SICAV

US Large-Cap Value Equity Fund

Invest in large US companies with hidden value and potential overlooked by the market majority.

ISIN LU0133100338 WKN 767380

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

-0.78%
$579.4m

1YR Return
(View Total Returns)

Manager Tenure

-13.03%
18yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

-0.18
4.30%

Inception Date 27-Mar-2002

Performance figures calculated in USD

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30-Jun-2020 - Heather McPherson, Portfolio Manager,
We continue to believe the market will be driven by news headlines until there is more clarity on the impacts of the coronavirus and how it may affect economic behaviour moving forward. Earnings guidance will be of little value for the next several quarters, so we see opportunities by extending our time horizon to identify opportunities that look attractive under a “normalised” environment.
John D.  Linehan, CFA
John D. Linehan, CFA, Co-Portfolio Manager

John D. Linehan is the portfolio manager for the U.S. Large Cap Equity Income Strategy and co-portfolio manager for the US Large-Cap Value Equity Strategy in the U.S. Equity Division. In addition, he is the chief investment officer of Equity and a member of the firm's U.S. Equity Steering and Equity Brokerage and Trading Control Committees. He also is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price Associates, 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 that are selling at discounted valuations relative to their historical average and/or the average of their industries.

Investment Approach

  • Focus on relative value relationships to opportunistically identify attractively valued companies.
  • Fundamental research is key to uncovering companies with potential for stock price mean reversion.
  • Integrate qualitative inputs to assess potential for improved investor perception.
  • Verify relative valuation anomalies through quantitative analysis.
  • Balance valuation analysis and qualitative overlay.

Portfolio Construction

  • Typically 70-80 stock portfolio
  • Individual positions typically are below 3%, but higher conviction ideas can range to 5%
  • Sector weights will typically vary from 0.5X to 2.0X of primary value sectors of the Russell 1000 Value Index
  • Reserves will range from 0% to 2%

Performance (Class I)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Fund % -13.03% -0.78% 3.06% 8.96%
Indicative Benchmark % -9.58% 1.05% 3.85% 9.60%
Excess Return % -3.45% -1.83% -0.79% -0.64%

Inception Date 27-Mar-2002

Indicative Benchmark: Russell 1000 Value Net 30% Index

Data as of  30-Jun-2020

Performance figures calculated in USD

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Fund % -13.03% -0.78% 3.06% 8.96%
Indicative Benchmark % -9.58% 1.05% 3.85% 9.60%
Excess Return % -3.45% -1.83% -0.79% -0.64%

Inception Date 27-Mar-2002

Indicative Benchmark: Russell 1000 Value Net 30% Index

Data as of  30-Jun-2020

Performance figures calculated in USD

Recent Performance

  Month to DateData as of 07-Aug-2020 Quarter to DateData as of 07-Aug-2020 Year to DateData as of 07-Aug-2020 1 MonthData as of 30-Jun-2020 3 MonthsData as of 30-Jun-2020
Fund % 1.44% 7.18% -13.89% 0.22% 11.48%
Indicative Benchmark % 2.73% 6.73% -11.00% -0.73% 14.05%
Excess Return % -1.29% 0.45% -2.89% 0.95% -2.57%

Inception Date 27-Mar-2002

Indicative Benchmark: Russell 1000 Value Net 30% Index

Indicative Benchmark: Russell 1000 Value Net 30% Index

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-Jun-2020 - Heather McPherson, Portfolio Manager,
U.S. equities produced positive returns in June, capping off a robust but periodically volatile second quarter. Equities started out the month on a strong note, helped by growing optimism that the economy might experience a sharp, “V-shaped” recovery. Fears of a resurgence in the coronavirus pandemic soon derailed the market’s gains, however. Equities fluctuated over much of the second half of June as hopes for better treatments and a vaccine for the coronavirus helped offset fears over the rise in cases. Within the portfolio, the information technology sector was the leading contributor to relative results due to our stock selection. Qualcomm shares gained in conjunction with the partial reopening of the U.S. economy. Our choice of securities in the industrials and business services sector also lifted relative returns, led by Boeing. Conversely, the utilities sector had the most negative impact, as a result of both stock selection and an overweight allocation. Along with other utilities, Southern Company shares underperformed amid a resurgence in investors’ appetite for risk. Security selection, notably in Tyson Foods, and an underweight allocation in the consumer staples sector hampered relative performance further.

