arena of natural resources extraction and production.

ISIN LU0272423913 WKN A0MKKE

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

2.90%
$130.3m

1YR Return
(View Total Returns)

Manager Tenure

49.22%
7yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

-0.07
5.97%

Inception Date 15-Nov-2006

Performance figures calculated in USD

31-May-2021 - Shawn T. Driscoll, Portfolio Manager,
We continue to believe that we are in the middle of a secular downcycle for commodities. While the recent reflation rally likely has more room to run, we expect energy stocks to be relative laggards, and our energy allocation has fallen to historic lows in the portfolio. We remain committed to our philosophy of buying and holding a diverse selection of fundamentally sound natural resources companies with solid balance sheets and talented management.
Shawn T.  Driscoll
Shawn T. Driscoll, Portfolio Manager

Shawn Driscoll is the portfolio manager of the Global Natural Resources Equity Strategy, including the New Era Fund, in the U.S. Equity Division. He is chairman of the Investment Advisory Committee of the Global Natural Resources Equity Strategy and a vice president and an Investment Advisory Committee member of the US Capital Appreciation, US Large-Cap Core Equity, US Growth Stock, US Large-Cap Core Equity, US Mid-Cap Growth Equity, US Multi-Cap Growth Equity, and Real Assets Equity Strategies. Shawn also is a vice president of T. Rowe Price Group, Inc.

Click for Manager Outlook
 

Strategy

Manager's Outlook

A massive productivity wave in U.S. shale-which has collapsed cost curves-began in 2011 and prompted a secular bear market in oil that has since extended to other commodities. Commodity cycles tend to last 15-20 years, on average, and we continue to believe there is more room for productivity to improve and the bear market to persist. The narrative of productivity-driven oil price deflation was exacerbated in early 2020 by dual demand and supply shocks hitting the market at precisely the wrong time. This created unprecedented pressure on the market's balance and ultimately drove West Texas Intermediate (WTI) prices briefly negative in late April, a clear signal to producers that oil production needed to be swiftly and meaningfully curtailed.

The global spread of the coronavirus effectively shut down many large economies around the world and sent oil demand negative for the first time since the 2008 global financial crisis. This negative demand shock, however, far exceeded any weakness previously seen in oil. The oil markets were under significant pressure at the height of the crisis, but it does not take long to rebalance the market and we, indeed, saw oil prices rebound meaningfully off lows. Demand accelerated as the harshest pandemic-related restrictions eased globally, drawing on inventories at the same time that oil rig counts fell and OPEC cut production. These forces drove spot prices and oil-levered equities meaningfully higher.

Despite our belief that the recent reflation rally-driven by low oil prices capping inflation expectations and massive monetary stimulus-will likely persist well into 2021, we believe the scope has narrowed and structurally challenged segments, like energy, will be relative laggards. A backwardated oil futures curve (where spot oil prices are now higher than longer-dated futures prices, indicative of expectations that oil prices will fall from current levels), lends support to our view. With this backdrop coloring our outlook, we have maintained our disciplined approach and continue to avoid high-cost producers and "hidden leverage," a dangerous spike in a company's debt caused by a meaningful decline in oil prices. With oil spot prices well above the incentive curve and the futures curve remaining backwardated, our energy allocation remains at historic lows for the strategy to reflect our longer-term bearish view.

We remain committed to our bottom-up stock selection process and our philosophy of buying and holding a diverse selection of fundamentally sound natural resources companies with solid balance sheets and talented management. Our expansive global research platform continues to assist in identifying those companies that can provide long-term capital appreciation for our clients, and we believe the market will reward our disciplined and consistent approach to investing over the long term.

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 widely diversified portfolio of stocks of natural resources or commodities-related companies. The companies may be anywhere in the world, including emerging markets.

Investment Approach

  • Focus on well-managed companies that own or develop natural resources and other basic commodities with attractive long-term supply-demand fundamentals.
  • Invest in companies that operate “downstream” from these resources, e.g., refining, paper manufacturing, steel fabrication, and petrochemicals.
  • The portfolio invests in resource companies on a global basis including — international energy, forest products, mining, and commodities.
  • Assessment of resource/commodity cycle, industry valuation, and company fundamentals is key.
  • Broadly diversify holdings to manage portfolio risk profile relative to highly concentrated energy or gold strategies.
  • Environmental, social and governance ("ESG") factors with particular focus on those considered most likely to have a material impact on the performance of the holdings or potential holdings in the funds’ portfolio are assessed. These ESG factors, which are incorporated into the investment process alongside financials, valuation, macro-economics and other factors, are components of the investment decision. Consequently, ESG factors are not the sole driver of an investment decision but are instead one of several important inputs considered during investment analysis.

