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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)

18.24%
$843.6m

1YR Return
(View Total Returns)

Manager Tenure

1.90%
4yrs

Information Ratio
(3 Years)

Tracking Error
(3 Years)

0.77
7.21%

Inception Date 04-May-2015

Performance figures calculated in USD

Other Literature

31-Aug-2019 - Larry J. Puglia, Portfolio Manager,
Overall, we believe positive economic growth, low inflation, and accommodative monetary policies should support financial asset prices in the remainder of 2019. The reality is it will largely depend on a resolution of the U.S.-China trade dispute, which is weighing on sentiment and eroding business confidence and capital spending. With all the fits and starts, trade and interest rates remain the two key market factors to watch.
Larry Puglia
Larry Puglia, Lead Portfolio Manager

Larry J. Puglia is a portfolio manager in the U.S. Equity Division of T. Rowe Price. He is president of the Investment Advisory Committee of the US Large-Cap Core Growth Equity Strategy. He 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. Mr. Puglia is a vice president of T. Rowe Price Group, Inc.

Click for Manager Outlook
 

Strategy

Manager's Outlook

We believe positive economic growth, low inflation, and accommodative monetary policies should support financial asset prices in the second half of 2019. The reality is it will largely depend on a resolution of the U.S.-China trade dispute, which is weighing on sentiment and corroding business confidence and capital spending. With all the fits and starts, trade and interest rates remain the two key market factors to watch.

Our investment approach recognizes that it is very difficult to forecast how these macro factors will develop and how much they will affect stock prices. Therefore, we continue to emphasize companies that we believe can continue to generate strong earnings and free cash flow growth in most scenarios. Essentially, we are trying to buy "all season" growth companies that we think can do reasonably well in most economic and regulatory environments. Over reasonable time horizons, we believe the quality and growth prospects of our holdings could provide relatively favorable prospects.

As always, we maintain a disciplined adherence to our rigorous process, which is rooted in bottom-up, fundamental research. In addition to uncovering underappreciated idiosyncratic stories, this approach also helps prepare us to take advantage of the market's tendency to overshoot on both the downside and the upside. Potential market overreactions often provide opportunities to trim positions into strength and add to our highest-conviction ideas on weakness.

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 % 1.90% 18.24% N/A 13.08%
Indicative Benchmark % 3.62% 12.71% N/A 9.65%
Excess Return % -1.72% 5.53% N/A 3.43%

Inception Date 04-May-2015

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

Data as of  30-Sep-2019

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Fund % 1.90% 18.24% N/A 13.08%
Indicative Benchmark % 3.62% 12.71% N/A 9.65%
Excess Return % -1.72% 5.53% N/A 3.43%

Inception Date 04-May-2015

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

Data as of  30-Sep-2019

Performance figures calculated in USD

Recent Performance

  Month to DateData as of 09-Oct-2019 Quarter to DateData as of 09-Oct-2019 Year to DateData as of 09-Oct-2019 1 MonthData as of 30-Sep-2019 3 MonthsData as of 30-Sep-2019
Fund % -1.51% -1.51% 16.68% -1.94% -1.38%
Indicative Benchmark % -1.88% -1.88% 17.75% 1.83% 1.55%
Excess Return % 0.37% 0.37% -1.07% -3.77% -2.93%

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.

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.

31-Aug-2019 - Larry J. Puglia, Portfolio Manager,
Major U.S. stock indexes declined in August as the deepening trade conflict with China and global growth concerns weighed on sentiment. Within the portfolio, the communication services sector detracted from relative results due to unfavourable stock selection during the month. An underweight to the consumer staples sector and adverse stock selection in the health care sector also cramped relative returns. Within health care, shares of Anthem declined due to investors’ rising concerns over new Medicare-for-All proposals in Congress that could upend the industry by replacing private insurance with a government-run system. Despite these near-term headwinds, we believe that the company is executing a credible plan to drive meaningful earnings growth, fueled by momentum in its commercial segment and the launch of an in-house pharmacy benefit manager that should improve its cost structure. On the positive side, effective stock selection in the industrial and business services sector contributed the most to relative performance. Names in the aerospace and defense industry added notably to relative sector results. A beneficial underweight to the financials sector, and favourable stock selection in the information technology sector, also boosted relative returns.

Holdings

Total
Holdings
128
Largest Holding Amazon.com 9.84% Was (31-Mar-2019) 9.74%
Other View Full Holdings Quarterly data as of 30-Sep-2019
Top 10 Holdings 45.07% View Top 10 Holdings Monthly data as of 30-Sep-2019

Largest Top Contributor^

Amazon.com
By 3.71%
% of fund 9.61%

Largest Top Detractor^

Alphabet
By -1.38%
% of fund 4.81%

^Absolute

Quarterly Data as of 30-Jun-2019

Top Purchase

Facebook
5.82%
Was (31-Mar-2019) 4.93%

Top Sale

Eli Lilly
0.05%
Was (31-Mar-2019) 0.83%

Quarterly Data as of 30-Jun-2019

30-Jun-2019 - Larry J. Puglia, Portfolio Manager,

Amid the market rally, we sold shares of several companies on relative strength. However, we also identified certain idiosyncratic investment opportunities. We continue to favor many of our high-conviction holdings in the information technology and consumer discretionary sectors, where valuations still look relatively compelling given the trajectories of the underlying businesses.

