SICAV

US Equity Fund

Formerly US Large-Cap Equity Fund

Style agnostic investing in larger US companies.

ISIN LU0429319774 WKN A0X87P

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

10.72%
$859.7m

1YR Return
(View Total Returns)

Manager Tenure

11.17%
11yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

-0.29
4.51%

Inception Date 26-Jun-2009

Performance figures calculated in USD

Other Literature

30-Sep-2020 - Jeff Rottinghaus, Portfolio Manager ,
As economies continue to reopen, we believe a sustained recovery will largely depend on controlling the virus. A key question remains how long it will take for companies to regain enough earnings power to justify current valuations. Aggressive stimulus measures have helped fuel the continued rally in equities. We believe that additional support will be needed to boost the recovery, but the prospects of a broad-based fiscal package remain uncertain in the near term.
Jeff Rottinghaus
Jeff Rottinghaus, Portfolio Manager

Jeff Rottinghaus is a portfolio manager in the U.S. Equity Division. He is president of the US Large-Cap Core Equity Strategy and chairman of its Investment Advisory Committee. In addition, he is a vice president and an Investment Advisory Committee member of the US Quantitative U.S. and US Dividend Growth Strategies. Jeff 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 from large capitalization companies in the United States.

Investment Approach

  • Carefully constructed portfolio of the portfolio manager’s highest conviction investment ideas supported by our deep pool of U.S. equity analysts.
  • Core style targeting attractive opportunities across the investable universe irrespective of growth or value style.
  • Investment process that:
    • leverages the stock selection capabilities of our global research team;
    • emphasizes fundamental bottom-up stock selection;
    • is combined with an in-depth valuation assessment;
    • has rigorous portfolio construction.
  • Active risk management process integrated throughout our analysis.
  • Focused Large-Cap approach with stock selection the primary source of value added.
  • High conviction portfolio takes meaningful bets based on rigorous proprietary research.

Portfolio Construction

  • Roughly 50-60 securities.
  • Invest in high conviction ideas over a two-year time horizon.
  • Typical position size range: +/- 4% relative to the benchmark.
  • Sector weights: Generally limited to +/- 10% relative to the benchmark.
  • Expected tracking error: targeting 400 basis points.
  • Expected active share: targeting 70% or greater.

Performance (Class I)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Since Manager Inception
Annualised
Fund % 11.17% 10.72% 12.15% 12.95% 13.59%
Indicative Benchmark % 14.49% 11.62% 13.46% 13.04% 13.84%
Excess Return % -3.32% -0.90% -1.31% -0.09% -0.25%

Inception Date 26-Jun-2009

Manager Inception Date 26-Jun-2009

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
10 YR
Annualised
Fund % 11.17% 10.72% 12.15% 12.95%
Indicative Benchmark % 14.49% 11.62% 13.46% 13.04%
Excess Return % -3.32% -0.90% -1.31% -0.09%

Inception Date 26-Jun-2009

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 23-Oct-2020 Quarter to DateData as of 23-Oct-2020 Year to DateData as of 23-Oct-2020 1 MonthData as of 30-Sep-2020 3 MonthsData as of 30-Sep-2020
Fund % 3.26% 3.26% 6.33% -3.71% 10.27%
Indicative Benchmark % 3.11% 3.11% 8.39% -3.84% 8.79%
Excess Return % 0.15% 0.15% -2.06% 0.13% 1.48%

Inception Date 26-Jun-2009

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 - Jeff Rottinghaus, Portfolio Manager ,
U.S. equities endured their first monthly losses since March in September amid continued frictions in Washington. Within the portfolio, industrials and business services had the largest positive impact due to stock selection. Integrated solid waste services company Waste Connections performed well amid the continuing economy recovery. We like the company for its outstanding management team, durable business model, and strong opportunities for value-creating capital deployment. Security selection in information technology was also beneficial. IT services firm Fiserv produced gains despite a decline in the broader sector. We believe Fiserv is well positioned for above average organic growth as the penetration of mobile banking continues to increase. Conversely, stock selection in consumer discretionary dragged. Yum! Brands, the parent company of Taco Bell, KFC, and Pizza Hut, recently reported quarterly results that included a decline in sales due to coronavirus-related restrictions but improving trends as the company was able to reopen some of its restaurants. We believe Yum! Brands’ recent refranchising initiatives can lead to higher margins, a more stable cash flow stream, and increased capital being returned to shareholders.