Portfolio Construction

  • Typically 90-120 securities
  • Positions typically range to 5%
  • Reserves typically range from 0% to 5%

Performance (Class I)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Since Manager Inception
Annualised
Fund % 49.22% 2.90% 5.43% 0.66% 2.10%
Indicative Benchmark % 47.95% 0.61% 5.87% 0.72% 1.40%
Excess Return % 1.27% 2.29% -0.44% -0.06% 0.70%

Inception Date 15-Nov-2006

Manager Inception Date 30-Sep-2013

Indicative Benchmark: MSCI World Select Natural Resources Index Net

Data as of 31-May-2021

Performance figures calculated in USD

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Fund % 66.54% 3.07% 5.36% -0.52%
Indicative Benchmark % 68.08% 0.85% 5.50% -0.18%
Excess Return % -1.54% 2.22% -0.14% -0.34%

Inception Date 15-Nov-2006

Indicative Benchmark: MSCI World Select Natural Resources Index Net

Data as of 31-Mar-2021

Performance figures calculated in USD

Recent Performance

  Month to DateData as of 11-Jun-2021 Quarter to DateData as of 11-Jun-2021 Year to DateData as of 11-Jun-2021 1 MonthData as of 31-May-2021 3 MonthsData as of 31-May-2021
Fund % 1.25% 7.86% 19.75% 1.91% 10.28%
Indicative Benchmark % 3.80% 11.43% 29.30% 5.04% 10.65%
Excess Return % -2.55% -3.57% -9.55% -3.13% -0.37%

Inception Date 15-Nov-2006

Indicative Benchmark: MSCI World Select Natural Resources Index Net

Indicative Benchmark: MSCI World Select Natural Resources 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-2021 - Shawn T. Driscoll, Portfolio Manager,
All major commodities continued their upward trend in May, supported by increased industrial and consumer demand as economies recover. Market participants also hedged potential inflation risk by investing in commodities. Crude oil-levered industries advanced as surging U.S.-led demand offset concerns about the prospect of rising supply. Coal saw a dramatic spike in demand, and prices hit a three-year high amid a domestic coal shortage in China stemming from production problems among several major miners. Diversified metals and mining companies saw strong gains across the board. Precious metals gained ground as investors switched their focus back to the risk of inflation and a weakening U.S. dollar. Among agricultural commodities, however, corn and wheat prices ended the month notably lower. Names in U.S. mixed exploration and production surged in May, and our portfolio’s lack of exposure to the industry held back returns. Stock selection and an overweight allocation in semiconductor equipment holdings also weighed on relative results as the industry posted losses for the month. Conversely, our underweight allocation to diversified metals and mining companies contributed to performance.

Holdings

Total
Holdings
118
Largest Holding Total 3.79% Was (31-Dec-2020) 4.44%
Other View Full Holdings Quarterly data as of  31-Mar-2021
Top 10 Holdings 24.51% View Top 10 Holdings Monthly data as of  31-May-2021

Largest Top Contributor^

Total
By 0.74%
% of fund 3.81%

Largest Top Detractor^

Packaging Corporation of America
By -0.64%
% of fund 2.04%

^Absolute

Quarterly Data as of 31-Mar-2021

Top Purchase

UPM-Kymmene
1.40%
Was (31-Dec-2020) 0.92%

Top Sale

American Electric Power (E)
0.00%
Was (31-Dec-2020) 1.04%

Quarterly Data as of 31-Mar-2021

31-Mar-2021 - Shawn T. Driscoll, Portfolio Manager,

Our bearish long-term outlook for oil prices and belief that we are in the middle of a secular downcycle for commodities have not changed. We trimmed our energy exposure on strength in U.S. oil explorers and producers and eliminated our natural gas-weighted explorers and producers in favor of higher-conviction ideas in more structurally attractive segments of the natural resources universe. Additionally, we continue to favor beneficiaries of commodity deflation-including utilities, packaging, and specialty chemicals-and expect to retain meaningful allocations to paper and forest products, where we see cyclical and secular tailwinds converging, as the cost curve steepens to the advantage of low-cost producers and the growing emphasis on ESG adds additional support to the industry.

