SICAV

Global Real Estate Securities Fund

Equity investment alert to the changing supply and demand dynamics of the global property market.

ISIN LU0382932225 WKN A0RB2J

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

0.21%
$4.5m

1YR Return
(View Total Returns)

Manager Tenure

-11.97%
5yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

0.00
3.42%

Inception Date 27-Oct-2008

Performance figures calculated in USD

Other Literature

30-Sep-2020 - Nina Jones, Portfolio Manager,
While near-term volatility is likely to persist as a result of the coronavirus, we are cautiously optimistic about a potential rebound in economic activity once the pandemic subsides. We think it is unlikely that developers will begin construction on new projects in this environment, which should help mitigate supply pressure and offset some of the near-term, virus-related weakness in demand. Continued low interest rates could also help support property prices.
Nina P.  Jones
Nina P. Jones, Portfolio Manager

Nina Jones is the portfolio manager for the Global Real Estate Equity and U.S. Real Estate Equity Strategies.  She is also chairman of the Investment Advisory Committee for the U.S. Real Estate Equity Strategy.  Nina is also a vice president and advisory committee member of the Financial Services and Mid-Cap Value strategies.  She is a member of the investment advisory committee of the Global Growth, Global Stock and Institutional Large Cap Value strategies.  Nina is vice president of T. Rowe Price Group.

 

Strategy

Investment Objective

To increase the value of its shares in the long term through both growth in the value of, and income from, its investments. The fund invests mainly in a diversified portfolio of securities issued by real-estate related companies. The companies may be anywhere in the world, including emerging markets.

Investment Approach

  • Employ fundamental research with a bottom-up approach.
  • Assess the capability, strategy, and management of the business.
  • Evaluate the asset base potential.
  • Understand the supply and demand dynamics by property and market.
  • Analyze balance sheet strength and flexibility.
  • Integrate a risk-adjusted perspective throughout our analysis.
  • Establish whether we would want to own a business for the long term.
  • Leverage the deep knowledge base at T. Rowe Price, including dedicated analysts in North America, Europe, and Asia.

Portfolio Construction

  • Typically 40-80 securities
  • Invest in highest conviction ideas
  • Diversified by property type and geography, with at least 40% invested outside the U.S.
  • Sector weights are the result of bottom-up security selection
  • Country weightings +/- 10% of the benchmark
  • Individual position sizes range from +/- 5% of the benchmark
  • Continually monitor investments to ensure:
    • Execution and results are tracking our expectations
    • Strategy intact and investment thesis unfolding as expected

Performance (Class I)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Since Manager Inception
Annualised
Fund % -11.97% 0.21% 2.03% 4.70% 0.23%
Indicative Benchmark % -18.29% -1.45% 2.03% 4.75% 0.22%
Excess Return % 6.32% 1.66% 0.00% -0.05% 0.01%

Inception Date 27-Oct-2008

Manager Inception Date 31-Mar-2015

Indicative Benchmark: FTSE EPRA Nareit Developed Index Net TRI

Data as of  30-Sep-2020

Performance figures calculated in USD

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Fund % -11.97% 0.21% 2.03% 4.70%
Indicative Benchmark % -18.29% -1.45% 2.03% 4.75%
Excess Return % 6.32% 1.66% 0.00% -0.05%

Inception Date 27-Oct-2008

Indicative Benchmark: FTSE EPRA Nareit Developed Index Net TRI

Data as of  30-Sep-2020

Performance figures calculated in USD

Recent Performance

  Month to DateData as of 26-Oct-2020 Quarter to DateData as of 26-Oct-2020 Year to DateData as of 26-Oct-2020 1 MonthData as of 30-Sep-2020 3 MonthsData as of 30-Sep-2020
Fund % -0.43% -0.43% -14.59% -3.12% 3.20%
Indicative Benchmark % 0.19% 0.19% -19.54% -3.11% 2.09%
Excess Return % -0.62% -0.62% 4.95% -0.01% 1.11%

Inception Date 27-Oct-2008

Indicative Benchmark: FTSE EPRA Nareit Developed Index Net TRI

Indicative Benchmark: FTSE EPRA Nareit Developed Index Net TRI

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 June 2019, 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.

30-Sep-2020 - Nina Jones, Portfolio Manager,
The real estate segment fell in September as some areas of the market continued to be negatively affected by the pandemic. Within the portfolio, an overweight position and stock selection in the UK held back relative results. Unite Group, a large developer and owner of purpose-built student accommodations, recorded negative results as the spread of the pandemic and uncertainty over university reopenings led to a drop in demand. We believe that student demand for quality housing will rebound once the pandemic subsides and that a growing university-age population will benefit the company. In the U.S., Douglas Emmett, which is focused on office space in West Los Angeles, underperformed amid poor sentiment for U.S. office properties as American employees have returned to the office at a slower pace than other developed countries. We continue to like the company as supply in its market is very limited. Conversely, stock selection in Canada added the most relative value, led by our position in Summit Industrial Income REIT, which owns and manages light industrial properties across the country. Shares rallied after the company reported that rent collections were holding up well despite the pandemic.