Holdings

Total
Holdings
66
Largest Holding Microsoft 5.98% Was (30-Jun-2020) 5.87%
Other View Full Holdings Quarterly data as of 30-Sep-2020
Top 10 Holdings 31.85% View Top 10 Holdings Monthly data as of 30-Sep-2020

Largest Top Contributor^

Amazon.com
By 1.72%
% of fund 5.27%

Largest Top Detractor^

Eli Lilly and Co
By -0.07%
% of fund 1.64%

^Absolute

Quarterly Data as of 30-Sep-2020

Top Purchase

Bank of America (N)
1.47%
Was (30-Jun-2020) 0.00%

Top Sale

Apple
3.31%
Was (30-Jun-2020) 6.02%

Quarterly Data as of 30-Sep-2020

30-Jun-2020 - Jeff Rottinghaus, Portfolio Manager ,

Within the portfolio, our positioning is mainly driven by fundamental, stock-specific views. During the quarter, we selectively added to high-quality names with attractive valuations and strong balance sheets. Conversely, we trimmed names where we did not have complete confidence in their balance sheets or where we found better risk/reward ideas. We will continue to look for high-quality companies that have opportunities to increase their market share or have barriers to entry around their business that will allow them to grow organically in a variety of market environments.

Information Technology

Information technology represents our largest absolute sector weight. Within the sector, we favor companies with durable business models that address large and growing markets, such as increasing demand for business technology solutions. Our largest exposure is to the software industry, where we hold Microsoft and Salesforce.com. Within the sector, we also hold sizable positions in Apple, Visa, and Fiserv.

  • We initiated a position in Applied Materials, a leading provider of semiconductor capital equipment. Over a longer time frame, we believe the company will benefit from rising capital intensity and more rational capital expenditure cycles in the semiconductor industry. Growing demand for semiconductors related to the so-called Internet of Things, hyper-scale data centers, and artificial intelligence should act as another secular tailwind. We believe that Applied Materials' undemanding valuation and signs of a bottom in the memory market create a compelling risk/reward setup for the stock.
  • We added to tech giant Apple. While there are many uncertainties related to future sales and earnings forecasts, the company sports a rock-solid balance sheet. We believe that Apple can post solid results from its services and wearables segments and can continue to generate strong cash flow it can use to pay dividends or for acquisitions.
  • We eliminated chipmaker Xilinx in favor of more compelling risk/reward opportunities within the sector.

Industrials and Business Services

Within the industrials and business services sector, where many names are cyclically tied to either infrastructure or capital spending, we seek to invest in companies with exposure to diverse end markets that feature solid business models and strong cash flow generation. Our largest sector holdings are Honeywell International, Union Pacific, and Waste Connections.

  • We initiated a position in Honeywell International, a top-tier, multi-industrial company with a technologically differentiated portfolio and a best-in-class operating framework. While the company faces some significant near-term pressures in several of its end markets, including commercial aerospace, oil and gas, and nonresidential construction, we believe the company's earnings growth will increase coming out of the recession, partly due to its strong balance sheet, which provides some downside protection and offers optionality when economic activity stabilizes/improves.
  • We initiated a position in global parcel delivery firm UPS. We like management's continued efforts to revamp the company's pricing structure, which we expect to manifest in improved margins going forward. We believe UPS will likely perform better than many peers in a recession given the quality of its balance sheet and safe 3% dividend yield.
  • We eliminated aerospace and defense company Boeing as we believe delays in the 737 MAX recertification process and pressure on air travel from coronavirus fears are likely to have a meaningful impact on the company's bottom line.

Communication Services

The communication services sector comprises a wide range of media and entertainment and telecommunication services companies. The sector is our largest underweight position relative to the S&P 500 Index, as we are most underweight the entertainment and media industries. Our largest sector holdings are in Alphabet and Facebook.

  • We added to our position in Verizon Communications. We like the company's high-quality wireless network and progress on building out a potentially transformative 5G wireless system. We also like its recurring revenue business model, predictable free cash flow, and attractive dividend yield.
  • We eliminated our stake in media conglomerate Walt Disney. While we believe the company has a best-in-class intellectual property (IP) portfolio and IP monetization engine, we have concerns over the ongoing pandemic's impact on the company's business segments, including its theme parks and content production.

Health Care

The health care sector continues to play a significant role in the portfolio, as we believe certain industries offer compelling, relatively stable growth potential that can perform well over the long term in multiple economic scenarios. It also has a strong secular tailwind from an aging population. We favor companies that offer relatively stable growth potential and/or that are well positioned to take advantage of long-term trends such as highly innovative product offerings. Our largest industry weight is in health care equipment and supplies, including Danaher and Becton, Dickinson & Company. We also maintain a sizable position in pharmaceuticals, including Johnson & Johnson and Pfizer.

