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SICAV

Emerging Markets Bond Fund

Active investment in mainly sovereign emerging-market bonds.

ISIN LU1127970330 Bloomberg TRGEBQE:LX

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

3.10%
$555.3m

1YR Return
(View Total Returns)

Manager Tenure

15.56%
5yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

-0.01
2.63%

Inception Date 28-Oct-2014

Performance figures calculated in EUR

Other Literature

31-Dec-2019 - Michael Conelius, Portfolio Manager,
Slowing global growth and the U.S.-China trade war remain headwinds, although accommodative monetary policy globally and the significant stock of negative-yielding debt in developed markets have been supportive for emerging markets debt. Despite exposure to the global risk environment, we remain cautiously optimistic on the asset class as it offers one of the highest-yielding opportunities in the fixed income market and has proven increasingly durable through market corrections.
Michael J.  Conelius
Michael J. Conelius, Portfolio Manager

Michael Conelius is a portfolio manager in the Fixed Income Division at T. Rowe Price. Mr. Conelius is lead manager of T. Rowe Price's Emerging Markets Bond Strategy. He is a vice president of T. Rowe Price Group, Inc., T. Rowe Price Associates, 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 emerging market issuers.

Investment Approach

  • Focus primarily on sovereign debt.
  • Integrate proprietary credit research and relative value analysis.
  • Establish independent credit rating at the country and corporate issuer level.
  • Add value through active country allocation and individual security selection decisions.
  • Limit risk through diversification.
  • Employ long-term investment horizon.

Portfolio Construction

  • Diversified portfolio structure: typically 200-300 securities
  • Duration bands: managed within +/- 1 year of the benchmark
  • Average credit quality: BB
  • Country exposure will range between 0% and 10%
  • Expected tracking error: 200-400 bps

Performance (Class Q | EUR)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Fund % 15.56% 3.10% 7.82% 7.94%
Indicative Benchmark % 17.15% 4.50% 7.85% 8.22%
Excess Return % -1.59% -1.40% -0.03% -0.28%

Inception Date 28-Oct-2014

Indicative Benchmark: J.P. Morgan Emerging Markets Bond Index Global Diversified

Data as of  31-Dec-2019

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Fund % 15.56% 3.10% 7.82% 7.94%
Indicative Benchmark % 17.15% 4.50% 7.85% 8.22%
Excess Return % -1.59% -1.40% -0.03% -0.28%

Inception Date 28-Oct-2014

Indicative Benchmark: J.P. Morgan Emerging Markets Bond Index Global Diversified

Data as of  31-Dec-2019

Performance figures calculated in EUR

Recent Performance

  Month to DateData as of 15-Jan-2020 Quarter to DateData as of 15-Jan-2020 Year to DateData as of 15-Jan-2020 1 MonthData as of 31-Dec-2019 3 MonthsData as of 31-Dec-2019
Fund % 1.62% 1.62% 1.62% 0.68% -0.40%
Indicative Benchmark % 1.47% 1.47% 1.47% 0.20% -1.12%
Excess Return % 0.15% 0.15% 0.15% 0.48% 0.72%

Inception Date 28-Oct-2014

Indicative Benchmark: J.P. Morgan Emerging Markets Bond Index Global Diversified

Indicative Benchmark: J.P. Morgan Emerging Markets Bond Index Global Diversified

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.

31-Dec-2019 - Michael Conelius, Portfolio Manager,
Emerging markets debt produced strong returns in December. Investors’ appetite for risk was bolstered by progress in trade negotiations between the U.S. and China, where a “phase one” agreement was reached. Within the portfolio, our overweight allocation to Argentina was beneficial. The distressed bonds recovered from oversold levels as sentiment toward a potential debt restructuring improved. Similarly, our overweight allocation to Ecuador contributed further to relative performance as the country recovered somewhat after declining last month amid antigovernment protests. Conversely, our out-of-benchmark positions in Israel Electric held back relative performance. The state-owned, investment-grade utility underperformed higher-yielding assets. Our lack of exposure to high-yielding oil exporter Angola also weighed on results as investors sought yield and oil prices increased.

Holdings

Issuers

Top
Issuers
10
Top 10 Issuers 38.28% Was (30-Nov-2019) 37.48%
Other View Top 10 Issuers

Monthly data as of 31-Dec-2019

Holdings

Total
Holdings
263
Largest Holding Petrobras Global Finance BV 4.04% Was (30-Sep-2019) 3.90%
Top 10 Holdings 21.17%
Other View Full Holdings Quarterly data as of 31-Dec-2019

Quality Rating View quality analysis

  Largest Overweight Largest Underweight
Quality Rating BB A
By % 9.04% -12.88%
Fund 23.08% 4.40%
Indicative Benchmark 14.04% 17.29%

Average Credit Quality

BB-

Monthly Data as of 31-Dec-2019
Indicative Benchmark:  J.P. Morgan Emerging Markets Bond Index Global Diversified

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 7-10 Years 10+ Years
By % 6.51% -11.95%
Fund 26.31% 25.16%
Indicative Benchmark 19.79% 37.11%

Weighted Average Maturity

10.43 Years

Monthly Data as of 31-Dec-2019
Indicative Benchmark:  J.P. Morgan Emerging Markets Bond Index Global Diversified

Duration View duration analysis

  Largest Overweight Largest Underweight
Duration 5-7 Years 1-3 Years
By % 12.23% -6.52%
Fund 33.64% 9.10%
Indicative Benchmark 21.40% 15.61%

Weighted Average Duration

7.55 Years

Monthly Data as of 31-Dec-2019
Indicative Benchmark:  J.P. Morgan Emerging Markets Bond Index Global Diversified

30-Sep-2019 - Michael Conelius, Portfolio Manager,

We are overweight countries pursuing reform agendas that target long-term growth.

