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GIPS® Information

T. Rowe Price ("TRP") claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. T. Rowe Price has been independently verified for the twenty four-year period ended June 30, 2020, by KPMG LLP. The verification report is available upon request. A firm that claims compliance with the GIPS standards must establish policies and procedures for complying with all the applicable requirements of the GIPS standards. Verification provides assurance on whether the firm’s policies and procedures related to composite and pooled fund maintenance, as well as the calculation, presentation, and distribution of performance, have been designed in compliance with the GIPS standards and have been implemented on a firm-wide basis. Verification does not provide assurance on the accuracy of any specific performance report.

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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T. Rowe Price

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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)

16.64%
$736.8m

1YR Return
(View Total Returns)

Manager Tenure

39.79%
11yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

-0.36
4.27%

Inception Date 26-Jun-2009

Performance figures calculated in USD

31-May-2021 - Jeff Rottinghaus, Portfolio Manager ,
Over the past year equity markets have staged a remarkable recovery, fuelled by unprecedented fiscal stimulus and an optimistic outlook for growth. Ongoing progress in vaccine distribution, low interest rates, and indications of significant pent-up consumer demand have created expectations for robust economic growth in the year ahead. However, we believe many of these tailwinds have already been priced-in and certain risks to the economic recovery have yet to be fully appreciated by the market.
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.

Click for Manager Outlook
 

Strategy

Manager's Outlook

Over the past year equity markets have staged a remarkable recovery, fueled by unprecedented fiscal stimulus and an optimistic outlook for growth. Ongoing progress in vaccine distribution, low interest rates, and indications of significant pent-up consumer demand have created expectations for robust economic growth in the year ahead. However, we believe many of these tailwinds have already been priced in, leaving valuations in some segments vulnerable to a pullback. Additionally, we think certain risks to the economic recovery have yet to be fully appreciated by the market. The Federal Reserve has expressed a willingness to let markets run hot to sustain the recovery, giving rise to inflation concerns. While further stimulus and infrastructure spending may provide a short-term lift for consumers and some industries, these proposals could lead to an increase in both consumer and corporate tax rates.

Going forward, it will be critical to continue seeking out companies that appear well positioned to emerge from the pandemic with lasting competitive advantages, while avoiding firms that face longer-term secular challenges. We believe careful fundamental research will be necessary to find opportunities, and we will continue to search for investment opportunities in select areas of the market, utilizing our bottom-up stock selection approach. As always, we rely on our global research team of industry specialists to uncover fundamentally sound companies and remain committed to providing quality, risk-adjusted returns over the long term.

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.
  • Environmental, social and governance ("ESG") factors with particular focus on those considered most likely to have a material impact on the performance of the holdings or potential holdings in the funds’ portfolio are assessed. These ESG factors, which are incorporated into the investment process alongside financials, valuation, macro-economics and other factors, are components of the investment decision. Consequently, ESG factors are not the sole driver of an investment decision but are instead one of several important inputs considered during investment analysis.

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 % 39.79% 16.64% 14.95% 13.60% 14.99%
Indicative Benchmark % 39.65% 17.35% 16.49% 13.68% 15.23%
Excess Return % 0.14% -0.71% -1.54% -0.08% -0.24%

Inception Date 26-Jun-2009

Manager Inception Date 26-Jun-2009

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

Data as of 31-May-2021

Performance figures calculated in USD

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Fund % 50.35% 15.29% 14.10% 12.99%
Indicative Benchmark % 55.56% 16.12% 15.61% 13.21%
Excess Return % -5.21% -0.83% -1.51% -0.22%

Inception Date 26-Jun-2009

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

Data as of 31-Mar-2021

Performance figures calculated in USD

Recent Performance

  Month to DateData as of 15-Jun-2021 Quarter to DateData as of 15-Jun-2021 Year to DateData as of 15-Jun-2021 1 MonthData as of 31-May-2021 3 MonthsData as of 31-May-2021
Fund % 0.79% 7.52% 14.15% 0.36% 10.92%
Indicative Benchmark % 1.06% 7.12% 13.61% 0.65% 10.60%
Excess Return % -0.27% 0.40% 0.54% -0.29% 0.32%

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.