  • We initiated a position in Becton, Dickinson & Company, the largest manufacturer of single-use medical needles, syringes, and blood collection devices. We believe the company is poised to benefit from relatively steady revenue increases and balance sheet improvements, driven in part by the acquisition of medical technology company C.R. Bard.
  • We initiated a position in pharmaceutical company Eli Lilly. We believe the company has several late-stage assets with high probabilities of success that will benefit its visibility and revenue over the next 12-18 months. We also expect Eli Lilly's base business will remain stable against competition and drug-pricing pressures, and we are encouraged by management's goal of increasing the company's operating margin percentage over the next five years.
  • We eliminated Elanco Animal Health, which provides products and services designed to enhance the health of animals and pets. We have concerns that the company took on too much debt during its recent acquisition of Bayer's animal health business.

Sectors

Total
Sectors
11
Largest Sector Information Technology 25.07% Was (31-Aug-2020) 25.66%
Other View complete Sector Diversification

Monthly Data as of 30-Sep-2020

Indicative Benchmark: S&P 500 Index

Top Contributor^

Industrials & Business Services
Net Contribution 0.57%
Sector
0.06%
Selection 0.51%

Top Detractor^

Health Care
Net Contribution -0.35%
Sector
-0.06%
Selection
-0.29%

^Relative

Quarterly Data as of 30-Sep-2020

Largest Overweight

Industrials & Business Services
By1.50%
Fund 9.79%
Indicative Benchmark 8.29%

Largest Underweight

Information Technology
By-3.08%
Fund 25.07%
Indicative Benchmark 28.15%

Monthly Data as of 30-Sep-2020

30-Sep-2020 - Jeff Rottinghaus, Portfolio Manager ,
The health care sector is one of our largest absolute positions, as we believe certain industries offer compelling, relatively stable growth potential that can perform well over the long term in multiple economic scenarios. It also has a strong secular tailwind from an aging population. We favour companies that offer relatively stable growth potential and/or that are well positioned to take advantage of long-term trends such as highly innovative product offerings. Our largest industry weight is in health care equipment and supplies, including Danaher and Medtronic. We also have a sizable position in pharmaceuticals, including Johnson & Johnson and Eli Lilly.

Team (As of 01-Oct-2020)

Jeff Rottinghaus

Jeff Rottinghaus is a portfolio manager in the U.S. Equity Division. He is president of the US Large-Cap Core Equity Strategy and chairman of its Investment Advisory Committee. In addition, he is a vice president and an Investment Advisory Committee member of the US Quantitative U.S. and US Dividend Growth Strategies. Jeff also is a vice president of T. Rowe Price Group, Inc.

Jeff’s investment experience began in 2001 when he joined T. Rowe Price, beginning in the U.S. Equity Division. Prior to this, Jeff was employed by Ernst & Young as a financial consultant. Jeff also was part owner of software consulting firm Kelly Levey & Associates.

Jeff earned a B.S. in business administration from Bowling Green State University and an M.B.A. in finance from the University of Pennsylvania, The Wharton School. He is a certified public accountant.

  • Fund manager
    since
    2009
  • Years at
    T. Rowe Price
    19
  • Years investment
    experience
    20
Eric Papesh, CFA, BA, MBA

Eric Papesh is a portfolio specialist in the U.S. Equity Division of T. Rowe Price. He is based in London and serves as a proxy for equity portfolio managers with institutional clients, consultants and prospects. Mr. Papesh supports T. Rowe Price's US Smaller Companies Equity and US Large-Cap Equity Strategies offered in the Europe, Middle East and Africa (EMEA) and Asia-Pacific (APAC) regions. He is a vice president of T. Rowe Price Group, Inc. and T. Rowe Price International Ltd.

Mr. Papesh has 22 years of financial services experience, two of which have been with T. Rowe Price. Before joining the firm in 2014, he was a senior research analyst with Russell Investments, where he focused on US equity investment strategies.

Mr. Papesh earned a B.A. in business administration and an M.B.A. from the University of Washington. He has also earned the Chartered Financial Analyst designation.

  • Years at
    T. Rowe Price
    5
  • Years investment
    experience
    25

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 1.62%
Class I $2,500,000 $100,000 $0 0.00% 65 basis points 0.70%
Class Q $1,000 $100 $100 0.00% 65 basis points 0.77%

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