SICAV

US Blue Chip Equity Fund

Seeking superior returns from high quality US companies.

ISIN LU0133088293 WKN 767360

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

21.48%
$1.2b

1YR Return
(View Total Returns)

Manager Tenure

36.01%
5yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

0.83
7.69%

Inception Date 04-May-2015

Performance figures calculated in USD

Other Literature

30-Sep-2020 - Larry J. Puglia, Portfolio Manager,
It is difficult to predict the outcome of the pandemic, elections, and many economic factors with any degree of conviction. Therefore, we think it is prudent to avoid companies that we feel require a robust economic backdrop or a meaningful increase in interest rates. Instead, we will continue to focus on high-quality growth companies that we believe can continue to generate durable earnings and free cash flow growth in most economic and regulatory environments.
Larry J. Puglia, CFA, CPA
Larry J. Puglia, CFA, CPA, Lead Portfolio Manager

Larry J. Puglia is a portfolio manager in the U.S. Equity Division. Larry has been managing the US Large-Cap Core Growth Equity Strategy since 1993 and has had lead responsibility for all institutional accounts and other investment products within the strategy since 1997. He also is president of the Investment Advisory Committee of the US Large-Cap Core Growth Equity Strategy. Larry is a vice president of T. Rowe Price Group, Inc.

Click for Manager Outlook
 

Strategy

Manager's Outlook

As economies continue to gradually reopen, we believe a sustained recovery will largely depend on controlling the spread of the coronavirus. The key question for markets may now be how long it will take for companies to regain enough earnings power to justify current valuation levels while compensating investors for the risk that an economic recovery might not progress as rapidly or as evenly as expected. Amid uncertainty, asset returns are likely to remain uneven across sectors, industries, and companies, creating the potential to add value with our strategic investing approach but requiring careful analysis to identify opportunities and manage risk.

We recognize that it is difficult to forecast the pandemic, elections, and many economic factors with any degree of conviction. With this in mind, we think it is prudent to avoid companies that we feel require a robust economic backdrop or a meaningful increase in interest rates in order to justify ownership, as well as those we believe are prohibitively expensive with relative valuations that are difficult to justify. Instead, we will continue to emphasize high-quality growth companies that we believe can continue to generate durable earnings and free cash flow growth in most economic and regulatory environments. As always, we maintain a disciplined adherence to our rigorous investment process, which is rooted in bottom-up, fundamental research.

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 large and medium sized “blue chip” companies in the United States.

Investment Approach

  • Identify high-quality companies with leading market positions in fertile growth fields. Integrate fundamental research — emphasize sustainable growth, not momentum growth.
  • Focus on high-quality earnings, strong free cash flow growth, shareholder-oriented management, and rational competitive environments.
  • Avoid overpaying for growth, while broadly diversifying portfolios, to manage portfolio risk.

Portfolio Construction

  • Typically 100-140 stock portfolio
  • Active position sizes typically range +/- 3.00% relative to S&P 500 Index
  • Sector weights vary from 0.5X to 2.0X for primary sectors relative to S&P 500 Index

Performance (Class I)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Fund % 36.01% 21.48% 19.84% 17.01%
Indicative Benchmark % 14.49% 11.62% 13.46% 10.53%
Excess Return % 21.52% 9.86% 6.38% 6.48%

Inception Date 04-May-2015

Indicative Benchmark: S&P 500 Net 30% Withholding Tax

Data as of  30-Sep-2020

Performance figures calculated in USD

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Fund % 36.01% 21.48% 19.84% 17.01%
Indicative Benchmark % 14.49% 11.62% 13.46% 10.53%
Excess Return % 21.52% 9.86% 6.38% 6.48%

Inception Date 04-May-2015

Indicative Benchmark: S&P 500 Net 30% Withholding Tax

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 % -0.38% -0.38% 23.69% -4.49% 13.61%
Indicative Benchmark % -2.67% -2.67% 2.32% -3.84% 8.79%
Excess Return % 2.29% 2.29% 21.37% -0.65% 4.82%

