SICAV

Diversified Income Bond Fund

Formerly Global Multi-Sector Bond Fund

The fund invests mainly in a diversified portfolio of high yield corporate bonds from issuers around the world, including emerging markets.

ISIN LU1244139231 Bloomberg TRPGMSI:LX

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

2.77%
$145.8m

1YR Return
(View Total Returns)

Manager Tenure

0.09%
1yr

Information Ratio
(3 Years)

Tracking Error
(3 Years)

-0.32
6.54%

Inception Date 15-Dec-2016

Performance figures calculated in USD

Other Literature

31-May-2020 - Ken Orchard, Portfolio Manager ,
Credit valuations appear fair given the uncertain economic outlook, and momentum is positive. However, the third quarter outlook is less clear. Markets have rallied so there is less support cushion, while the initial upswing in economic data will most likely be complete by mid-summer, and the market may refocus on the increased possibility of a slow recovery. As U.S. presidential polls recently shifted toward Joe Biden, we may also see a significant increase in policy and geopolitical tensions.
Kenneth A.  Orchard
Kenneth A. Orchard, Portfolio Manager

Kenneth Orchard is a senior portfolio manager in the Fixed Income Division of T. Rowe Price and a member of the Global Fixed Income Investment team, with responsibility for cochairing the Fixed Income Sector Strategy Advisory Group . He is the portfolio manager for the Global Multi-Sector Bond and Diversified Income Bond Strategies and co-portfolio manager for the International Bond Strategies . He is a vice president of T. Rowe Price Group, Inc. and T. Rowe Price International Ltd.

 

Strategy

Investment Objective

To maximise the value of its shares through both growth in the value of, and income from, its investments. The fund invests mainly in a diversified portfolio of bonds of all types from issuers around the world, including emerging markets.

Investment Approach

  • To seek diversified sources of income and return by utilizing the full global opportunity set and managing risk.
    • Active tactical allocation across an expanded global opportunity set of 14 fixed income sectors, 80+ countries, and 40+ currencies.
    • Best ideas security selection from proprietary global research platform.
    • Actively diversify risk across both quantitative risk factors and qualitative investment themes.
    • Avoid concentration in any one sector or interest rate cycle.
    • Focus on risk-adjusted returns over a medium to long-term horizon.
  • Target tracking error range: 100-500 basis points

Portfolio Construction

  • Up to 50% of assets may be unhedged to exploit currency valuation opportunities
  • 40% of bonds may be invested outside of the U.S.
  • High Yield: Max 50%, excluding securitized assets
  • Emerging Markets: Max 25% Hard Currency, Max 25% Local Currency
  • Portfolio Average Credit Quality: Target Investment Grade
  • Duration range: 0 to 8 years
  • Number of securities: 200-500

Performance (Class I)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Since Manager Inception
Annualised
Fund % 0.09% 2.77% N/A 4.00% 4.50%
Indicative Benchmark % 7.02% 4.87% N/A 5.00% 8.66%
Excess Return % -6.93% -2.10% N/A -1.00% -4.16%

Inception Date 15-Dec-2016

Manager Inception Date 31-Oct-2018

Indicative Benchmark: Bloomberg Barclays Global Aggregate Bond USD Hedged Index

Data as of  31-May-2020

Performance figures calculated in USD

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Fund % -5.50% 0.96% N/A 1.96%
Indicative Benchmark % 6.59% 4.65% N/A 4.66%
Excess Return % -12.09% -3.69% N/A -2.70%

Inception Date 15-Dec-2016

Indicative Benchmark: Bloomberg Barclays Global Aggregate Bond USD Hedged Index

Data as of  31-Mar-2020

Performance figures calculated in USD

Recent Performance

  Month to DateData as of 06-Jul-2020 Quarter to DateData as of 06-Jul-2020 Year to DateData as of 06-Jul-2020 1 MonthData as of 31-May-2020 3 MonthsData as of 31-May-2020
Fund % 0.51% 0.51% -2.41% 2.88% -4.42%
Indicative Benchmark % 0.04% 0.04% 3.94% 0.28% 0.32%
Excess Return % 0.47% 0.47% -6.35% 2.60% -4.74%

Inception Date 15-Dec-2016

Indicative Benchmark: Bloomberg Barclays Global Aggregate Bond USD Hedged Index

Indicative Benchmark: Bloomberg Barclays Global Aggregate Bond USD Hedged 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.