Holdings

Total
Holdings
63
Largest Holding Prologis 5.91% Was (30-Jun-2020) 6.41%
Other View Full Holdings Quarterly data as of 30-Sep-2020
Top 10 Holdings 31.25% View Top 10 Holdings Monthly data as of 30-Sep-2020

Largest Top Contributor^

Prologis
By 2.86%
% of fund 5.86%

Largest Top Detractor^

Essex Property Trust
By -0.45%
% of fund 2.61%

^Absolute

Quarterly Data as of 30-Sep-2020

Top Purchase

Equinix (N)
1.26%
Was (30-Jun-2020) 0.00%

Top Sale

Hudson Pacific Properties (E)
0.00%
Was (30-Jun-2020) 0.68%

Quarterly Data as of 30-Sep-2020

30-Jun-2020 - Nina Jones, Portfolio Manager,

During the quarter, we remained focused on companies with quality properties, strong management teams, and solid balance sheets. We are diversified across property types; although, given our bottom-up approach, we may be overweight or underweight particular subsectors at any given time. Because real estate cycles occur over long periods, we employ a long-term orientation to allow for the compounding of value for our clients.

United States

The largest absolute weight in the portfolio and benchmark is in the United States, the largest and most mature market within commercial real estate.

  • Prologis, an industrial property landlord with significant global scale, remained the portfolio's largest holding, although we sold some shares to manage position size. We believe that the company is well positioned to benefit from supply-chain reconfiguration and growth in e-commerce.
  • We maintain a sizable position in AvalonBay Communities, one of the nation's leading apartment REITs, with assets located in high-barrier communities. The company has maintained a solid balance sheet, and the management team has launched initiatives to improve margins.
  • Healthcare REIT Welltower, which has a diversified portfolio of properties across the senior housing, medical office, and skilled nursing/post-acute care areas, was one of our largest purchases during the period. We believe Welltower is well equipped to emerge from the pandemic stronger given its favorable liquidity profile and the likelihood for significantly increased demand for senior housing in the coming years.

Japan

We have a significant weighting in Japan.

  • Our largest holding is Mitsui Fudosan, which develops and owns numerous office, housing, and retail properties, primarily in Tokyo. We added to our position as the stock traded at attractive valuations during the period. We believe the company has the potential to benefit from an increased focus on capital efficiency.
  • Nippon Accommodations Fund invests mainly in rental housing in Tokyo, and we continue to like its portfolio of residential assets.

United Kingdom���

We also maintain a significant weighting to the United Kingdom. We believe London remains an attractive global city for companies, employees, and real estate investors alike.

  • We reestablished a position in Capital & Counties as shares traded at relatively discounted levels. The company owns a diversified portfolio, including London's Covent Garden, and, in our view, has ample cash and strong liquidity to weather the pandemic.

Hong Kong

We maintain a substantial weighting in Hong Kong, where we focus on companies with high-quality properties in attractive locations. The lack of available land for commercial and residential construction should benefit operating fundamentals over the long run.

  • Our largest exposure is to Sun Hung Kai Properties, one of the largest-cap real estate companies in the world with rental properties and residential developments in Hong Kong and mainland China. With low mortgage rates and a supportive supply/demand backdrop, we believe Sun Hung Kai has significant upside potential.

Additional Allocations

We maintain notable exposures to Australia, Singapore, and Europe.

  • In Australia, we added to Mirvac Group, which is well positioned to benefit from an improving residential market and the government's recent residential housing stimulus. The firm's dividend is supported by a high-quality commercial portfolio with largely fixed rental increases. We trimmed industrial real estate firm Goodman Group after recent strong performance, but it remains a significant holding as we continue to like the outlook for the company.
  • We added to Singapore mall owner Frasers Centrepoint. We believe the company's suburban retail exposure should be relatively resilient in the face of any additional coronavirus-related economic disruptions.
  • In Sweden, we initiated a position in Fabege, a developer and owner of office properties. We believe Fabege is well positioned with good liquidity as well as a sizable development pipeline and land bank in Stockholm.