Inception Date 04-May-2015

Indicative Benchmark: S&P 500 Net 30% Withholding Tax

Indicative Benchmark: S&P 500 Net 30% Withholding Tax

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 - Larry J. Puglia, Portfolio Manager,
U.S. equities endured their first monthly losses since March in September. Within the portfolio, communication services held back relative returns due to both stock selection and our overweight position For example, shares of social networking giant Facebook fell in September amid news of the Senate Committee’s vote to subpoena the company’s CEO for declining to testify on a legal shield that protects online platforms against lawsuits. Despite the recent weakness, we believe that Facebook’s share of consumer time spent on mobile devices, coupled with its advertising monetisation and targeting capabilities, should help it generate advertising-led revenue growth over the next several years. On the positive side, a significant underweight position in the energy sector boosted relative returns. Energy stocks suffered significant declines and vastly underperformed all areas of the market amid continued uncertainties related to the coronavirus pandemic. Effective stock selection in the health care sector added further value. Shares of medical technology company Stryker rose as surgical procedure trends continued to improve, bouncing back from the big drop experienced due to pandemic-related restrictions. We think the potential for future capital deployment and the growing success of its Mako robotic technology offers meaningful upside going forward.

Holdings

Total
Holdings
117
Largest Holding Amazon.com 9.47% Was (30-Jun-2020) 9.61%
Other View Full Holdings Quarterly data as of 30-Sep-2020
Top 10 Holdings 48.51% View Top 10 Holdings Monthly data as of 30-Sep-2020

Largest Top Contributor^

Amazon.com
By 2.78%
% of fund 9.42%

Largest Top Detractor^

Vertex Pharmaceuticals
By -0.42%
% of fund 1.59%

^Absolute

Quarterly Data as of 30-Sep-2020

Top Purchase

Alibaba Group Holding
4.97%
Was (30-Jun-2020) 4.11%

Top Sale

Becton, Dickinson & Company
0.03%
Was (30-Jun-2020) 0.55%

Quarterly Data as of 30-Sep-2020

30-Sep-2020 - Larry J. Puglia, Portfolio Manager,

The digitalization of a wide range of industries and markets has accelerated during the pandemic. As individuals around the globe work, shop, and consume entertainment at home, companies that provide the infrastructure for the online economy have seen demand for their services boom, allowing them to extend their dominance.

In this environment, the companies that we are looking to invest in have various, consistent qualities that single them out as potentially advantaged long?term businesses. Such attributes include high barriers to entry, low availability of substitute products, industry leadership, and pricing power with both suppliers and customers. Also essential is capable management that can allocate capital effectively and efficiently.

Information Technology

Within the information technology sector, we focus on innovative business models that can take advantage of transformational change. We favor companies with durable businesses that address large and growing markets, including electronic payment processing and public cloud computing services.

  • We added shares of Advanced Micro Devices, a semiconductor company that develops computer processors and related technologies. We believe that the slowing of Moore's law will be beneficial to big, through-cycle secular winners such as Advanced Micro Devices. The company also benefits from superior architecture design, better products, and approximately 12 to 18 months of lead time versus its primary rival, in our view.
  • We sold VMware as we feel that an uncertain information technology spending environment related to the coronavirus pandemic could weigh on the company's performance in the near term. We redeployed the proceeds of the sale to fund more compelling opportunities.

Consumer Discretionary

We remain optimistic about stock-specific opportunities within the consumer discretionary sector. We favor businesses benefiting from the secular shift of consumer spending to online products and services. We believe industries such as physical retail and traditional media are secularly challenged; therefore, we plan to continue emphasizing companies within the sector that we think are on the right side of change and disruption.

  • We bought shares of Nike. We have a constructive view on the athletic sportswear company's growth potential as it continues to aggressively build a moat around its brand through category offense, consumer-focused innovation, and more emphasis on its digital presence as it shifts away from weak wholesale partners and takes a direct-to-consumer approach.

Communication Services

Within the communication services sector, we continue to seek attractive opportunities in companies with innovative business models that can take advantage of transformational change. We favor companies with durable business models that address large and growing markets, including internet search and advertising and social connectivity.

  • We added shares of internet platform provider Sea as both its gaming and e-commerce businesses are experiencing accelerating revenue growth due to pandemic-related tailwinds, which have reinforced a shift toward digitalization. Overall, we feel Sea's platform is well positioned to gain market share in Southeast Asia's high-margin online gaming market, with additional growth supported by an underappreciated consumer-to-consumer e-commerce marketplace.

