SICAV

Middle East & Africa Equity Fund

Unconstrained, growth-orientated investing in the under explored markets of the Middle East and Africa.

ISIN LU0310188205 WKN A0M1XR

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

-3.19%
$4.4m

1YR Return
(View Total Returns)

Manager Tenure

-12.14%
9yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

-0.23
5.26%

Inception Date 04-Sep-2007

Performance figures calculated in USD

Other Literature

30-Sep-2020 - Oliver Bell, Portfolio Manager ,
Against a challenging backdrop, we continue to focus on the long-term fundamentals, and we look to hold high-conviction ideas in quality companies that we believe are in a strong position to withstand the current environment and emerge stronger on the other side of this crisis. Over the longer term, this region is likely to be bolstered by a recovery in regional growth and meaningful country-specific improvements, including economic reform.
Oliver Bell
Oliver Bell, Co-Portfolio Manager

Oliver Bell is a vice president of T. Rowe Price Group, Inc., associate head of Equity EMEA and the lead portfolio manager and chairman of the Investment Advisory Committee for the T. Rowe Price Middle East & Africa Equity Strategy and the Frontier Markets Equity Strategy. He is a member of the International Equity Steering Committee and a Board member of T. Rowe Price (Luxembourg) Management S.a.r.l.

 

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 companies in the developing countries of the Middle East and Africa.

Investment Approach

  • The fund is growth oriented, unconstrained and designed to deliver strong absolute performance.
  • Stock selection is driven by fundamental analysis seeking to identify the best companies with attractive valuations and earnings that are growing faster than their local, regional or global peers.
  • In investment frontiers such as the Middle East and Africa market, inefficiencies are likely to be significant. One of the core tenets of our investment strategy is that stocks are frequently mispriced.
  • Focus on finding companies with above-average revenue growth, strong management and good corporate governance.
  • The bottom-up, stock specific approach is supported by a top-down perspective focusing on macro and micro-factors mainly at the country level.
  • Manager with a proven track record of investing in emerging markets supported by a dedicated analyst team.
  • Dedicated Portfolio Manager supported by a well-resourced analyst team.

Portfolio Construction

  • Typically 50-80 stocks
  • Individual positions typically range from 2.0%-8.0%
  • Country and sector weights unconstrained
  • Cash reserves typically 0%-5%

Performance (Class I)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Since Manager Inception
Annualised
Fund % -12.14% -3.19% 0.19% 2.28% 4.38%
Indicative Benchmark % -5.86% -1.03% 1.42% 1.56% 2.48%
Excess Return % -6.28% -2.16% -1.23% 0.72% 1.90%

Inception Date 04-Sep-2007

Manager Inception Date 10-Oct-2011

Indicative Benchmark: Linked Benchmark Net

Data as of  30-Sep-2020

Performance figures calculated in USD

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Fund % -12.14% -3.19% 0.19% 2.28%
Indicative Benchmark % -5.86% -1.03% 1.42% 1.56%
Excess Return % -6.28% -2.16% -1.23% 0.72%

Inception Date 04-Sep-2007

Indicative Benchmark: Linked Benchmark 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 % 1.62% 1.62% -16.19% 1.45% 6.28%
Indicative Benchmark % -0.01% -0.01% -13.21% 1.20% 7.99%
Excess Return % 1.63% 1.63% -2.98% 0.25% -1.71%

Inception Date 04-Sep-2007

Indicative Benchmark: Linked Benchmark Net

Indicative Benchmark: Linked Benchmark 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 30 September 2010, the benchmark for the sub-fund was changed to S&P Emerging Market/Frontier Middle East & Africa Broad Market Index ex Israel. Prior to 30 September 2010, the benchmark for the sub-fund was MSCI Arabian Markets and Africa Index. Prior to 1 July 2009, the benchmark for the sub-fund was S&P IFCG Africa and Middle East ex-Saudi Arabia and ex-Israel. Prior to 1 September 2008, this benchmark also excluded Kuwait. The benchmark changes were made because the portfolio manager viewed the new benchmark composition to be a better representation of the investment strategy of the sub-fund. Historical benchmark representations have not been restated.