Paper and Forest Products

We increased the portfolio's allocation to this industry to reflect our increasing conviction in the potential for cost curves to rise throughout the value chain, supporting timber and containerboard prices and improving profit margins in the industry.

  • We added to UPM-Kymmene-which manufactures and sells printing and writing papers, and also increased our positions in European cartonboard market leader Mayr-Melnhof Karton and packaging company Avery Dennison. We see meaningful opportunities in the space, as cost curves are rising to the advantage of low-cost producers that, in our view, are poised to benefit from rising prices and improving demand.
  • We exited Domtar, a designer, manufacturer, marketer, and distributor of fiber-based products. The stock has performed well and, we believe, has more modest upside potential than industry peers. We reallocated the proceeds to other high-conviction ideas.

Multi-utilities

We appreciate utilities for their defensive qualities but remain selective and valuation-conscious, focusing on names that should be able to deliver solid cash flow and dividend growth during all economic cycles. In our view, the trends toward increasing adoption of renewable energy and electric vehicles, as well as the associated need for grid modernization, should be secular multi-decade tailwinds for the industry. For these reasons, we believe electric utilities should also benefit from increasing interest in investment strategies that involve ESG considerations.

  • We initiated positions in WEC Energy and Dominion Energy based in Wisconsin and Virginia, respectively, at attractive valuations after the industry came under pressure. These well-managed electric utilities stand to gain from clean energy legislation that could drive significant capital expenditures in renewables over the long term.�

Specialty Chemicals

Given its defensive profile, this industry faced challenges in a high-momentum market environment that overlooks fundamentals. We added to our overweight position during the period. Our bearish long-term outlook for commodities makes specialty chemicals an area of focus, thanks in part to the potential margin uplift that some companies may receive from lower input costs. In this space, we favor long-term earnings compounders and names with idiosyncratic growth drivers.

  • Atotech, a supplier of process chemicals used in electroplating solutions for electronics and automotive technology applications, was one of our new additions during the period. In our view, the company operates in an oligopolistic industry and its strength in Asia, as well as in certain niche applications, are an attractive differentiator from its peers.
  • We added to Sherwin-Williams, our largest specialty chemicals position. We consider it a best-in-class architectural coatings company. We value its high free cash flow business that generates solid returns on invested capital.

U.S. Oil Exploration and Production

We trimmed some of our holdings in this industry on recent outperformance and eliminated our natural-gas weighted explorers and producers in favor of more compelling opportunities. While the cyclical rally has boosted crude prices, the pandemic is hindering new projects that would typically arise when oil prices are well above the incentive price. With this backdrop coloring our outlook, we have maintained our disciplined approach and continue to avoid high- cost producers and "hidden leverage," a dangerous spike in a company's debt caused by a meaningful decline in oil prices.

  • We continued to reduce our stake in ConocoPhillips given its plans to merge with fellow portfolio holding Concho Resources. We also trimmed our positions in EOG Resources, Pioneer Natural Resources, and Devon Energy. Secular long-term risks remain for names levered to oil, and, with our long-term views in mind, we remain highly selective when investing in this space.

Industrial Gases

In a world moving toward replacing fossil fuels with electrons, the growth outlook remains bright for industrial gases. In our view, industrial gases will likely be a huge part of the global solution for both capturing carbon in the existing fossil fuel footprint, which needs oxygen, and transporting hydrogen once it is produced. Our bearish long-term outlook for commodities has not changed, and we continue to favor these defensive industries, which benefit from lower commodity prices.

  • We sold some shares of Air Products & Chemicals and used the proceeds to increase the portfolio's position in Linde. Linde is a solid industrial gases company that is benefiting from industry consolidation and its strong leadership team. We believe there is opportunity for the company to generate margin improvement through rising prices and better capacity utilization. The company has a strong balance sheet with an excellent management team, and we like Linde's defensive qualities and potential to compound value for shareholders.

Semiconductor Equipment

While the portfolio has a small allocation to the space, we think that parts of the industry will benefit from rising cost curves amid thin inventories as economic activity recovers.

  • Japan-based SUMCO Corp, a global leader in the manufacturing of silicon wafers for the semiconductor industry, was one of the top purchases over the period. With its dominant market share, SUMCO is well positioned to benefit from long-term demand tailwinds related to the growing importance of big data and artificial intelligence in a wide range of industries.