Health Care

Our allocation to the health care sector is composed of select therapeutics and medical device companies that we believe have limited exposure to potential regulatory pressures. We are also emphasizing managed care companies positioned to benefit from industry consolidation as well as the increasing focus on providing cost-effective solutions.

  • We bought shares of biotechnology firm Incyte during the period. We think the company may be underappreciated by the market given the potential of its promising lymphoma treatment and improved visibility into the life-cycle extension of Jakafi, its treatment for bone marrow disorders.
  • We sold Becton, Dickinson & Company due to uncertainty surrounding how quickly elective medical procedures will bounce back in the wake of the pandemic. We prefer other companies in the sector that we think have better risk/reward profiles.

Sectors

Total
Sectors
9
Largest Sector Information Technology 39.82% Was (31-Aug-2020) 40.06%
Other View complete Sector Diversification

Monthly Data as of 30-Sep-2020

Indicative Benchmark: S&P 500 Index

Top Contributor^

Information Technology
Net Contribution 1.10%
Sector
0.41%
Selection 0.69%

Top Detractor^

Industrials & Business Services
Net Contribution -0.21%
Sector
-0.19%
Selection
-0.03%

^Relative

Quarterly Data as of 30-Sep-2020

Largest Overweight

Information Technology
By11.67%
Fund 39.82%
Indicative Benchmark 28.15%

Largest Underweight

Consumer Staples
By-7.02%
Fund 0.00%
Indicative Benchmark 7.02%

Monthly Data as of 30-Sep-2020

30-Sep-2020 - Larry J. Puglia, Portfolio Manager,
Being on the right side of change means identifying and investing in companies that make it easier for businesses of all sizes and across the economy to expand their online presence, improve productivity, and engage customers across multiple channels. As such, we continue to focus on secular growth companies with strong competitive positions in large addressable markets that support multiyear growth horizons. Prominent sectors in the portfolio, including information technology, consumer discretionary, and health care, are areas that we continue to believe offer fertile ground for innovative companies to achieve above-average growth prospects.

Team (As of 01-Oct-2020)

Larry J. Puglia, CFA, CPA

Larry J. Puglia is a portfolio manager in the U.S. Equity Division. Larry has been managing the US Large-Cap Core Growth Equity Strategy since 1993 and has had lead responsibility for all institutional accounts and other investment products within the strategy since 1997. He also is president of the Investment Advisory Committee of the US Large-Cap Core Growth Equity Strategy. Larry is a vice president of T. Rowe Price Group, Inc.

Larry’s investment experience began in 1989, and he has been with T. Rowe Price since 1990, beginning as an investment analyst, specializing in financial services stocks, in the U.S. Equity Division. His coverage included banking, consumer finance, brokerage, investment management, and diversified financial companies. Prior to T. Rowe Price, Larry was employed by Peat Marwick Main & Co. as a senior manager.

Larry earned a B.B.A., summa cum laude, in accounting from the University of Notre Dame and an M.B.A. in finance from the University of Virginia, Darden School of Business, where he was a Shermet Scholar. He also has earned the Chartered Financial Analyst® designation and is a certified public accountant.

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

  • Fund manager
    since
    2015
  • Years at
    T. Rowe Price
    30
  • Years investment
    experience
    31
Craig Watson, CPA

Craig Watson is a portfolio specialist in the U.S. Equity Division. He is a member of the U.S. Large-Cap Growth team, working closely with institutional clients, consultants, and prospects. Craig also is a vice president of T. Rowe Price Group, Inc., and a trustee on the T. Rowe Price Foundation, Inc.

Craig’s investment experience began in 1995, and he has been with T. Rowe Price since 2007, beginning in the U.S. Equity Division. Prior to this, Craig was employed by HSBC Securities as a senior vice president of global equity sales and by UBS as the director of institutional equity sales.

Craig earned a B.S., magna cum laude, in accounting from Hampton University and an M.B.A. from the University of Pennsylvania, The Wharton School. He is a certified public accountant.

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

  • Years at
    T. Rowe Price
    13
  • Years investment
    experience
    13

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% 150 basis points 1.59%
Class I $2,500,000 $100,000 $0 0.00% 65 basis points 0.69%
Class J $10,000,000 $0 $0 0.00% 0 basis points 0.03%
Class Q $1,000 $100 $100 0.00% 65 basis points 0.75%

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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