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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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SICAV

US Smaller Companies Equity Fund

Seeks capital appreciation using both value and growth approaches.

Important Information: Read the 19/11/2020 press release regarding a proposal to launch a new investment advisor. 

ISIN LU1582221328 WKN A2DNL3

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

9.50%
$1.6b

1YR Return
(View Total Returns)

Manager Tenure

11.40%
1yr

Inception Date 10-May-2017

Performance figures calculated in EUR

Other Literature

31-Oct-2020 - Curt Organt, Portfolio Manager ,
We anticipate market volatility to persist in anticipation of the outcome of the U.S. presidential election, as coronavirus infections continue to ebb and flow, and the full extent of the economic impact of the pandemic becomes clearer. Regardless of the macroeconomic environment, we continue to work closely with our experienced team of investment professionals to identify the most attractive opportunities across the full range of the small-cap and mid-cap segment of the U.S. equity market.
Curt J. Organt, CFA
Curt J. Organt, CFA, Portfolio Manager

Curt Organt is the portfolio manager of the US Smaller Companies Equity Strategy and an associate portfolio manager of the US Small-Cap Core Equity Strategy in the U.S. Equity Division. Curt is a vice president and an Investment Advisory Committee member of the US Small-Cap Core Equity, US Diversified Small-Cap Value Equity, and US Small-Cap Growth Equity Strategies. He also is a vice president of T. Rowe Price Group, Inc.

Click for Manager Outlook
 

Strategy

Manager's Outlook

U.S. equities continued their rally in the third quarter. All indices posted positive returns on the quarter and we saw a shift back to what we have seen for much of the last decade, large-cap and growth stocks outpacing their smaller and value peers. During the quarter, the Russell 2500 Net 30% Index returned 5.78% as sector performance was mixed. Consumer discretionary, industrials, and health care were the largest contributors to Russell 2500 performance. Energy, financials, and utilities all weighed on index performance. We anticipate choppiness in the market to continue as we approach the U.S. presidential election, coronavirus case numbers continue to ebb and flow, and the full extent of the economic impact of the pandemic becomes more clear.

Better-than-expected second-quarter corporate earnings reports amid very low earnings expectations benefited stocks early in the period. Equities continued to grind higher during the summer on largely positive news flow about potential vaccines and treatments for COVID-19, the disease caused by the coronavirus. Several equity indexes experienced their best August in more than 30 years, while the S&P 500 Index hit an all-time high during the quarter, surpassing its February 2020 peak. Stocks retreated a bit in September amid concerns about valuations in some sectors due to significant gains since late March. Some investors were concerned about the durability of the economic recovery and disappointed that Congress failed to agree on new fiscal stimulus legislation, particularly an extension of additional weekly unemployment benefits that expired at the end of July.

The US Smaller Companies portfolio seeks to capitalize on opportunities across the broad range of the small-cap and mid-cap U.S. equity market. The portfolio has a collection of core holdings in high-quality companies that we expect to compound value over time and looks for select investments in "deeper value" opportunities; companies experiencing challenge or controversy of one sort or another, that the investment team believes can be resolved in a reasonable period of time. The portfolio holds a number of income-oriented, dividend growth companies, as well as a collection of high-growth investments in which the investment team believes other investors do not yet fully appreciate the companies' long-term growth potential.�Overall, the strategy remains modestly overweight the high-quality compounding companies, but has been finding opportunities in materials, consumer staples, and energy.

Since the strategy's inception over 15 years ago, it has relied upon T. Rowe Price's team of fundamental research analysts to provide unique perspective and insight on the companies they follow. Going forward, the portfolio manager will continue to work closely with this talented team of investment professionals to identify the most attractive opportunities across the full range of the small-cap and mid-cap segment of the U.S. equity market.

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 widely diversified portfolio of stocks from smaller capitalization companies in the United States.

Investment Approach

  • Focus on companies within the market cap range of the Russell 2500 Index at time of purchase.
  • Assess valuation using relevant sector/industry metrics — absolute and relative price to earnings, price to cash flow, and price to assets.
  • Integrate fundamental research by a dedicated Small-Cap research team to discover underfollowed companies possessing clear business plans, financial flexibility, and proven management teams.
  • Identification of a “value creation” catalyst is key.
  • Broadly diversify holdings to manage portfolio risk profile.
  • Employ a low turnover and patient trading strategy to promote full value realization.