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 bought shares of Marvell Technology Group, a digital semiconductor company focused on data storage and connectivity. We feel the company stands to benefit as fundamentals improve and the market better appreciates its improved business mix and operational execution. We also think recent acquisitions will prove accretive to earnings as management aims to strengthen the company's computing and networking capabilities in communications and enterprise data center markets.
  • Shares of NVIDIA fell after softer-than-anticipated demand for its data center products caused guidance to decline. We sold shares due to the implied thesis change and redeployed the proceeds to fund other 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 added shares of Alibaba Group Holding during the quarter. While trade tensions are a near-term overhang on the stock, we remain constructive on the long-term fundamentals and expect the Chinese internet giant's investments in its cloud business and offline retail to pay off by expanding the company's total addressable market. Moreover, the company's rich data on user behavior across its different services also create ample opportunity for monetization, while its leadership in online retail offers exposure to rising household incomes in China and other emerging markets.
  • Booking Holdings, formerly known as Priceline, is a worldwide provider of online travel services. We continued to trim our exposure to the stock as we expect growth to moderate as the business matures. We are modestly overweight in Booking Holdings as we still think the company's expansions internationally and into non-hotel properties present attractive opportunities for growth.

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. Furthermore, we feel a single-payer health care system is extremely unlikely, but we also recognize the meaningful shift in sentiment around stocks in the managed care industry, as well as the reality that political rhetoric is only likely to intensify as the 2020 U.S. presidential election approaches.

  • Cigna is one of the largest health insurers in the U.S. by enrollment and maintains a leading position in both commercial insurance and Medicare. We increased our position as we believe there is potential for earnings growth based on Cigna's attractive business model, high barriers to entry, and limited substitutes. Cigna's merger with Express Scripts should also present attractive synergies that could help unlock shareholder value for the combined entity. Furthermore, we feel the overhang of democratic proposals for a single-payer health care system is a threat that is unlikely to be realized.
  • We sold shares of managed care provider Humana during the quarter to moderate our position size as we focus our exposure within the industry amid a highly uncertain and politically charged environment for the group. We have some fog to get through in the near term, but in general, we continue to have a positive long-term view of the company as the underlying business model remains sound and utilization trends remain favorable.

Sectors

Total
Sectors
11
Largest Sector Information Technology 31.17% Was (31-Aug-2019) 30.94%
Other View complete Sector Diversification

Monthly Data as of 30-Sep-2019

Indicative Benchmark: S&P 500 Index

Top Contributor^

Energy
Net Contribution 0.27%
Sector
0.36%
Selection -0.09%

Top Detractor^

Consumer Discretionary
Net Contribution -0.88%
Sector
-0.14%
Selection
-0.74%

^Relative

Quarterly Data as of 30-Sep-2019

Largest Overweight

Consumer Discretionary
By11.28%
Fund 21.39%
Indicative Benchmark 10.11%

Largest Underweight

Consumer Staples
By-7.63%
Fund 0.05%
Indicative Benchmark 7.68%

Monthly Data as of 30-Sep-2019

31-Aug-2019 - Larry J. Puglia, Portfolio Manager,
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 emphasising managed care companies positioned to benefit from industry consolidation as well as the increasing focus on providing cost-effective solutions. Furthermore, we feel a single-payer health care system is extremely unlikely. However, we also recognise the meaningful shift in sentiment around stocks in the managed care industry, as well as the reality that political rhetoric is only likely to intensify as the 2020 U.S. presidential election approaches.

Team (As of 31-Aug-2019)

Larry Puglia

Larry J. Puglia is a portfolio manager in the U.S. Equity Division of T. Rowe Price. He is president of the Investment Advisory Committee of the US Large-Cap Core Growth Equity Strategy. He 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. Mr. Puglia is a vice president of T. Rowe Price Group, Inc.

Mr. Puglia has 30 years of investment experience, 29 of which have been with T. Rowe Price. He joined the firm in 1990 as an investment analyst specializing in financial services stocks. His coverage included banking, consumer finance, brokerage, investment management, and diversified financial companies. Mr. Puglia also served as an investment analyst covering the pharmaceutical industry. He began his career at Peat Marwick Main & Co. in 1982, ultimately serving as a senior manager.

Mr. Puglia 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 named a Shermet Scholar. He has earned the Chartered Financial Analyst designation and is a certified public accountant.

  • Fund manager
    since
    2015
  • Years at
    T. Rowe Price
    29
  • Years investment
    experience
    30
Craig Watson

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

Mr. Watson has 24 years of investment experience. Prior to joining the firm in 2007, he was senior vice president of global equity sales for HSBC Securities. Mr. Watson also was employed by UBS as director of institutional equity sales.

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

  • Years at
    T. Rowe Price
    11
  • Years investment
    experience
    23

Fee Schedule

Share Class Minimum Initial Investment and Holding Amount Minimum Subsequent Investment Minimum Redemption Amount Sales Charge (up to) Investment Management Fee (up to) Ongoing Charges
Class A $15,000 $100 $100 5.00% 150 basis points 1.61%
Class I $2,500,000 $100,000 $0 0.00% 65 basis points 0.72%
Class J $10,000,000 $0 $0 0.00% 0 basis points 0.03%
Class Q $15,000 $100 $100 0.00% 65 basis points 0.76%

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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