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 - Oliver Bell, Portfolio Manager ,
Middle Eastern and African equities ended September with modest gains, slightly outperforming their emerging market peers. Saudi Arabia gained ground despite the decline in the oil price; domestic retail investors have been enthusiastic buyers of Saudi stocks in recent months, particularly small- and mid-cap names. South Africa finished marginally lower. Sentiment was negatively affected by data released early in the month that indicated that GDP growth in the second quarter had slumped, although this was partially offset by strong buying activity in domestic names by local funds. Within the portfolio, stock selection in South Africa had by far the most positive impact, while our underweight position here added further. Shares in food retailer Shoprite posted substantial gains with investors encouraged by its latest results; the company gained market share, improved margins, and substantially boosted free cash flow, and management indicated that it intends to divest out of low-return countries in the rest of Africa and invest more to entrench its dominant position in South Africa. Capitec Bank was another significant contributor; the South African bank’s half-year results were very strong, with earnings at the top end of management’s recent guidance.

Holdings

Total
Holdings
46
Largest Holding Naspers 9.62% Was (30-Jun-2020) 9.65%
Other View Full Holdings Quarterly data as of 30-Sep-2020
Top 10 Holdings 50.44% View Top 10 Holdings Monthly data as of 30-Sep-2020

Largest Top Contributor^

Al Rajhi Bank
By 2.64%
% of fund 8.49%

Largest Top Detractor^

Naspers
By -6.54%
% of fund 9.55%

^Absolute

Quarterly Data as of 30-Sep-2020

Top Purchase

Al Rajhi Bank
8.49%
Was (30-Jun-2020) 6.56%

Top Sale

Saudi British Bank (E)
0.00%
Was (30-Jun-2020) 2.27%

Quarterly Data as of 30-Sep-2020

30-Jun-2020 - Oliver Bell, Portfolio Manager ,

Saudi Arabia

We reduced our underweight allocation to Saudi Arabia, initiating positions in Saudi Basic Industries and Yanbu National Petrochemical. These stocks were oversold amid the sluggish price of oil, providing an attractive entry point.

Saudi Basic Industries is one of the largest petrochemical manufacturers in the world. The company has significant economies of scale and access to cheap feedstock from Saudi Aramco, which allows the company to seek to deliver resilient profitability despite volatile industry cycles. Furthermore, we believe that the stock's downside is tempered by the company's high free cashflow generation and strong cash position.

Yanbu National Petrochemical is a Saudi Arabia-based, pure play single site petrochemical company. It manufactures basic chemicals, intermediates and polymers. The company has a strong net cash position and we expect dividends to increase over time.

Egypt

We scaled back our exposure to Egypt, selling our position in Commercial International Bank. Given the disruption in supply chains, we expect to see weaker growth in working capital financing. Capital expenditures are also likely to be delayed.

We also reduced our position in snack food company Edita Food Industries. Management saw a broad-based recovery in demand starting in June, but sales are still running below pre-coronavirus levels. We believe it remains an industry leader with some of the best brands.

Prosus

We reduced our holding in Netherlands-listed Prosus which focuses on consumer technology in emerging markets. At current levels, we have a preference for the South African listing, Naspers, which owns 74% of Prosus.

Consumer Discretionary

We sold our holding in Jarir Marketing, a Saudi Arabian retailer of consumer electronics, technology products, books and school/office supplies. We eliminated our position on strength, after the company announced solid first-quarter results. The company has also been strengthening its e-commerce position, although it is likely to face increasing competition from Amazon.

We also eliminated our holding in Herfy Food Services, a Saudi Arabian fast food chain operator. The pandemic has weighed on the company and its industry in the near term. Looking further ahead, increased competition could be a headwind for the company.

Sectors

Total
Sectors
8
Largest Sector Financials 47.41% Was (31-Aug-2020) 48.51%
Other View complete Sector Diversification

Monthly Data as of 30-Sep-2020

Indicative Benchmark: MSCI Arabian Markets & Africa 10/40 IMI Index

Top Contributor^

Health Care
Net Contribution 0.88%
Sector
-0.02%
Selection 0.90%

Top Detractor^

Materials
Net Contribution -0.78%
Sector
-0.72%
Selection
-0.06%

^Relative

Quarterly Data as of 30-Sep-2020

Largest Overweight

Consumer Staples
By6.94%
Fund 12.62%
Indicative Benchmark 5.68%

Largest Underweight

Materials
By-10.49%
Fund 7.67%
Indicative Benchmark 18.17%

Monthly Data as of 30-Sep-2020

30-Sep-2020 - Oliver Bell, Portfolio Manager ,
The portfolio has an overweight position in the financial sector. Over the course of the month, we eliminated our position in Saudi British Bank. While we believe the bank is well managed, we have concerns about asset quality and incremental provisioning needs, particularly in the contracting and manufacturing segments. In our opinion, shares reached a fair valuation point over the period, and we chose to sell out of our holding and focus on higher-conviction names within financials.