Portfolio Construction

  • 200-250 securities
  • Position sizes typically range from 0.15% to 2.50%
  • Primary sector weights generally vary from 0.5X to 2.0X the Russell 2500 Index weights

Performance (Class An | EUR)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Since Manager Inception
Annualised
Fund % 11.40% 9.50% N/A 10.10% 11.64%
Indicative Benchmark % -0.49% 1.24% N/A 2.93% 0.52%
Excess Return % 11.89% 8.26% N/A 7.17% 11.12%

Inception Date 10-May-2017

Manager Inception Date 31-Mar-2019

Indicative Benchmark: Russell 2500 Index Net 30% Hedged to EUR

Data as of  31-Oct-2020

Performance figures calculated in EUR

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Fund % 10.46% 9.53% N/A 9.80%
Indicative Benchmark % -0.63% 1.13% N/A 2.48%
Excess Return % 11.09% 8.40% N/A 7.32%

Inception Date 10-May-2017

Indicative Benchmark: Russell 2500 Index Net 30% Hedged to EUR

Data as of  30-Sep-2020

Performance figures calculated in EUR

Recent Performance

  Month to DateData as of 20-Nov-2020 Quarter to DateData as of 20-Nov-2020 Year to DateData as of 20-Nov-2020 1 MonthData as of 31-Oct-2020 3 MonthsData as of 31-Oct-2020
Fund % 11.24% 13.18% 17.82% 1.75% 3.40%
Indicative Benchmark % 13.96% 15.94% 7.04% 1.74% 3.27%
Excess Return % -2.72% -2.76% 10.78% 0.01% 0.13%

Inception Date 10-May-2017

Indicative Benchmark: Russell 2500 Index Net 30% Hedged to EUR

Indicative Benchmark: Russell 2500 Index Net 30% Hedged to EUR

Performance figures calculated in EUR

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-Oct-2020 - Curt Organt, Portfolio Manager ,
In October, U.S. equities were mixed as a renewed surge in coronavirus cases, the inability of Congress to pass additional virus relief stimulus measures, and political uncertainty all weighed on stocks. Within the portfolio, health care contributed the most to relative results due to our stock choices. Quidel has benefited from strong demand for its testing kits for COVID-19, the disease caused by the coronavirus. A resurgence in cases across the globe suggest that trend will continue, sending shares higher. Stock selection in real estate also added value. American Campus Communities is the largest provider of student housing in the U.S. Shares were lifted by in-line quarterly results reflecting a range of encouraging data points, including improving collections. Conversely, industrials and business services hindered relative returns, primarily due to our stock picks. Clarivate Analytics has been a strong performer year-to-date but pulled back on a decrease in transactional revenues in the most recent quarter, attributed to coronavirus-driven weakness in demand.

Holdings

Total
Holdings
170
Largest Holding CoStar Group 2.02% Was (30-Jun-2020) 2.05%
Other View Full Holdings Quarterly data as of 30-Sep-2020
Top 10 Holdings 15.26% View Top 10 Holdings Monthly data as of 31-Oct-2020

Largest Top Contributor^

CoStar Group
By 0.11%
% of fund 1.99%

Largest Top Detractor^

Teleflex
By -0.64%
% of fund 1.46%

^Absolute

Quarterly Data as of 30-Sep-2020

Top Purchase

Reliance Steel & Aluminum (N)
0.40%
Was (30-Jun-2020) 0%

Top Sale

Twilio
0.60%
Was (30-Jun-2020) 1.49%

Quarterly Data as of 30-Sep-2020

30-Sep-2020 - Curt Organt, Portfolio Manager ,

We do not make sector "bets," and sector weightings are formed as a residual of our bottom-up investment process. We used recent volatility as an opportunity to upgrade the portfolio and increase exposure to our highest-conviction companies, using funds sourced from our highest performers. During the quarter, trading activity spanned the various sectors. We've highlighted some of the larger purchases and sales occurring within information technology, health care, industrials and business services, and consumer discretionary.

Information Technology

A number of the disruptive companies that are on the right side of change are featured in the sector. We remain sanguine on the sector as a whole. The portfolio has large allocations in the software, IT services, semiconductors, and electronic equipment and instruments segments. We have been able to find many niche software providers that we believe have attractive growth opportunities and barriers to ward off their competition.

  • We initiated a position in PTC, a leading software developer for computer-aided design, product life-cycle management, and the industrial internet of things (IIoT). We believe the company has a sustainably differentiated position in the IIoT market given its domain expertise, early mover's advantage, and ability to integrate with core software.
  • We added a position in leading high-speed analog player Inphi on recent weakness attributed to the company's exposure to Huawei. We believe this to be a high-quality company that is well positioned to benefit from the increasing demand for faster data movement in the cloud and 5G.
  • Twilio has generated strong performance, boosted by an acceleration in digital platforms. We trimmed our position into strength but maintain our view that the company's rapid growth should have a long runway.

Health Care

In health care, we have a sizable allocation to equipment and supplies, providers and services, and biotechnology names. The health care segment has been a sector of controversy over recent years amid reform legislation, attempts at repeal, and the uncertainty regarding its outcomes. We have focused on investments that we feel will benefit from the environment regardless of the end result by sticking to fundamentals and a diversified approach within biotechnology to mitigate risk.

  • We initiated a position in Ionis Pharmaceuticals. The commercial-stage biotech company is built around its antisense drug discovery platform, which has markedly improved in recent years. Additionally, we believe the company's improved technology platform and transition from a partnering model to a more fully integrated biotech model should unlock substantial value over time. In our view, the company's recently announced agreement to acquire the outstanding shares of Akcea Therapeutics that it does not already own furthers that transformation.
  • We reduced Quidel following strong share price appreciation attributed to an increased focus on testing and vaccine distribution in the wake of the coronavirus pandemic.
  • Seattle Genetics, a fully integrated biotech company focused on antibody-drug conjugates for cancer, has performed well, and we exited our position early in the period on market capitalization considerations.

