SICAV

Global Technology Equity Fund

To provide long-term capital growth by investing mainly in technology companies, and companies enabled by technology.

ISIN LU1244139827 WKN A14UXW

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

23.03%
$1.2b

1YR Return
(View Total Returns)

Manager Tenure

62.18%
1yr

Information Ratio
(5 Years)

Tracking Error
(5 Years)

0.15
8.84%

Inception Date 15-Jun-2015

Performance figures calculated in USD

Other Literature

30-Sep-2020 - Alan Tu, Portfolio Manager ,
The performance of global technology stocks has begun to diverge as investors have received more data points on how individual companies are performing amid the pandemic. This has benefitted our portfolio and our focus on firms that are showing they are on the right side of durable changes to the global economy, particularly in the areas of e-commerce, cloud-based computing, and online collaboration.
Alan Tu, CFA
Alan Tu, CFA, Portfolio Manager

Alan Tu is the portfolio manager for the Global Technology Equity Strategy in the U.S. Equity Division. He also is chairman of its Investment Advisory Committee. Alan is a vice president and an Investment Advisory Committee member of the US Small-Cap Growth II Equity, Science & Technology Equity, US Large-Cap Core Growth Equity, Communications and Technology Equity, and US Tax-Efficient Multi-Cap Growth Equity Strategies. In addition, he is an Investment Advisory Committee member of the Global Growth Equity Strategy. Alan also is a vice president of T. Rowe Price Group, Inc.

 

Strategy

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 technology development or utilization companies, with a focus on leading global technology companies. The companies may be anywhere in the world, including emerging markets.

Investment Approach

  • Seeks long-term growth by investing primarily in the common stocks of companies that generate the majority of revenues from the development, advancement, and use of technology.
  • Stock selection is driven by rigorous research and analysis of companies, sectors, and industry trends.
  • The portfolio invests primarily in the common stocks of technology companies or companies enabled by technology across the entire market capitalization spectrum. We seek companies which can successfully weather economic cycles and deliver sustainable growth through product development and innovation, at a reasonable valuation.
  • While our primary emphasis is on a company’s prospects for future growth, valuation can also be an important consideration, particularly when valuation reaches extreme levels.
  • The portfolio is less diversified than a non-focused fund and its substantial reward potential is coupled with significant risk. In addition, any foreign holdings could be affected by declining local currencies or adverse political or economic events.

Portfolio Construction

  • Typically 35-60 stock portfolio
  • Non-U.S. companies typically make up 25-45% of the portfolio
  • Portfolio consists of highest conviction ideas from a global perspective
  • Diversification across sectors, countries/currencies, and end markets is a risk management tool
  • Bottom-up stock picking is used to capitalize on rapid and extreme changes in technology trends

Performance (Class I)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Since Manager Inception
Annualised
Fund % 62.18% 23.03% 26.09% 23.09% 35.29%
Indicative Benchmark % 44.79% 23.66% 24.74% 21.23% 35.77%
Excess Return % 17.39% -0.63% 1.35% 1.86% -0.48%

Inception Date 15-Jun-2015

Manager Inception Date 28-Feb-2019

Indicative Benchmark: MSCI All Country World Index Information Technology Net

Data as of  30-Sep-2020

Performance figures calculated in USD

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Fund % 62.18% 23.03% 26.09% 23.09%
Indicative Benchmark % 44.79% 23.66% 24.74% 21.23%
Excess Return % 17.39% -0.63% 1.35% 1.86%

Inception Date 15-Jun-2015

Indicative Benchmark: MSCI All Country World Index Information Technology Net

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 % 1.40% 1.40% 47.41% -0.92% 16.85%
Indicative Benchmark % -3.13% -3.13% 22.49% -3.62% 12.69%
Excess Return % 4.53% 4.53% 24.92% 2.70% 4.16%

Inception Date 15-Jun-2015

Indicative Benchmark: MSCI All Country World Index Information Technology Net

Indicative Benchmark: MSCI All Country World Index Information Technology 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. 

30-Sep-2020 - Alan Tu, Portfolio Manager ,
Global technology shares outperformed the MSCI All Country World Index in September. Within the portfolio, software added the most relative value due primarily to our stock choices. Shares of Zoom Video Communications rose on the heels of another blowout quarter, highlighted by massive revenue growth and strong free cash flow margins. Management also significantly raised its full-year guidance. We appreciate Zoom Video Communications’ medium-term growth prospects and self-service distribution model, which helps to control marketing expenses and shorten the sales cycle. Not owning any hardware names also lifted relative returns. Conversely, semiconductors had the most negative impact on relative performance due to stock selection. An overweight in Advanced Micro Devices, the second-largest player in central processing units (CPU) and graphics processing units, hurt the portfolio. Shares fell as the U.S. Commerce Department threatened, and later followed through on, a ban on Chinese chipmaker Semiconductor Manufacturing Intl. In addition to Advanced Micro Devices' superior technology and head start in qualifying data centre workloads, we like the margin advantages associated with outsourcing fabrication and the pricing support that should come from the rising cost curve for advanced central processing units.

