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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 Smaller Companies Equity Fund

Seeks capital appreciation using both value and growth approaches.

ISIN LU0133096981 WKN 767372

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

22.74%
$3.5b

1YR Return
(View Total Returns)

Manager Tenure

60.87%
2yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

0.66
6.32%

Inception Date 28-Sep-2001

Performance figures calculated in USD

30-Apr-2021 - Curt Organt, Portfolio Manager ,
We are seeing signs of an economic rebound but are cognisant of the fact that asset prices appear to be getting ahead of the recovery. Additionally, there is the potential headwind of rising interest rates and a corporate tax hike, which could weigh on equities. While we take these macroeconomic factors into consideration, they do not drive portfolio construction and we maintain our focus on long-term investment outcomes.
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

Following what appeared to be investors rushing to the most speculative stocks in the asset class, we saw some normalization at the end of the quarter, which was a welcome sight for our disciplined investment approach. We are seeing signs of economic recovery but are cognizant of the fact that asset prices appear to be ahead of that recovery. Additionally, there is the potential headwind of rising rates and a corporate tax hike that could weigh on equities. While we take these macro factors into consideration, they do not drive portfolio construction, and we maintain our focus on long-term investment outcomes.

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 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.

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.
  • 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

  • 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 I)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Since Manager Inception
Annualised
Fund % 60.87% 22.74% 20.34% 15.51% 28.63%
Indicative Benchmark % 71.31% 16.25% 15.99% 11.83% 22.03%
Excess Return % -10.44% 6.49% 4.35% 3.68% 6.60%

Inception Date 28-Sep-2001

Manager Inception Date 31-Mar-2019

Indicative Benchmark: Russell 2500 Net 30% Index

Data as of 30-Apr-2021

Performance figures calculated in USD

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Fund % 75.93% 21.48% 19.61% 15.27%
Indicative Benchmark % 88.68% 14.83% 15.42% 11.71%
Excess Return % -12.75% 6.65% 4.19% 3.56%

Inception Date 28-Sep-2001

Indicative Benchmark: Russell 2500 Net 30% Index

Data as of 31-Mar-2021

Performance figures calculated in USD

Recent Performance

  Month to DateData as of 12-May-2021 Quarter to DateData as of 12-May-2021 Year to DateData as of 12-May-2021 1 MonthData as of 30-Apr-2021 3 MonthsData as of 30-Apr-2021
Fund % -3.19% 1.70% 9.89% 5.06% 10.76%
Indicative Benchmark % -4.96% -1.18% 9.53% 3.98% 12.51%
Excess Return % 1.77% 2.88% 0.36% 1.08% -1.75%

Inception Date 28-Sep-2001

Indicative Benchmark: Russell 2500 Net 30% Index

Indicative Benchmark: Russell 2500 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-Apr-2021 - Curt Organt, Portfolio Manager ,
U.S. equities advanced in April, boosted by favourable economic data, ongoing progress in fighting the coronavirus, and the continued reopening of the economy. At the portfolio level, stock selection in information technology (IT) led relative results, bolstered by strong performance from security software company Proofpoint. Shares of Proofpoint surged towards the end of the month on news that the company had accepted a takeout offer from private-equity firm Thoma Bravo. Shares of software developer Manhattan Associates also spiked on strong quarterly results despite the headwinds resulting from its transition to a cloud-based product portfolio. Stock picks in materials and financials added further value. Conversely, stock selection in health care had the most negative effect on relative results. Shares of Quidel declined as investors questioned the durability of COVID-19 diagnostic names as we enter the recovery phase of the pandemic. Shares of iRhythm Technologies had already been pressured by the prospect of lower Medicare reimbursement rates for its Zio Service, which enables a faster and more accurate diagnosis of arrhythmia and moved lower after the company said it would discontinue providing the product to Medicare patients. Industrials and business services also dragged due to our stock picks and an overweight position.

Holdings

Total
Holdings
181
Largest Holding Avery Dennison 1.53% Was (31-Dec-2020) 1.47%
Other View Full Holdings Quarterly data as of  31-Mar-2021
Top 10 Holdings 13.21% View Top 10 Holdings Monthly data as of  30-Apr-2021

Largest Top Contributor^

Avery Dennison
By 0.19%
% of fund 1.53%

Largest Top Detractor^

CoStar Group
By -0.31%
% of fund 1.20%

^Absolute

Quarterly Data as of 31-Mar-2021

Top Purchase

Darling Ingredients (N)
0.82%
Was (31-Dec-2020) 0%

Top Sale

ConocoPhillips (E)
0.00%
Was (31-Dec-2020) 0%

Quarterly Data as of 31-Mar-2021

31-Mar-2021 - Curt Organt, Portfolio Manager ,

We do not make sector "bets," and sector weightings are formed as a residual of our bottom-up investment process. There were no major thematic changes to portfolio positioning in the quarter. We continued to invest in companies that we believe offer compelling long-term investment opportunities, and we trimmed exposure to names that performed strongly, were acquired, or appreciated beyond our typical market capitalization range. During the quarter, trading activity spanned the various sectors. We've highlighted some of the larger purchases and sales occurring within information technology, industrials and business services, consumer discretionary, and consumer staples.