31-May-2020 - Ken Orchard, Portfolio Manager ,
Global fixed income markets posted moderately positive total returns in U.S. dollar-hedged terms. Credit sectors generally outperformed as sovereigns posted more muted results for the month. Similar to last month, the portfolio’s exposure to various credit sectors meaningfully contributed to relative results. Our allocations to global investment-grade and high yield corporate bonds contributed as spreads continued to tighten from their recent wide levels stemming from the coronavirus sell-off. Exposure to securitised credit also helped as spreads tightened. The portfolio’s duration positioning was positive. Duration exposure in Chile and South Korea aided performance as yields largely decreased in both countries. Chile announced a second stimulus package that will be equivalent to 2% of the country’s GDP. However, our overweight duration posture in the eurozone hurt as German yields increased.

Holdings

Issuers

Top
Issuers
10
Top 10 Issuers 18.01% Was (30-Apr-2020) 19.42%
Other View Top 10 Issuers

Monthly data as of 31-May-2020

Holdings

Total
Holdings
357
Largest Holding Bonos de la Tesoreria de la Republica en pesos 3.05% Was (31-Dec-2019) 3.32%
Top 10 Holdings 16.09%
Other View Full Holdings Quarterly data as of 31-Mar-2020

Quality Rating View quality analysis

  Largest Overweight Largest Underweight
Quality Rating BB A
By % 20.18% -13.07%
Fund 20.57% 11.73%
Indicative Benchmark 0.39% 24.80%

Average Credit Quality

BBB-

Monthly Data as of 31-May-2020
Indicative Benchmark:  Bloomberg Barclays Global Aggregate Bond USD Hedged Index

Sources for Credit Quality Diversification: Moody's Investors Service and Standard & Poor's (S&P) split ratings (i.e. BB/B and B/CCC) are assigned when the Moody's and S&P ratings differ. Short-Term holdings are not rated.

Maturity View maturity analysis

  Largest Overweight Largest Underweight
Maturity 0-1 Years 1-3 Years
By % 13.74% -12.61%
Fund 13.74% 13.51%
Indicative Benchmark 0.00% 26.12%

Weighted Average Maturity

5.76 Years

Monthly Data as of 31-May-2020
Indicative Benchmark:  Bloomberg Barclays Global Aggregate Bond USD Hedged Index

Duration View duration analysis

  Largest Overweight Largest Underweight
Duration Under 1 Year Over 10 Years
By % 19.09% -16.99%
Fund 22.72% 6.12%
Indicative Benchmark 3.63% 23.11%

Weighted Average Duration

3.67 Years

Monthly Data as of 31-May-2020
Indicative Benchmark:  Bloomberg Barclays Global Aggregate Bond USD Hedged Index

Sectors

Total
Sectors
7
Largest Sector Global Sovereign 29.85% Was (30-Apr-2020) 31.14%
Other View complete Sector Diversification

Monthly Data as of 31-May-2020

Indicative Benchmark: Bloomberg Barclays Global Aggregate Bond USD Hedged Index

Largest Overweight

Global High Yield
By15.73%
Fund 15.73%
Indicative Benchmark 0.00%

Largest Underweight

Global Sovereign
By-36.85%
Fund 29.85%
Indicative Benchmark 66.70%

Monthly Data as of 31-May-2020

31-May-2020 - Ken Orchard, Portfolio Manager ,
We maintained overall credit exposure while marginally shifting sector allocations to areas not fully pricing in a rebound in global growth. Although spreads are still high by historical standards, they are no longer at recessionary levels, and sectors without central bank support appear more attractive than those directly supported by central bank purchase programmes. However, while macro indicators imply a mostly positive backdrop for risk, the global economic outlook remains uncertain so we may decrease our credit exposure moving forward.