Holdings

Total
Holdings
50
Largest Holding Alibaba Group Holding 5.78% Was (30-Jun-2020) 5.94%
Other View Full Holdings Quarterly data as of 30-Sep-2020
Top 10 Holdings 41.01% View Top 10 Holdings Monthly data as of 30-Sep-2020

Largest Top Contributor^

Alibaba Group Holding
By 0.30%
% of fund 5.84%

Largest Top Detractor^

Slack Technologies
By -1.04%
% of fund 3.34%

^Absolute

Quarterly Data as of 30-Sep-2020

Top Purchase

Taiwan Semiconductor Manufacturing
3.22%
Was (30-Jun-2020) 0.98%

Top Sale

Intuit (E)
0.00%
Was (30-Jun-2020) 2.15%

Quarterly Data as of 30-Sep-2020

30-Jun-2020 - Alan Tu, Portfolio Manager ,

We broadened and diversified the portfolio's holdings. We focus on technology companies that we believe can fare well in the current environment and benefit from sustainable tailwinds on the other side of the economic cycle. Many of our purchases this quarter targeted companies where we believe the market does not appreciate the extent to which their growth stories have accelerated. We also increased the portfolio's exposure to a potential cyclical recovery, adding to positions in semiconductor stocks exposed to the memory complex and industrial end markets.

Software

We regard the business models and growth runways available in cloud-based enterprise software as some of the most compelling over the long term. As enterprises seek to reduce costs, improve efficiency, and engage with customers across multiple channels, high-quality providers of cloud-based software could see the uptake of their solutions accelerate. We favor names that we believe can penetrate large addressable markets and stand to benefit as the digitalization of the enterprise gathers steam. We refined our positioning in this subsector to reflect evolving risk/reward profiles.

  • We trimmed Salesforce.com, a leader in cloud-based enterprise software for managing customer relationships. We believe that the company has built an impressive end-to-end platform for the sales process and that the digitalization of the enterprise should remain a powerful secular tailwind for Salesforce.com. However, we see the potential for the company to experience some coronavirus-related disruptions to its sales process and deal pipeline in the near term.
  • We initiated a stake in Five9, which specializes in cloud-based software that replaces traditional infrastructure for contact centers. We believe that the embrace of remote work and the value proposition associated with the company's product relative to legacy solutions create a compelling growth story.
  • We started a position in Anaplan, a company that offers cloud-based enterprise software for sales, financial, and supply chain planning. Despite near-term sales headwinds related to the coronavirus, we believe that Anaplan's differentiated solutions have ample opportunity to take market share over the long run and that the uncertainties created by the pandemic could increase enterprise demand for robust, flexible software for real-time scenario analysis.

Internet

Our internet holdings focus on platform companies that we believe have significant competitive advantages and compelling long-term growth prospects. We tend to favor the large social media, online advertising, and e-commerce companies in developed and emerging markets because we think that their strong balance sheets, internal talent, superior computing infrastructure, and valuable data position them to drive future innovation. We broadened and refined our positioning in this subsector, adding to and establishing stakes in companies where we believe the market does not fully appreciate their growth prospects.

  • We initiated a position in Delivery Hero, a company whose online platforms connect consumers with restaurants that deliver food. The company also provides the logistics to fulfill delivery orders. We value Delivery Hero's emphasis on emerging markets, where labor costs are typically lower, and expect the company to benefit from accelerating customer acquisition and order frequency because of the coronavirus pandemic. Capital constraints at formerly free-spending competitors could also lead to more rational behavior on pricing. We believe that Delivery Hero's acquisition of its primary competitor in South Korea should set the stage for improved profitability in the coming years, potentially providing the necessary proof of concept to bolster sentiment toward the stock and industry.
  • Snap operates Snapchat, a communication tool that is especially popular among users who are 13 to 24 years old. We initiated a position in Snap after the company announced strong quarterly results, headlined by impressive growth in revenue and daily active users amid the coronavirus pandemic. The company's advertising pricing also proved surprisingly resilient, thanks to robust demand from direct-response advertisers in e-commerce and online entertainment. We like Snap's potential to drive top-line growth as its investments in innovation and a reorganized sales force combine to improve monetization of the platform.
  • We trimmed Alibaba Group Holdings, though the stock still ended the quarter as one of the portfolio's larger positions. In our view, Alibaba Group Holding's investments in its cloud business and other initiatives should pay off over the long run by expanding the company's total addressable market. We believe that the company's rich data on user behavior across its different but complementary services create ample opportunity for monetization, while its leadership in online retail and fintech offers exposure to rising household incomes in China and other emerging markets.
  • We exited Booking Holdings, a leading provider of online travel services, in favor of investment opportunities that we believe offer better risk/reward profiles.

