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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.

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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)

-7.55%
$77.0m

1YR Return
(View Total Returns)

Manager Tenure

-15.84%
7yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

0.42
5.63%

Inception Date 15-Nov-2006

Performance figures calculated in USD

Other Literature

31-Oct-2020 - Shawn T. Driscoll, Portfolio Manager,
We continue to believe that we are in a secular bear market for many commodities. Global supplies of crude oil remain elevated despite a nascent recovery in demand, and we expect production to remain muted until crude prices incentivize a return of exploration and production activity. Post pandemic, oil prices could potentially rebound sharply as demand normalizes. Over the long term, however, we believe that oil prices are likely to settle in the mid-USD 40s per barrel.
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 wave of productivity gains and falling cost curves in U.S. shale began in 2011 and prompted a secular bear market in oil that has since extended to other commodities. Commodity cycles tend to last 15 to 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, creating unprecedented pressure on the market's balance and briefly driving WTI prices into negative territory in late April. This extreme price action sent oil producers a clear signal that output needed to be curtailed swiftly and meaningfully.�

The global spread of the coronavirus effectively shut down many large economies around the world, resulting in the first contraction in oil demand since the 2008 global financial crisis. This negative demand shock, however, far exceeded any weakness previously seen in the oil market. Fortunately, it does not take long to rebalance the market, a point underscored by oil prices bouncing off their lows. While the timing of a recovery depends on the duration of the coronavirus' effect on global economic activity, we believe the market is shaping up for a powerful move in oil prices and energy stocks over the next 12 to 24 months as demand begins to normalize. As rig counts drop in the U.S. and the steeper decline rates on shale wells kick in, the oil market should rebalance relatively quickly as inventories draw down. Just as oil prices shot through the cost curve on the way down, we would not be surprised to see them rebound above the incentive curve in recovery.

�Throughout this experience, we have maintained our disciplined approach and remained extremely careful with "hidden leverage," or a dangerous spike in a company's debt caused by a meaningful decline in oil prices. This diligence has contributed to our strong competitive positioning. Peers continue to forego traditional energy industries as fundamentals deteriorate and the sector underperforms in favor of other segments of the natural resources universe. During the quarter, the portfolio's energy allocation declined, and it remains near historical lows for the strategy. Given the strategy's mandate to invest in energy stocks, the shrinking universe of viable investment options within certain industries is a challenge, and our holdings within the space focus on names with quality assets and business models. Although the near-term supply/demand dynamics may be positive for oil prices as demand normalizes, we firmly believe our longer-term view of a structural commodity bear market remains intact. We expect to retain considerable allocations to chemicals, utilities, and packaging, as these businesses should benefit from lower commodity prices. We also see meaningful opportunities in the paper and forest products industry, where we see the cost curve steepening to the advantage of low-cost producers that we believe are poised to benefit from rising prices. Over the long term, we believe that favorable ESG profile could provide a secondary tailwind for the industry.

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.

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 % -15.84% -7.55% -0.91% -1.26% -3.06%
Indicative Benchmark % -25.64% -11.23% -3.29% -1.93% -4.82%
Excess Return % 9.80% 3.68% 2.38% 0.67% 1.76%

Inception Date 15-Nov-2006

Manager Inception Date 30-Sep-2013

Indicative Benchmark: MSCI World Select Natural Resources Index Net

Data as of  31-Oct-2020

Performance figures calculated in USD

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Fund % -13.16% -5.97% 1.65% -0.66%
Indicative Benchmark % -23.13% -10.02% -0.75% -1.14%
Excess Return % 9.97% 4.05% 2.40% 0.48%

Inception Date 15-Nov-2006

Indicative Benchmark: MSCI World Select Natural Resources Index Net

Data as of  30-Sep-2020

Performance figures calculated in USD

Recent Performance

  Month to DateData as of 27-Nov-2020 Quarter to DateData as of 27-Nov-2020 Year to DateData as of 27-Nov-2020 1 MonthData as of 31-Oct-2020 3 MonthsData as of 31-Oct-2020
Fund % 21.67% 17.72% -4.70% -3.25% -4.28%
Indicative Benchmark % 24.34% 20.54% -13.86% -3.05% -8.00%
Excess Return % -2.67% -2.82% 9.16% -0.20% 3.72%