Regions

Total
Regions
6
Largest Region North America 34.63% Was (31-Dec-2019) 32.57%
Other View complete Region Diversification

Monthly Data as of 31-Mar-2020

Indicative Benchmark: Bloomberg Barclays Global Aggregate Bond USD Hedged Index

Largest Overweight

Latin America
By10.83%
Fund 11.83%
Indicative Benchmark 1.00%

Largest Underweight

Japan
By-13.80%
Fund 2.09%
Indicative Benchmark 15.88%

Monthly Data as of 31-Mar-2020

Countries

Total
Countries
53
Largest Country United States 36.12% Was (30-Apr-2020) 35.94%
Other View complete Country Diversification

Monthly Data as of 31-May-2020

Indicative Benchmark: Bloomberg Barclays Global Aggregate Bond USD Hedged Index

Largest Overweight

Chile
By3.38%
Fund 3.54%
Indicative Benchmark 0.16%

Largest Underweight

Japan
By-15.45%
Fund 0.00%
Indicative Benchmark 15.45%

Monthly Data as of 31-May-2020

31-May-2020 - Ken Orchard, Portfolio Manager ,
We decreased the portfolio’s overall euro duration exposure by trimming periphery positions in Italy and Portugal as yields rallied and increased our exposure to French duration as a hedge ahead of the German Constitutional Court decision on asset purchases by the European Central Bank. We retained high-quality duration exposure in Australia, South Korea, and Israel (which acts as a proxy to U.S. duration) to partially hedge our credit risk. Overall U.S. duration remained flat over the month.

Currency

Total
Currencies
21
Largest Currency U.S. dollar 96.86% Was (30-Apr-2020) 93.96%
Other View complete Currency Diversification

Monthly Data as of 31-May-2020

Indicative Benchmark : Bloomberg Barclays Global Aggregate Bond USD Hedged Index

Largest Overweight

U.S. dollar
By 52.95%
Fund 96.86%
Indicative Benchmark 43.91%

Largest Underweight

euro
By -26.67%
Fund -3.24%
Indicative Benchmark 23.43%

Monthly Data as of 31-May-2020

31-May-2020 - Ken Orchard, Portfolio Manager ,
We trimmed exposure to our Japanese yen position, which we held as a portfolio hedge and exited a small long in the Indian rupee, which was held for income purposes. We retain longs in the Serbian dinar and the Czech koruna, which can exhibit strong correlations with the euro but have the potential to provide additional carry to the portfolio. Both positions were funded out of the euro. We also hold a small position in the Chinese renminbi.

Team (As of 02-Jul-2020)

Kenneth A.  Orchard

Kenneth Orchard is a senior portfolio manager in the Fixed Income Division of T. Rowe Price and a member of the Global Fixed Income Investment team, with responsibility for cochairing the Fixed Income Sector Strategy Advisory Group . He is the portfolio manager for the Global Multi-Sector Bond and Diversified Income Bond Strategies and co-portfolio manager for the International Bond Strategies . He is a vice president of T. Rowe Price Group, Inc. and T. Rowe Price International Ltd.

Mr. Orchard has 15 years of investment experience, eight of which have been with T. Rowe Price. Prior to joining the firm in 2010, he worked as a senior credit officer for the Sovereign Risk Group at Moody's Investors Service, where he helped design and review its sovereign rating methodology. Mr. Orchard also worked as a senior economist for Emerging Market Economics in London and as an assistant portfolio manager for HSBC Asset Management in Vancouver.

Mr. Orchard earned a B.A. in international relations from the University of British Columbia and an M.Sc. in public financial policy from the London School of Economics. He also has earned the Chartered Financial Analyst designation.

  • Fund manager
    since
    2018
  • Years at
    T. Rowe Price
    9
  • Years investment
    experience
    16
Terry  A.  Moore

Terry Moore is a portfolio specialist in the Fixed Income Division of T. Rowe Price. He is a member of the Global Multi-Sector, Dynamic Global Bond, International Bond, and Customized Fixed Income Solutions teams, working closely with clients, consultants, and prospects. Mr. Moore is a vice president of T. Rowe Price Group, Inc.

Mr. Moore has 23 years of investment experience, nine of which have been at T. Rowe Price. Prior to joining the firm in 2009, he was a portfolio manager and principal with Smith Breeden Associates, where he managed a variety of fixed income portfolios with a focus on residential mortgage-backed securities. He also worked at Goldman Sachs & Co. trading asset-backed securities.

Mr. Moore earned a B.A. in economics and political science from the University of North Carolina at Chapel Hill and an M.B.A. from Duke University, The Fuqua School of Business, where he was a Fuqua Scholar. He also has earned the Chartered Financial Analyst designation.

  • Years at
    T. Rowe Price
    10
  • Years investment
    experience
    24

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% 100 basis points 1.17%
Class I $2,500,000 $100,000 $0 0.00% 50 basis points 0.60%
Class Q $1,000 $100 $100 0.00% 50 basis points 0.67%

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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