Holdings

Total
Holdings
87
Largest Holding Morgan Stanley 3.17% Was (31-Mar-2020) 2.45%
Other View Full Holdings Quarterly data as of 30-Jun-2020
Top 10 Holdings 25.92% View Top 10 Holdings Monthly data as of 30-Jun-2020

Largest Top Contributor^

Morgan Stanley
By 0.36%
% of fund 3.18%

Largest Top Detractor^

Southern Company
By -0.66%
% of fund 3.05%

^Absolute

Quarterly Data as of 30-Jun-2020

Top Purchase

Morgan Stanley
3.17%
Was (31-Mar-2020) 2.45%

Top Sale

JPMorgan Chase
1.82%
Was (31-Mar-2020) 2.63%

Quarterly Data as of 30-Jun-2020

31-Mar-2020 - Heather McPherson, Portfolio Manager,

During the period, we bought shares of high-quality companies that had dropped to attractive valuations due to the equity market sell-off. We trimmed positions that had held up amid the downturn to increase our exposure to high-quality names with a more attractive reward-to-risk ratio. We also sold firms where our thesis changed due to the coronavirus to take advantage of investment ideas that we found more compelling.

Financials

The financials sector represents a significant absolute weighting in the portfolio. Given the declines during the first quarter of 2020, we found opportunities to add to names we like at attractive valuations. We tend to prefer defensively positioned names with solid balance sheets and diversified revenue streams, as we are mindful of the adverse impact of lower interest rates on bank lending margins and potential weakening of the credit cycle. We sold shares during the quarter.

  • We sold shares of U.S. Bancorp, a regional bank. Although we continue to like the company's demonstrated credit discipline and solid return profile, we are mindful of the adverse impact of lower interest rates and the potential weakening of the credit cycle on the bank's profitability.
  • Global bank JPMorgan Chase has above-average balance sheet strength and diversified business lines that are highly levered to consumers. These defensive characteristics enabled the stock to withstand the market downturn somewhat better than peers, and we sold shares. However, we continue to believe the company's strong management team and bench, along with market leadership in most business lines, create a differentiated story.
  • We bought shares of discount broker Charles Schwab. We like the company's low relative credit risk and attractive valuation. Given that Charles Schwab is highly levered to rising short-term interest rates, we are also attracted to the stock's upside potential in the event of an eventual unwinding of the Federal Reserve's recent emergency rate cuts.

Health Care

We have a varied view of the sector, considering the myriad challenges and opportunities health care companies face, including the potential for drug pricing reform, mergers and acquisitions, and an aging U.S. population. Within the sector, our primary exposure is to the pharmaceuticals industry. We bought shares during the quarter.

  • Elanco Animal Health provides products and services designed to enhance the health of animals and pets. We bought shares around the company's recent equity financing, which we believe should be accretive to earnings. Longer term, we expect the stock to benefit from the dissipation of several overhangs and headwinds.

Industrials and Business Services

Within the industrials and business services sector, we invest in companies that reach many different end markets and have solid business models and/or an ability to generate strong cash flows.

  • We bought shares of Rockwell Automation, a provider of industrial automation and information products, on weakness. The company suffered due to concerns around valuation and the state of the industrial economy amid the coronavirus pandemic. We like Rockwell Automation for its healthy balance sheet, and we believe the industrial automation space could have an attractive setup at this point in the cycle.
  • Johnson Controls International is a maker of equipment and building controls. The stock has held up well in recent periods, and we sold shares in order to buy into high-quality peers that we believe are trading at attractive valuations.

Materials

The materials sector is largely cyclical and has faced challenges due to large swings in raw materials costs and lower industrial output. Our focus is on owning companies that are undertaking initiatives to create additional shareholder value. We bought shares during the quarter.

  • We bought shares of DuPont de Nemours. Although we remain mindful of the potential liabilities stemming from the company's alleged role in creating and selling PFAS chemicals, which are under fire for their adverse health and environmental effects, we are drawn to the stock's attractive risk/reward profile and desirable end markets. We also believe the proceeds from the impending DuPont de Nemours-International Flavors & Fragrances merger, slated to be voted on later in the year, should help address concerns over liquidity.

Sectors

Total
Sectors
11
Largest Sector Financials 20.69% Was (31-May-2020) 20.65%
Other View complete Sector Diversification

Monthly Data as of 30-Jun-2020

Indicative Benchmark: Russell 1000 Value Index

Top Contributor^

Financials
Net Contribution 1.44%
Sector
-0.02%
Selection 1.46%

Top Detractor^

Energy
Net Contribution -1.12%
Sector
0.35%
Selection
-1.47%

^Relative

Quarterly Data as of 30-Jun-2020

Largest Overweight

Health Care
By2.88%
Fund 16.96%
Indicative Benchmark 14.08%

Largest Underweight

Consumer Discretionary
By-4.71%
Fund 2.32%
Indicative Benchmark 7.02%

Monthly Data as of 30-Jun-2020

30-Jun-2020 - Heather McPherson, Portfolio Manager,
The financials sector represents a significant absolute weighting in the portfolio. We tend to prefer defensively positioned companies with solid balance sheets and diversified revenue streams, as we are mindful of the adverse impact of lower interest rates on bank lending margins and potential weakening of the credit cycle. In June, we sold shares of several firms, taking advantage of relative strength. We also took advantage of opportunities to add to select names that we like at attractive valuations.