Sectors

Total
Sectors
9
Largest Sector Chemicals 20.56% Was (30-Apr-2021) 20.18%
Other View complete Sector Diversification

Monthly Data as of 31-May-2021

Indicative Benchmark: MSCI World Select Natural Resources Index

Largest Overweight

Commodity Industrials
By10.54%
Fund 18.32%
Indicative Benchmark 7.78%

Largest Underweight

Energy Services & Processors
By-16.74%
Fund 6.54%
Indicative Benchmark 23.28%

Monthly Data as of 31-May-2021

31-May-2021 - Shawn T. Driscoll, Portfolio Manager,
Although the recent reflation rally—driven by rising inflation expectations and massive monetary stimulus—will likely persist well into 2021, our bearish long-term outlook for oil prices has not changed. Accordingly, we favour defensive industries, such as electric utilities, and areas of the natural resources universe that tend to benefit from lower commodity prices. We also see meaningful opportunities in the paper and forest products industry, which we believe could benefit from a steepening cost curve and a favourable environmental, social and governance profile.

Countries

Total
Countries
19
Largest Country United States 53.66% Was (30-Apr-2021) 54.27%
Other View complete Country Diversification

Monthly Data as of 31-May-2021

Indicative Benchmark: MSCI World Select Natural Resources Index

Largest Overweight

Sweden
By5.47%
Fund 6.64%
Indicative Benchmark 1.18%

Largest Underweight

Canada
By-7.42%
Fund 5.84%
Indicative Benchmark 13.26%

Monthly Data as of 31-May-2021

31-Jul-2015 - Shawn T. Driscoll, Portfolio Manager,
From a country perspective, our allocation to Norway saw the largest percentage increase during the month of July. There were no notable reductions for the period.

Currency

Total
Currencies
10
Largest Currency 58.79% Was (30-Apr-2021) 58.90%
Other View completeCurrency Diversification

Monthly Data as of  31-May-2021

Indicative Benchmark : MSCI World Select Natural Resources Index

Largest Overweight

U.S. dollar
By 6.35%
Fund 58.79%
Indicative Benchmark 52.43%

Largest Underweight

Canadian dollar
By -9.44%
Fund 3.82%
Indicative Benchmark 13.26%

Monthly Data as of  31-May-2021

Team (As of 10-Jun-2021)

Shawn T.  Driscoll

Shawn Driscoll is the portfolio manager of the Global Natural Resources Equity Strategy, including the New Era Fund, in the U.S. Equity Division. He is chairman of the Investment Advisory Committee of the Global Natural Resources Equity Strategy and a vice president and an Investment Advisory Committee member of the US Capital Appreciation, US Large-Cap Core Equity, US Growth Stock, US Large-Cap Core Equity, US Mid-Cap Growth Equity, US Multi-Cap Growth Equity, and Real Assets Equity Strategies. Shawn also is a vice president of T. Rowe Price Group, Inc. 

Shawn’s investment experience began in 2003, and he has been with T. Rowe Price since 2006, beginning in the U.S. Equity Division. Prior to this, Shawn was employed by MTB Investment Advisors as an equity research analyst. Shawn also was employed by MPower Communications as an information technology project manager. 

Shawn earned a B.A. in economics and mathematics from the University of Rochester and an M.B.A. in finance and global business from New York University, Leonard N. Stern School of Business.

  • Fund manager
    since
    2013
  • Years at
    T. Rowe Price
    14
  • Years investment
    experience
    17
Brian Dausch, CFA

Brian Dausch is a portfolio specialist in the U.S. Equity Division. He is a member of the Global Natural Resources Equity, US Mid-Cap Growth Equity, US Small-Cap Growth Equity, QM US Small-Cap Growth Equity, and Health Sciences Equity Strategy teams, working closely with institutional clients, consultants, and prospects. He is a vice president of T. Rowe Price Group, Inc.  

Brian’s investment experience began in 1997, and he has been with T. Rowe Price since 1998, beginning in the U.S. Equity Division as an associate investment analyst covering biotechnology and pharmaceutical companies. Prior to his current role, Brian managed the U.S. Equity Portfolio Analysis Group.

Brian earned a B.S. in business administration, with a concentration in finance, from the University of Delaware. He also has earned the Chartered Financial Analyst® designation.

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

  • Years at
    T. Rowe Price
    22
  • Years investment
    experience
    23

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 1.74%
Class I $2,500,000 $100,000 $0 0.00% 75 basis points 0.84%
Class Q $1,000 $100 $100 0.00% 75 basis points 0.92%

Please note that the Ongoing Charges figure is inclusive of the Investment Management Fee and is charged per annum.