31-May-2021 - Jeff Rottinghaus, Portfolio Manager ,
U.S. stocks advanced modestly during a rather volatile month, but some major indices hit new record highs in May. Within the portfolio, the financials sector had the largest negative impact on relative performance due to stock selection. Shares of insurer RenaissanceRe declined. Recently, the company reported disappointing results from its most recent quarter, driven by escalating costs and lower net investment income. We believe RenaissanceRe will benefit from a rising property and casualty cycle. Not having an allocation to energy also weighed on relative returns as the sector outperformed all others in the index. We maintain an underweight position in energy as we see challenging long-term supply/demand dynamics for the sector. Conversely, the industrials and business services sector had the largest positive impact on relative returns, thanks to stock selection and an overweight allocation. Howmet Aerospace continued to benefit from a rebounding economy. During the month, the company also reported better-than-expected earnings from its most recent quarter. We like the company’s exposure to commercial aerospace, which we believe will see continued recovery over the next two years as travel demand increases and airlines purchase new aircraft to expand their fleets.

Holdings

Total
Holdings
63
Largest Holding Microsoft 6.16% Was (31-Dec-2020) 5.87%
Other View Full Holdings Quarterly data as of  31-Mar-2021
Top 10 Holdings 31.65% View Top 10 Holdings Monthly data as of  31-May-2021

Largest Top Contributor^

Microsoft
By 2.33%
% of fund 6.24%

Largest Top Detractor^

Amazon.com
By -2.52%
% of fund 5.05%

^Absolute

Quarterly Data as of 31-Mar-2021

Top Purchase

Charter Communications (N)
1.24%
Was (31-Dec-2020) 0%

Top Sale

Apple (E)
0.00%
Was (31-Dec-2020) 2.53%

Quarterly Data as of 31-Mar-2021

31-Mar-2021 - 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.

Industrials and Business Services

The industrials and business services sector contains many names that are cyclically tied to either infrastructure or capital spending. The sector is our largest overweight relative to the S&P 500 Index, where we invest in companies with exposure to diverse end markets that feature solid business models and strong cash flow generation. Our largest sector holdings are Union Pacific, Howmet Aerospace, and Waste Connections.

  • We added to our position in Caterpillar, a leading manufacturer of construction and mining equipment as well as engines and turbines, as we believe the construction market still has room for recovery. We like the company's high market share and durability created by the dealer network. Longer term, we are bullish on new management's strategy to shift toward a more value-added mix of products and services.
  • We eliminated our position in agriculture and construction equipment manufacturer Deere. While we like the company's dominant market share in a consolidated market with positive product tailwinds, we have valuation concerns and believe the fundamental setup is less attractive as we approach peak growth.

Health Care

The health care sector is one of our largest absolute and relative overweight positions, as we believe certain industries offer compelling, relatively stable growth potential that can perform well over the long term. It also has a strong secular tailwind from an aging U.S. population. We favor companies that offer relatively stable growth potential and/or that are well positioned to take advantage of long-term trends by offering highly innovative products. Our largest industry weight is in pharmaceuticals, including Johnson & Johnson and Eli Lilly. We also have a sizable position in health care equipment and supplies, including Medtronic and Danaher.

  • Zoetis is a pharmaceuticals firm that specializes in vaccines and treatments for livestock and household pets. We initiated a position because we think the COVID-19 pandemic may have longer-term positive benefits for the animal health industry in the form of increased pet ownership as well as increased importance on the security of local food supply. We believe Zoetis is a durable secular growth company that could benefit from any incremental market fears on U.S. economic growth.
  • We eliminated hospital operator HCA Healthcare on recent strength. During the quarter, shares spiked higher after management reported favorable earnings results that skewed toward profitable, high-acuity admissions. Despite significant fixed costs in its operating model, HCA also demonstrated an ability to reduce operating expenses in a challenging environment, aiding the 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; we are most underweight the entertainment and diversified telecommunication services industries. Our largest sector holdings are in Alphabet and Facebook.