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-Oct-2020 - Shawn T. Driscoll, Portfolio Manager,
Commodity prices were mixed in October. Natural gas prices surged, while crude oil prices continued to decline over fears of a resurgence in coronavirus cases and a slower oil demand recovery. Precious metals and minerals companies lost ground over the period as gold and silver prices continued their retreat from summer highs. Platinum also remained under pressure, showing weakness largely due to the dramatic drop in global automobile demand. Within the portfolio, diversified metals and mining weighed on performance due to stock selection and an underweight allocation. While steel, aluminium, and zinc prices rose during the month, we believe that a global oversupply of many base metals could be a headwind through much of what we regard as a secular bear market in commodities. Industrial gases were weaker for the month, and a substantial overweight position hurt returns. Conversely, a favourable underweight to electrical components and equipment, coupled with positive stock selection, contributed to relative performance. Select names in the industry posted meaningful losses for the month, and our limited exposure and focus on traditional players, who outpaced industry peers, proved beneficial.

Holdings

Total
Holdings
116
Largest Holding Total 3.85% Was (30-Jun-2020) 4.48%
Other View Full Holdings Quarterly data as of 30-Sep-2020
Top 10 Holdings 23.99% View Top 10 Holdings Monthly data as of 31-Oct-2020

Largest Top Contributor^

Air Products & Chemicals
By 0.66%
% of fund 3.67%

Largest Top Detractor^

Total
By -1.82%
% of fund 3.84%

^Absolute

Quarterly Data as of 30-Sep-2020

Top Purchase

Air Liquide (N)
1.37%
Was (30-Jun-2020) 0%

Top Sale

Total
3.83%
Was (30-Jun-2020) 4.48%

Quarterly Data as of 30-Sep-2020

30-Sep-2020 - 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. Accordingly, we favor defensive industries, such as electric utilities, and areas of the natural resources universe that tend to benefit from lower commodity prices. We continued to upgrade the portfolio by exiting lower-conviction ideas while adding to high-quality names that look attractive now and that we'd like to own on the other side of the economic cycle. We increased the portfolio's exposure to paper and forest products, an industry where we believe production cost curves are rising and the supply/demand outlook appears favorable. Depending on the duration of the coronavirus outbreak, we see the potential for a sharp rebound in oil prices over the near term as demand normalizes, and we have been selective in how we position for this trade. As always, we remain conscious of valuation, industry fundamentals, and longer-term risk/reward propositions for the individual companies in which we invest.

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 initiated positions in Stora Enso and added to Svenska Cellulosa. These European producers of forest products could see significant upside to their midcycle earnings. We also see a reasonable path to the market assigning significant value to forest holdings as wood-based products replace less sustainable alternatives and as carbon-capture emerges as part of the solution for the global climate crisis.

Integrated Oil and Gas

We refined the portfolio's positioning in integrated oil and gas given the shrinking universe of viable options and structural headwinds from the shift to renewable energy.

  • We appreciate France-based Total's high-quality management team, capital discipline, strong balance sheet, and credible plan to deliver solid production growth in the coming years. These qualities and an attractive dividend yield make Total appealing in an environment where we expect the cost curve for oil to remain under pressure. However, we trimmed Total, which remained the portfolio's largest holding, to manage position size.
  • We exited our position in Canada-based Suncor Energy, as the company recently announced potential efforts to sacrifice its upstream production for more ESG-friendly downstream. This shift is a breach to our investment thesis and is a distraction to the management team, in our view, that could dilute returns.

Metal and Glass Containers

We increased the portfolio's allocation to this defensive industry. Our holdings emphasize investment ideas that we believe offer the most compelling risk/reward profiles.