Team (As of 05-Aug-2020)

John D.  Linehan, CFA

John D. Linehan is the portfolio manager for the U.S. Large Cap Equity Income Strategy and co-portfolio manager for the US Large-Cap Value Equity Strategy in the U.S. Equity Division. In addition, he is the chief investment officer of Equity and a member of the firm's U.S. Equity Steering and Equity Brokerage and Trading Control Committees. He also is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price Associates, Inc.

John’s investment experience began in 1987, and he has been with T. Rowe Price since 1998, beginning as an investment analyst, covering paper and forest products and the airline industry, in the U.S. Equity Division. From 2003 to 2009, he was the portfolio manager of the US Value Strategy, and from 2009 to 2014, he was head of U.S. Equity and chairman of the U.S. Equity Steering Committee. Prior to T. Rowe Price, John was an executive in the oil trading and consulting industry, first as vice president and managing director for Delaney Petroleum, then as vice president and managing director for E.T. Petroleum. He also was an associate in mortgage-backed securities trading at Banker Trust NY.

John earned a B.A. in economics from Amherst College and an M.B.A. from Stanford Graduate School of Business, where he was a Henry Ford II Scholar, an Arjay Miller Scholar, and the winner of the Alexander A. Robichek Award in finance. John also has earned the Chartered Financial Analyst® designation.

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

  • Fund manager
    since
    2002
  • Years at
    T. Rowe Price
    22
  • Years investment
    experience
    31
Mark S.  Finn, CFA, CPA

?Mark Finn is the portfolio manager of the US Large-Cap Value Equity Strategy, which includes the Value Fund, and co-portfolio manager of the Large-Cap Value Fund in the U.S. Equity Division. He is chairman of the Investment Advisory Committee of the U.S. Large Cap Value Equity Strategy. Mark is also a vice president and an Investment Advisory Committee member of the US Large-Cap Equity Income, Global Natural Resources Equity, US Quantitative U.S., US Quantitative Large, US Mid-Cap Value Equity, and Retirement Strategies.

Mark’s investment experience began in 1998, and he has been with T. Rowe Price since 1990, beginning as controller of Investment Services in the Finance department. After that, he was principal accounting officer for the firm’s realty income strategies and an equity research analyst. Prior to T. Rowe Price, Mark was employed by Price Waterhouse LLP as an auditor, working on engagements for both public and private companies.  

Mark earned a B.S. in accounting from the University of Delaware. He also has earned the Chartered Financial Analyst® designation.

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

  • Fund manager
    since
    2010
  • Years at
    T. Rowe Price
    29
  • Years investment
    experience
    22
Heather K. McPherson

Heather McPherson is a co-portfolio manager for the US Large-Cap Value Equity Strategy and an associate portfolio manager for the US Large-Cap Equity Income Strategy in the U.S. Equity Division. Heather is a member of the firm's U.S. Equity Steering Committee and is a vice president and an Investment Advisory Committee member of the US Large-Cap Equity Income, US Large-Cap Core Equity, US Quantitative Large, Global Natural Resources Equity, US Mid-Cap Value Equity, and US Large-Cap Value Equity Strategies. She is a trustee of the T. Rowe Price Foundation. Heather also is a vice president of T. Rowe Price Group, Inc. 

Heather’s investment experience began in 2001, and she has been with T. Rowe Price since 2002, beginning in the U.S. Equity Division. Prior to this, Heather was employed by Salomon Smith Barney as a summer intern, covering the storage area networking industry. Heather also was employed by Putnam Lovell Securities, Inc., as a vice president of finance and administration.

Heather earned a B.S. in managerial economics from the University of California, Davis, and an M.B.A. from Duke University, The Fuqua School of Business.

  • Fund manager
    since
    2015
  • Years at
    T. Rowe Price
    17
  • Years investment
    experience
    19
Caleb N. Fritz, CFA

Caleb Fritz is a portfolio specialist in the U.S. Equity Division of T. Rowe Price. He acts as a proxy for equity portfolio managers with institutional clients, consultants, and prospects. Mr. Fritz supports T. Rowe Price's large-cap value strategies. He is a vice president of T. Rowe Price Group, Inc.

Mr. Fritz has 19 years of investment experience, 12 of which have been with T. Rowe Price. Prior to his current position, he was a lead portfolio analyst providing analytical support to investment, client service, and marketing staff for the firm's large-cap value and health sciences portfolios. Prior to joining the firm in 2007, Mr. Fritz served as an associate analyst for Legg Mason Capital Management, covering the health care sector.

Mr. Fritz earned a B.A. and an M.A. from the University of South Florida, and he also has earned the Chartered Financial Analyst designation.

  • Years at
    T. Rowe Price
    12
  • Years investment
    experience
    19
Eric Papesh

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 1.61%
Class I $2,500,000 $100,000 $0 0.00% 65 basis points 0.70%
Class J $10,000,000 $0 $0 0.00% 0 basis points 0.02%
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.

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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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