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; semiconductors; electronic equipment, instruments, and components; and IT services industries. 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 added a position in Repay Holdings, a vertically integrated payment solutions provider within the largely underserved area of merchant acquiring, electronic bill presentment, and business-to-business payments. We believe the company to be reasonably valued and like its unique assets, growth potential, and solid leadership.
  • We increased the portfolio's position in Manhattan Associates, a developer of software for warehouse, order, and transportation management markets. The company in is the midst of transitioning to a cloud-based product portfolio, which expands its total addressable market. The company is also moving to a subscription model, which may hinder near-term results but should ultimately prove beneficial.
  • We exited leading high-speed analog player Inphi as the company's acquisition by fellow semiconductor company Marvell Technology is due to close in the second half of 2021.
  • We eliminated cloud communications platform company Twilio following strong performance 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 took advantage of recent share price weakness to increase our position in Waste Connections, the third-largest waste company in North America. We believe risk/reward opportunities are favorable at current valuations and that this is a well-managed company in an attractive industry with a solid balance sheet.
  • We initiated a position in Toro, a leading manufacturer of equipment for turf maintenance, snow removal, and irrigation systems. We favor the company for its strong management, solid balance sheet, and competitive position in attractive end markets.
  • Cubic is a provider of various defense products and systems to the U.S. government. Cubic also produces and maintains public transportation systems. The company is being acquired by Veritas Capital and the private equity arm of Elliott and we exited the portfolio's position.
  • Shares of Upwork, the largest global online marketplace for freelancers, appreciated on impressive quarterly results highlighting new client additions and we trimmed into strength. We believe this is a best-in-class company and a beneficiary of the accelerating adoption of freelance labor in the business world.

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 Marriott Vacation Worldwide, a timeshare company that develops, markets, finances, and sells vacation ownership intervals. We believe that pent-up travel demand and the anticipated synergies from the recent acquisition of ILG and pending acquisition of Welk position the company well for a post-pandemic recovery. Additionally, the company benefits from the marketing opportunities afforded by its access to the Marriott loyalty ecosystem.
  • Magna International is 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. Shares appreciated on strong results in the most recent quarter, and we trimmed on valuation considerations.

Consumer Staples

We increased our allocation to consumer staples during the period and are now overweight relative to the benchmark. Our holdings are concentrated in the food products industry.

  • Darling Ingredients engages in the development and production of natural ingredients from edible and inedible bio-nutrients. The company's joint venture with Valero Energy, Diamond Green Diesel, is one of the largest producers of renewable diesel-a low-carbon diesel replacement that utilizes animal fats from the rendering process as feedstock. As an integrated producer of renewable diesel and feedstock, Darling Ingredients is uniquely positioned to benefit from a rising demand for low-carbon fuels across the globe. We added a position.

Sectors

Total
Sectors
11
Largest Sector Industrials & Business Services 24.09% Was (31-Mar-2021) 25.10%
Other View complete Sector Diversification

Monthly Data as of 30-Apr-2021

Indicative Benchmark: Russell 2500 Index

Top Contributor^

Financials
Net Contribution 0.24%
Sector
-0.11%
Selection 0.35%

Top Detractor^

Health Care
Net Contribution -0.88%
Sector
0.26%
Selection
-1.14%

^Relative

Quarterly Data as of 31-Mar-2021

Largest Overweight

Industrials & Business Services
By7.77%
Fund 24.09%
Indicative Benchmark 16.32%

Largest Underweight

Consumer Discretionary
By-4.63%
Fund 9.39%
Indicative Benchmark 14.02%

Monthly Data as of 30-Apr-2021

30-Apr-2021 - Curt Organt, Portfolio Manager ,
Industrials and business services, IT, health care, and financials 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. During the month, this included boosting our positions within hotels, restaurants, and leisure; chemicals; construction and engineering; and food products.

Team (As of 12-May-2021)

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 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% 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.