Industrials and Business Services

In the industrials and business services sector, the portfolio is overweight compared with the benchmark allocation due in particular to sizable positions in machinery, professional services, and road and rail. The sector tends to be cyclical, with strong surges during economic recovery. We have exposure to cyclical holdings to take advantage of economic recovery, but we also hold positions in more stalwart areas that allow steady and measured returns to provide a more balanced risk exposure.

  • We added a position in Dun & Bradstreet, a commercial database and analytics provider that went public early in the period. The company's best-in-class data are firmly entrenched in the world's largest retailers, and we have confidence in new management's initiatives to improve the business and boost product capabilities.
  • We increased our position in Clarivate, a leading provider of intellectual property and scientific information; analytical tools; and services for academia, businesses, and governments. We feel Clarivate possesses an attractive set of information services assets and that new management is well positioned to capture efficiencies and spur organic growth through new product offerings, bundling, and untapped pricing power. We have a favorable view of the company's recently announced acquisition of CPA Global, which strengthens the core intellectual property business.
  • CoStar Group provides commercial real estate data to institutions and operates two popular online listing services: Apartments.com and LoopNet. The company has been a top year-to-date performer, and the share price reached a new high during the quarter. We trimmed our position on valuation considerations but maintain a positive view of the company and its ability to drive revenue growth and margin expansion over time.

Consumer Discretionary

We are underweight the benchmark allocation within the consumer discretionary sector, where our largest allocations are to the hotels, restaurants, and leisure; specialty retail; and diversified consumer services industries. Despite our underweight, we continue to believe the sector is ripe with select names that provide attractive business models and insulated growth opportunities. Coronavirus-related pressures on the sector have created compelling investment opportunities.

  • We initiated a position in Magna International, the world's third-largest auto supplier. We believe the company is well positioned to benefit from longer-term trends in automotive manufacturing, such as growth in hybrid electric powertrains, autonomous driving, and electrification.
  • We found an attractive entry point in SeaWorld Entertainment. The company has made significant capital investments, with a focus on redefining and improving the core brand image, and we believe there is substantial room for growth.
  • Shares of National Vision Holdings, an operator of value-oriented retail vision stores, has performed well relative to specialty retail peers and we eliminated our position to fund investments with greater upside potential.

Sectors

Total
Sectors
11
Largest Sector Industrials & Business Services 19.37% Was (30-Sep-2020) 19.93%
Other View complete Sector Diversification

Monthly Data as of 31-Oct-2020

Indicative Benchmark: Russell 2500 Index

Top Contributor^

Industrials & Business Services
Net Contribution 0.65%
Sector
0.15%
Selection 0.49%

Top Detractor^

Consumer Discretionary
Net Contribution -0.43%
Sector
-0.22%
Selection
-0.21%

^Relative

Quarterly Data as of 30-Sep-2020

Largest Overweight

Industrials & Business Services
By4.26%
Fund 19.37%
Indicative Benchmark 15.10%

Largest Underweight

Financials
By-2.89%
Fund 11.17%
Indicative Benchmark 14.06%

Monthly Data as of 31-Oct-2020

31-Oct-2020 - Curt Organt, Portfolio Manager ,
Industrials and business services, information technology, health care, financials, and consumer discretionary remain the dominant sectors in the portfolio, each with greater than 10% of the equity allocation. We continue to invest in select companies across various industries where we feel valuations may underestimate the sustainability of growth or turnaround potential. In October, this included boosting our positions within machinery, banks, semiconductors and semiconductor equipment, and food products.

Team (As of 01-Oct-2020)

Curt J. Organt, CFA

Curt Organt is the portfolio manager of the US Smaller Companies Equity Strategy and an associate portfolio manager of the US Small-Cap Core Equity Strategy in the U.S. Equity Division. Curt is a vice president and an Investment Advisory Committee member of the US Small-Cap Core Equity, US Diversified Small-Cap Value Equity, and US Small-Cap Growth Equity Strategies. He also is a vice president of T. Rowe Price Group, Inc.

Curt’s investment experience began in 1993, and he has been with T. Rowe Price since 1995, beginning in the U.S. Equity Division. Prior to this, Curt was employed by DAP Products, Inc., as a financial and marketing analyst. 

Curt earned a B.S. in finance and philosophy from LaSalle University and an M.B.A. from Wake Forest University. Curt also has earned the Chartered Financial Analyst® designation.

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

  • Fund manager
    since
    2019
  • Years at
    T. Rowe Price
    25
  • Years investment
    experience
    29
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 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% 160 basis points 1.68%
Class I $2,500,000 $100,000 $0 0.00% 95 basis points 0.99%
Class Q $1,000 $100 $100 0.00% 95 basis points 1.04%
Class S $10,000,000 $0 $0 0.00% 0 basis points 0.04%

Please note that the Ongoing Charges figure is inclusive of the Investment Management Fee and is charged per annum.