Semiconductors

We acknowledge that coronavirus-related challenges could push out the timing of a recovery cycle in key semiconductor markets, especially those with exposure to automobiles and smartphones. However, we also recognize that parts of the industry should benefit from thin inventories when economic activity recovers. Over the long term, we believe the secular trend of increasing demand for advanced chips in data centers, AI, and automobiles and other industrial end-markets remains intact.

  • We increased the portfolio's position in Lam Research, a leading supplier of semiconductor capital equipment that we expect to benefit over the long term as customers step up spending to meet demand for memory chips and to drive innovation in logic chips. We believe that the market does not fully appreciate the rising production cost curve in key semiconductor markets and the company's growth prospects when the recovery cycle eventually takes hold.
  • We added to Micron Technology. We believe that the leading producer of memory chips stands to benefit from a tightening supply/demand balance in that market, as inventories remain thin from the last downcycle and hyper-scale data center customers appear to be stepping up purchases. Over the longer term, we expect the chip producer to benefit from a favorable demand outlook and an improved industry structure that should lead to more rational behavior on the supply side.

Telecom Equipment

We tend to find fewer opportunities in telecom equipment, as we believe that intense competition, commodified products, and the drag from maturing business lines make this subsector a less-fertile hunting ground for sustainable businesses that are on the right side of innovation.

  • We exited Motorola Solutions, a leading player in emergency communication solutions and infrastructure, because of concerns about coronavirus-related demand weakness and our preference for higher-conviction investment ideas.

Business Services

This subsector represents a relatively small slice of our investment universe, limiting the number of potential opportunities.

  • We increased the portfolio's stake in CoStar Group. The company provides commercial real estate data to institutions and operates two popular online listing services: Apartments.com and LoopNet. We believe that the company has limited competition and could benefit to the extent that the coronavirus pandemic accelerates the digitalization of the real estate industry and rising vacancies increase the number of new listings. We appreciate the company's willingness to invest during the downcycle and see ample opportunity for the company to drive revenue growth and margin expansion over time by increasing its prices.

Industry

Total
Industries
N/A
31-Jul-2020 - Alan Tu, Portfolio Manager ,
We increased the portfolio’s exposure to semiconductors, focusing on memory chipmakers and names with meaningful exposure to the automotive end market. Low inventories after last year’s downcycle suggest that key segments of this subsector should benefit when economic activity fully recovers. Within semiconductors, we also bought shares of companies that we believe are well-positioned to benefit from a shifting competitive landscape.

Regions

Total
Regions
4
Largest Region North America 71.87% Was (31-Aug-2020) 72.57%
Other View complete Region Diversification

Monthly Data as of 30-Sep-2020

Indicative Benchmark: MSCI All Country World Index Information Technology

Largest Overweight

Pacific Ex Japan
By8.40%
Fund 19.14%
Indicative Benchmark 10.74%

Largest Underweight

North America
By-6.78%
Fund 71.87%
Indicative Benchmark 78.65%

Monthly Data as of 30-Sep-2020

Countries

Total
Countries
10
Largest Country United States 67.45% Was (31-Aug-2020) 68.61%
Other View complete Country Diversification

Monthly Data as of 30-Sep-2020

Indicative Benchmark: MSCI All Country World Index Information Technology

Largest Overweight

China
By5.88%
Fund 7.15%
Indicative Benchmark 1.27%

Largest Underweight

United States
By-9.75%
Fund 67.45%
Indicative Benchmark 77.20%

Monthly Data as of 30-Sep-2020

Team (As of 01-Oct-2020)

Alan Tu, CFA

Alan Tu is the portfolio manager for the Global Technology Equity Strategy in the U.S. Equity Division. He also is chairman of its Investment Advisory Committee. Alan is a vice president and an Investment Advisory Committee member of the US Small-Cap Growth II Equity, Science & Technology Equity, US Large-Cap Core Growth Equity, Communications and Technology Equity, and US Tax-Efficient Multi-Cap Growth Equity Strategies. In addition, he is an Investment Advisory Committee member of the Global Growth Equity Strategy. Alan also is a vice president of T. Rowe Price Group, Inc. 

Alan’s investment experience began in 2012, and he has been with T. Rowe Price since 2014, beginning in the U.S. Equity Division. After that, he was an investment analyst following software companies in the technology sector. He also served as a summer intern in 2013. Prior to T. Rowe Price, Alan was employed by Ananda Capital Management as an analyst, conducting analyses of small-cap Chinese and U.S. equities. He also was a valuation associate at Huron Consulting Group.

Alan earned a B.S., summa cum laude, in business administration from the University of California, Berkeley, and an M.B.A., with honors, from the University of Chicago, Booth School of Business. He also has earned the Chartered Financial Analyst® designation.

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

  • Fund manager
    since
    2019
  • Years at
    T. Rowe Price
    6
  • Years investment
    experience
    6

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% 175 basis points 1.87%
Class I $2,500,000 $100,000 $0 0.00% 85 basis points 0.94%
Class Q $1,000 $100 $100 0.00% 85 basis points 0.97%
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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