  • We added to the portfolio's position in Charter Communications, the second-largest cable operator in the U.S. We believe the company should be able to compound earnings and free cash flow over time as its subscriber rolls grow. In our view, access to fast, reliable internet service grows more important as more people work from home and consume streaming media, enhancing Charter Communications' value proposition to subscribers and its opportunity to poach customers who need higher speeds. We also believe the durability of the company's free cash flow trajectory is more attractive than the market estimates.
  • We eliminated wireless operator Verizon Communications. While we like the company's high-quality wireless network and strong management team, we were surprised by the amount the company spent in a recent spectrum auction and believe the business faces threats from rising competitive intensity in the wireless space.

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 IT services industry, where we hold several names including Visa and Fiserv. Within the sector we also hold sizable positions in Microsoft, Qualcomm, and Salesforce.com.

  • We initiated a position in Advanced Micro Devices, an American semiconductor company that develops computer processors and related technologies. We believe that Advanced Micro Devices will benefit from the slowing of Moore's law. The company also boasts superior architecture design, better products, and approximately 12 to 18 months of lead time versus its primary rival. We believe that improved product design, especially within its core gaming and computing segments, along with shifting economics in the industry that could allow fabless design firms take market share from rivals, will be beneficial for the firm over the long run.
  • We eliminated our position in tech giant Apple. The company has a strong and growing position in its market, solid fundamental underpinnings, and the potential for dividend growth and additional share repurchases. However, we have concerns about Apple's high valuation as well as its ability to sustain sales growth driven by the latest iPhone release.

Sectors

Total
Sectors
10
Largest Sector Information Technology 23.65% Was (30-Apr-2021) 23.70%
Other View complete Sector Diversification

Monthly Data as of 31-May-2021

Indicative Benchmark: S&P 500 Index

Top Contributor^

Health Care
Net Contribution 0.32%
Sector
-0.09%
Selection 0.40%

Top Detractor^

Energy
Net Contribution -0.50%
Sector
-0.50%
Selection
0.00%

^Relative

Quarterly Data as of 31-Mar-2021

Largest Overweight

Industrials & Business Services
By3.36%
Fund 12.30%
Indicative Benchmark 8.94%

Largest Underweight

Energy
By-2.79%
Fund 0.00%
Indicative Benchmark 2.79%

Monthly Data as of 31-May-2021

31-May-2021 - Jeff Rottinghaus, Portfolio Manager ,
The health care sector is one of our largest absolute and relative overweight positions, as we believe certain industries offer compelling, relatively stable growth potential that can perform well over the long term. It also has a strong secular tailwind from an aging U.S. population. We favour companies that offer relatively stable growth potential and/or that are well positioned to take advantage of long-term trends by offering highly innovative products. Our largest industry weight is in pharmaceuticals, including Johnson & Johnson and Eli Lilly.

Team (As of 10-Jun-2021)

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
    20
  • Years investment
    experience
    21
Eric Papesh, CFA, BA, MBA

Eric Papesh is a portfolio specialist based in London in the U.S. Equity Division. Eric supports the US Smaller Companies Equity and US Large-Cap Equity Income Strategies offered in the Europe, Middle East, and Africa and Asia-Pacific regions. Eric is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price International Ltd. 

Eric’s investment experience began in 1994, and he has been with T. Rowe Price since 2014, beginning in the ISG division as a portfolio specialist. Prior to this, Eric was employed by Russell Investments where he focused on U.S. equity investment strategies.

Eric earned a B.A. in business administration, with concentrations in finance and information systems, and an M.B.A. in business administration from the University of Washington. Eric has earned the Chartered Financial Analyst® designation.

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

  • Years at
    T. Rowe Price
    6
  • Years investment
    experience
    26

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.