Industry

Total
Industries
11
Largest Industry Apartment Residential 25.75% Was (31-Aug-2020) 26.72%
Other View complete Industry Diversification

Monthly Data as of 30-Sep-2020

Indicative Benchmark: FTSE EPRA Nareit Developed Index

Top Contributor^

Industrial
Net Contribution 0.77%
Industry
0.41%
Selection 0.37%

Top Detractor^

Apartment Residential
Net Contribution -1.00%
Industry
-0.01%
Selection
-0.99%

^Relative

Quarterly Data as of 30-Sep-2020

Largest Overweight

Apartment Residential
By6.94%
Fund 25.75%
Indicative Benchmark 18.81%

Largest Underweight

Diversified
By-5.44%
Fund 12.52%
Indicative Benchmark 17.96%

Monthly Data as of 30-Sep-2020

Regions

Total
Regions
4
Largest Region North America 56.60% Was (31-Aug-2020) 56.47%
Other View complete Region Diversification

Monthly Data as of 30-Sep-2020

Indicative Benchmark: FTSE EPRA Nareit Developed Index

Largest Overweight

Pacific Ex Japan
By0.81%
Fund 13.88%
Indicative Benchmark 13.06%

Largest Underweight

Europe
By-0.80%
Fund 17.97%
Indicative Benchmark 18.78%

Monthly Data as of 30-Sep-2020

Countries

Total
Countries
14
Largest Country United States 53.44% Was (31-Aug-2020) 53.56%
Other View complete Country Diversification

Monthly Data as of 30-Sep-2020

Indicative Benchmark: FTSE EPRA Nareit Developed Index

Largest Overweight

United Kingdom
By1.90%
Fund 6.61%
Indicative Benchmark 4.71%

Largest Underweight

Germany
By-3.15%
Fund 3.03%
Indicative Benchmark 6.18%

Monthly Data as of 30-Sep-2020

30-Sep-2020 - Nina Jones, Portfolio Manager,
The U.S. remains the dominant country allocation within the portfolio. Japan, Hong Kong, the UK, and Australia also represent significant portions of the equity allocation. In the U.S., we added to two self-storage companies as we expect increasing demand for storage space during the pandemic will lead to higher rental rates. Meanwhile, we eliminated a UK company that owns a mixed-use real estate portfolio after it purchased a stake in another one of our holdings.

Team (As of 01-Oct-2020)

Nina P.  Jones

Nina Jones is the portfolio manager for the Global Real Estate Equity and U.S. Real Estate Equity Strategies.  She is also chairman of the Investment Advisory Committee for the U.S. Real Estate Equity Strategy.  Nina is also a vice president and advisory committee member of the Financial Services and Mid-Cap Value strategies.  She is a member of the investment advisory committee of the Global Growth, Global Stock and Institutional Large Cap Value strategies.  Nina is vice president of T. Rowe Price Group.

Nina’s investment experience began in 2008 and she has been with T. Rowe Price since 2008, beginning in the U.S. Equity Division.  Prior to this, Nina was a T. Rowe Price summer intern following payroll processor companies in the business services sector.  Prior to joining the firm, she worked at KPMG LLP in the audit and risk advisory area.  

Nina earned a dual B.S., magna cum laude, in accounting and finance from the University of Maryland and earned an M.B.A., with honors, in finance and economics from Columbia Business School.  Nina also earned the certified public accountant designation.

  • Fund manager
    since
    2015
  • Years at
    T. Rowe Price
    12
  • Years investment
    experience
    12
Jai Kapadia

Jai Kapadia is a regional portfolio manager at T. Rowe Price. He manages the Global Real Estate Strategy and is responsible for stock selection for the Asia-Pacific region. 

Mr. Kapadia has 13 years of investment experience, eight of which have been with T. Rowe Price.  He joined the firm in 2011. Before his current role, Mr. Kapadia was an analyst and associate director of research in the Equity Research Group of T. Rowe Price in Hong Kong, covering Asian conglomerates, real estate and Indian pharmaceuticals. Prior to joining the firm, he worked at Credit Suisse in New York, covering telecommunication equipment stocks, and at Sirios Capital in Boston, covering consumer stocks. 

Mr. Kapadia earned a B.A. in economics from Columbia University and an M.B.A. from the Massachusetts Institute of Technology, Sloan School of Management.

  • Fund manager
    since
    2019
  • Years at
    T. Rowe Price
    9
  • Years investment
    experience
    14
Caleb N. Fritz, CFA

Caleb Fritz is a portfolio specialist in the U.S. Equity Division. He acts as a proxy for equity portfolio managers with institutional clients, consultants, and prospects and supports the large-cap value strategies. Caleb also is a vice president of T. Rowe Price Group, Inc.

Caleb’s investment experience began in 2000. He was with T. Rowe Price from 2000 to 2003, beginning in the Participant Service Center, and returned in 2010 until the present. Prior to his current position, he was a lead portfolio analyst providing analytical support to investment, client service, and marketing staff for the firm’s large-cap value and health sciences portfolios. Prior to returning to the firm, Caleb was employed by Legg Mason Capital Management as an associate analyst covering the health care sector.  

Caleb earned a B.A. and an M.A. from the University of South Florida. 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
    12
  • 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 0.85%
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.

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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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