Brazil

Brazil remains our largest overweight. We added to our overweight throughout the quarter, with a preference for bonds from quasi-sovereign oil company Petrobras as the company continues to improve its credit profile. We are also invested in sovereign debt as well as corporate debt from several issuers in the consumer-oriented sectors that benefit from domestic economic recovery.

South Africa

We added to our overweight position in South Africa with positions favoring quasi-sovereign utility company Eskom. Reform momentum could increase following the reelection of President Ramaphosa and his appointment of new cabinet members. The country's assets offer attractive relative value.

Ukraine

Ukraine has grown into a meaningful overweight. Recent elections led to a majority for President Volodimyr Zelensky's party, creating a strong mandate for reform and commitment to the IMF program. Inflation has been falling, and growth has ticked up.

We remain underweight countries that offer limited risk-adjusted return potential.

Russia

We maintained the fund's underweight allocation to Russia. Despite a conservative fiscal policy, solid credit metrics, and support from recovering oil prices, we remain cautious on the country due to the persisting risk of additional sanctions.

United Arab Emirates, Saudi Arabia, and Qatar

United Arab Emirates, Saudi Arabia, and Qatar are recent additions to the benchmark and our positioning has not kept up with their gradual inclusions. Our underweight to these higher-quality, low-yielding sovereigns is consistent with our structural underweight to such countries.

Philippines

The Philippines is a notable underweight, primarily due to the unattractive relative value of its external sovereign debt. The country is supported by strong local ownership causing it to consistently trade rich to peers.

Sectors

Total
Sectors
4
Largest Sector Sovereign 64.86% Was (30-Nov-2019) 62.79%
Other View complete Sector Diversification

Monthly Data as of 31-Dec-2019

Indicative Benchmark: J.P. Morgan Emerging Markets Bond Index Global Diversified

Largest Overweight

Corporate
By20.56%
Fund 20.56%
Indicative Benchmark 0.00%

Largest Underweight

Sovereign
By-17.45%
Fund 64.86%
Indicative Benchmark 82.31%

Monthly Data as of 31-Dec-2019

31-Dec-2019 - Michael Conelius, Portfolio Manager,
Economic fundamentals remain broadly supportive across emerging markets. In the near term, we think global macroeconomic risks along with several idiosyncratic factors within emerging markets will likely be the key drivers. We are overweight select quasi-sovereign companies, including Eskom and Petrobras, that will likely benefit from reforms and offer attractive carry pickup versus the sovereign. We have also added to our corporate exposure on more attractive relative value, focusing on consumer-oriented companies in higher-quality markets.

Countries

Total
Countries
53
Largest Country Brazil 13.56% Was (30-Nov-2019) 12.30%
Other View complete Country Diversification

Monthly Data as of 31-Dec-2019

Indicative Benchmark: J.P. Morgan Emerging Markets Bond Index Global Diversified

Largest Overweight

Brazil
By10.63%
Fund 13.56%
Indicative Benchmark 2.92%

Largest Underweight

Qatar
By-3.15%
Fund 0.00%
Indicative Benchmark 3.15%

Monthly Data as of 31-Dec-2019

31-Dec-2019 - Michael Conelius, Portfolio Manager,
We are positioned relatively conservatively, focusing on idiosyncratic opportunities with positive reform momentum, such as Brazil and Ukraine, as well as markets that are underpriced relative to their fundamental risks, such as South Africa and Mexico. While we maintain our structural underweight to low-beta countries, we have added to several defensive countries, such as Israel, Russia, and Saudi Arabia.

Currency

Total
Currencies
13
Largest Currency U.S. dollar 98.42% Was (30-Nov-2019) 99.24%
Other View complete Currency Diversification

Monthly Data as of 31-Dec-2019

Indicative Benchmark : J.P. Morgan Emerging Markets Bond Index Global Diversified

Largest Overweight

Brazilian real
By 0.55%
Fund 0.55%
Indicative Benchmark 0.00%

Largest Underweight

U.S. dollar
By -1.58%
Fund 98.42%
Indicative Benchmark 100.00%

Monthly Data as of 31-Dec-2019

31-Oct-2015 - Michael Conelius, Portfolio Manager,
Given our expectations for continued U.S. dollar strength, we maintained a low and defensive level of non-benchmark currency exposure.

Team (As of 06-Jan-2020)

Michael J.  Conelius

Michael Conelius is a portfolio manager in the Fixed Income Division at T. Rowe Price. Mr. Conelius is lead manager of T. Rowe Price's Emerging Markets Bond Strategy. He is a vice president of T. Rowe Price Group, Inc., T. Rowe Price Associates, Inc., and T. Rowe Price International Ltd.

Mr. Conelius has 31 years of investment experience, all of them at T. Rowe Price. Prior to joining the firm in 1988, he was a consultant for Booz Allen Hamilton.

Mr. Conelius earned a B.S. in finance from Towson University and an M.S. in finance from Loyola University Maryland. Mr. Conelius has also earned the Chartered Financial Analyst designation.

  • Fund manager
    since
    2014
  • Years at
    T. Rowe Price
    31
  • Years investment
    experience
    31

Fee Schedule

Share Class Minimum Initial Investment and Holding Amount Minimum Subsequent Investment Minimum Redemption Amount Sales Charge (up to) Investment Management Fee (up to) Ongoing Charges
Class A $15,000 $100 $100 5.00% 125 basis points 1.42%
Class I $2,500,000 $100,000 $0 0.00% 65 basis points 0.75%
Class Q $15,000 $100 $100 0.00% 65 basis points 0.82%
Class Sd $10,000,000 $0 $0 0.00% 0 basis points 0.10%

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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