  • We initiated a position in Crown Holdings, one of the largest beverage can manufacturers globally. The company benefits from surging demand from beverage and food manufacturers for aluminum cans, as well as a growing total addressable market given the shift from plastic to more sustainable products including aluminum.
  • We trimmed the portfolio's stake in Ball Corporation, a leading manufacturer of aluminum packaging, on strength. However, we continue to maintain a meaningful allocation in Ball, which should benefit as aluminum packaging replaces less sustainable options and cans take market share in cocktails and wines. We expect that Ball can grow its organic topline given competitive pricing in specialty cans and supportive supply/demand dynamics, as well as new beverage categories.

Precious Metals and Mining

The portfolio remained underweight precious metals and minerals, an industry where we prefer small- to mid-cap producers pursuing mining projects that are lower on the cost curve and should drive significant production and cash flow growth upon completion. In our view, gold miners with these high-quality expansion opportunities, as well as credible management teams and solid balance sheets, have the potential to create significant value for shareholders even if commodity prices do not cooperate.

  • We sold some shares of Canadian miner Kirkland Lake Gold. Unlike other North American gold miners, Kirkland Lake has been highly successful because of its ability to buy overlooked assets with under-utilized infrastructure and then use its exploration expertise to grow production. However, the company's questionable acquisition of Detour Gold prompted us to trim our position in favor of other compelling opportunities.

Commodity Chemicals

We favor defensive sectors that could benefit from low commodity prices.

  • We initiated a position in Orica, the largest supplier of industrial explosives and blasting services to the mining, quarrying, seismic, and construction industries globally. It also manufactures industrial and specialty chemicals for the mining industry. In our view, Orica's access to copper miners is favorable given the medium- to long-term outlook for copper prices and the potential for growing demand as the adoption of electric vehicles grows.

Semiconductor Equipment

While the portfolio has limited exposure to the space, we think that parts of the industry could benefit from thin inventories when economic activity recovers dynamics.

  • We initiated a new position in Cabot Microelectronics, an electronic materials supplier that will benefit from rising semiconductor cost curves. We expect Cabot's legacy tungsten slurries business to grow faster than the semiconductor industry while holding or adding to margins as a result of increasing materials per chip.

Sectors

Total
Sectors
9
Largest Sector Chemicals 20.99% Was (30-Sep-2020) 20.98%
Other View complete Sector Diversification

Monthly Data as of 31-Oct-2020

Indicative Benchmark: MSCI World Select Natural Resources Index

Largest Overweight

Other
By7.54%
Fund 10.82%
Indicative Benchmark 3.28%

Largest Underweight

Energy Services & Processors
By-14.72%
Fund 8.59%
Indicative Benchmark 23.31%

Monthly Data as of 31-Oct-2020

31-Oct-2020 - Shawn T. Driscoll, Portfolio Manager,
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 could benefit from a steepening cost curve and a favourable environmental, social, and corporate governance (ESG) profile. Although we see the potential for a strong countercyclical rally in oil prices and energy stocks over the next 12 months, we remain selective in how we position for this trade.

Countries

Total
Countries
18
Largest Country United States 57.32% Was (30-Sep-2020) 56.90%
Other View complete Country Diversification

Monthly Data as of 31-Oct-2020

Indicative Benchmark: MSCI World Select Natural Resources Index

Largest Overweight

United States
By9.00%
Fund 57.32%
Indicative Benchmark 48.32%

Largest Underweight

Canada
By-7.20%
Fund 6.89%
Indicative Benchmark 14.08%

Monthly Data as of 31-Oct-2020

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 61.49% Was (30-Sep-2020) 60.97%
Other View completeCurrency Diversification

Monthly Data as of 31-Oct-2020

Indicative Benchmark :

Largest Overweight

U.S. dollar
By 12.88%
Fund 61.49%
Indicative Benchmark 48.61%

Largest Underweight

Canadian dollar
By -9.62%
Fund 4.47%
Indicative Benchmark 14.08%

Monthly Data as of 31-Oct-2020

Team (As of 01-Oct-2020)

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
    21
  • Years investment
    experience
    22

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.