Countries

Total
Countries
14
Largest Country South Africa 28.06% Was (31-Aug-2020) 26.03%
Other View complete Country Diversification

Monthly Data as of 30-Sep-2020

Indicative Benchmark: MSCI Arabian Markets & Africa 10/40 IMI Index

Top Contributor^

South Africa
Net Contribution 0.70%
Country
0.29%
Selection 0.41%

Top Detractor^

United Arab Emirates
Net Contribution -0.79%
Country
0.00%
Selection
-0.79%

^Relative

Quarterly Data as of 30-Sep-2020

Largest Overweight

United Kingdom
By7.21%
Fund 7.21%
Indicative Benchmark 0.00%

Largest Underweight

Saudi Arabia
By-10.64%
Fund 25.69%
Indicative Benchmark 36.33%

Monthly Data as of 30-Sep-2020

30-Sep-2020 - Oliver Bell, Portfolio Manager ,
In recent months we have made a number of changes within holdings in South Africa but remain underweight. For example, we eliminated our holding in South African bank Absa. We believe that shares had reached fair valuation and have concerns around the bank’s ability to navigate the difficult top-down environment in South Africa and view its balance sheet as being of lower quality than peers. We also reduced our holding in a South African diversified financial services group providing financial solutions to individual and institutional clients; we believe coronavirus-related business impacts and potential credit-related provision could provide headwinds.

Team (As of 01-Oct-2020)

Oliver Bell

Oliver Bell is a vice president of T. Rowe Price Group, Inc., associate head of Equity EMEA and the lead portfolio manager and chairman of the Investment Advisory Committee for the T. Rowe Price Middle East & Africa Equity Strategy and the Frontier Markets Equity Strategy. He is a member of the International Equity Steering Committee and a Board member of T. Rowe Price (Luxembourg) Management S.a.r.l.

Mr. Bell has 21 years of investment experience, seven of which have been with T. Rowe Price. Prior to joining the firm in 2011, Mr. Bell was head of emerging markets equities research at Pictet Asset Management (the institutional asset management arm of Pictet & Cie, the largest private bank in Switzerland), where his responsibilities included managing several funds, as well as a team of analysts. During his time at Pictet, Mr. Bell was directly responsible for managing investments in the emerging Europe, Middle East and Africa region as part of the global emerging markets and the standalone Middle East and Africa portfolios. Mr. Bell also managed the Global Emerging Markets High Dividend Yield Equity Strategy.

Mr. Bell has earned a bachelor of science degree in chemistry from Exeter University and also has earned the Investment Management Certificate.

  • Fund manager
    since
    2011
  • Years at
    T. Rowe Price
    9
  • Years investment
    experience
    23
Seun Oyegunle, CFA

Seun Oyegunle is the co-portfolio manager of the Africa & Middle East Fund in the Equity Division. 

Seun’s investment experience began in 2009, and he has been with T. Rowe Price since 2013, beginning as a research analyst, covering retail and other sectors across a number of emerging markets, in the Emerging Markets department of the Equity Division. Prior to this, Seun was employed by Asset and Research Management Ltd as an analyst covering the consumer goods sector. He also was employed by Vetiva Capital Management Ltd.

Seun earned an M.B.A. in finance from the University of Pennsylvania, The Wharton School, and a B.Sc. in chemical engineering from the University of Lagos. Seun 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
    7
  • Years investment
    experience
    11

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% 190 basis points 2.07%
Class I $2,500,000 $100,000 $0 0.00% 100 basis points 1.10%
N/A

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

Download

Latest Date Range
Audience for the document: Share Class: Language of the document:
Download Cancel

Download

Share Class: Language of the document:
Download Cancel
Sign in to manage subscriptions for products, insights and email updates.
Continue with sign in?
To complete sign in and be redirected to your registered country, please select continue. Select cancel to remain on the current site.
Continue Cancel
Once registered, you'll be able to start subscribing.

Change Details

If you need to change your email address please contact us.
Subscriptions
OK
You are ready to start subscribing.
Get started by going to our products or insights section to follow what you're interested in.

Products Insights

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

Other Literature

You have successfully subscribed.

Notify me by email when
regular data and commentary is available
exceptional commentary is available
new articles become available

Thank you for your continued interest