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SICAV

Global Growth Equity Fund

Seeking to select superior stocks from the broadest global equity opportunity set.

ISIN LU0438015033 Bloomberg TRGBLIG:LX

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

12.37%
$470.8m

1YR Return
(View Total Returns)

Manager Tenure

15.61%
10yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

0.61
4.15%

Inception Date 10-Jul-2009

Performance figures calculated in GBP

Other Literature

31-Oct-2019 - Scott Berg, Portfolio Manager,
Equity investors are currently facing multi-dimensional challenges. Having said that, we still feel confident about the companies we own in the portfolio in terms of their growth outlooks and valuations over a multiyear view. We are more cautious in the short term and think it is time to be prudent in our positioning; however, we believe equity markets can still move higher and are mindful that there could be a cost to being too defensive too early.
R. Scott Berg
R. Scott Berg, Lead Portfolio Manager

Scott Berg is the portfolio manager for the T. Rowe Price Global Growth Equity Strategy and a vice president of T. Rowe Price Group, Inc.

Click for Manager Outlook
 

Strategy

Manager's Outlook

As we have mentioned in previous quarters, the challenges facing equity investors right now are multi-dimensional. At the start of the year, concerns about global interest rates and the relationship between the two world superpowers, the U.S. and China, were at the forefront of investors' minds. We would now add the uncertainty around the 2020 U.S. election cycle, which could usher in market-unfriendly policies, to the mix of notable challenges, along with the ongoing Brexit saga, rising geopolitical tensions with Iran, and political unrest in Hong Kong adding more wrinkles and complexity to the investment landscape.

However, all is not doom and gloom. Monetary expectations have shifted dramatically since the beginning of the year, with the U.S. Federal Reserve and other leading central banks becoming more dovish than most had expected. As a growth equity investor, the notion of a lower discount rate is a significant positive. Broadly, we still feel very good about the names we own in the portfolio in terms of their growth outlooks and valuations over a multiyear view. While we are more cautious over the short-term given the mix of uncertainties in the market and think it is a time for prudence in positioning, we think equity markets can still grind higher in a low interest rate world with moderate growth and fear there could be a cost to being too defensive too early.

We remain largely sector neutral across the portfolio with a few notable exceptions: We are meaningfully underweight energy due to our bearish view on the sector as well as overweight to consumer discretionary due to the global trend toward online commerce and the digital side of consumer, which we think is a significant structural trend over time. At the regional level, selective emerging markets still represent a fertile source of long-term ideas and area meaningful component of the portfolio.

We continue to search for high-quality, growing businesses in good industries where we believe the magnitude and/or change in growth is misunderstood by the market. We think picking stocks individually, controlling for risk in the aggregate, and searching for real and positive economic returns stock by stock in a low rate, low growth world will add value for our clients over time.

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 of companies that have the potential for above-average and sustainable rates of earnings growth. The companies may be anywhere in the world, including emerging markets.

Investment Approach

  • Single decision-maker provides clear accountability.
  • Identify “best ideas” by assessing companies in a global sector context, using bottom-up approach to create focused, high conviction portfolio.
  • Global research platform uses fundamental analysis to identify companies with superior and sustainable growth prospects, and improving fundamentals.
  • Macroeconomic and local market factors are integrated in stock selection decisions.
  • Valuation appeal is measured against local market and broad sector opportunity set.
  • Broad range of large-cap stocks, incorporating developed and emerging markets.

Portfolio Construction

  • Number of holdings: Typically around 130 holdings.
  • Individual positions: Typically 0.3%-3.0%, maximum 5%
  • Emerging markets exposure: +/- 15% of benchmark
  • Broad sector ranges: +/- 10% of benchmark
  • Country ranges: +/- 10% of benchmark (USA is +/- 20%)
  • Currency hedging: Currency views incorporated in stock selection
  • Cash target range: Typically less than 5%
  • Expected tracking error: 300 to 700 basis points

Performance (Class I | GBP)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Fund % 15.61% 12.37% 14.33% 13.04%
Indicative Benchmark % 11.18% 9.20% 11.72% 11.48%
Excess Return % 4.43% 3.17% 2.61% 1.56%

Inception Date 10-Jul-2009

Indicative Benchmark: MSCI All Country World Index Net

Data as of  31-Oct-2019

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Fund % 11.07% 15.02% 15.70% 13.04%
Indicative Benchmark % 7.28% 11.65% 12.67% 11.21%
Excess Return % 3.79% 3.37% 3.03% 1.83%

Inception Date 10-Jul-2009

Indicative Benchmark: MSCI All Country World Index Net

Data as of  30-Sep-2019

Performance figures calculated in GBP

Recent Performance

  Month to DateData as of 04-Dec-2019 Quarter to DateData as of 04-Dec-2019 Year to DateData as of 04-Dec-2019 1 MonthData as of 31-Oct-2019 3 MonthsData as of 31-Oct-2019
Fund % -2.15% -0.90% 23.15% -2.43% -5.66%
Indicative Benchmark % -1.99% -1.73% 18.01% -2.16% -3.09%
Excess Return % -0.16% 0.83% 5.14% -0.27% -2.57%

Inception Date 10-Jul-2009

Indicative Benchmark: MSCI All Country World Index Net

Indicative Benchmark: MSCI All Country World Index Net

Performance figures calculated in GBP

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.

Returns shown with reinvestment of dividends after the deduction of withholding taxes. 

Effective 1 July 2018, 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-2019 - Scott Berg, Portfolio Manager,
Global equities rallied in October amid increasing optimism about global growth and as trade negotiations between the U.S. and China seemed to progress. At the portfolio level, our holdings in the information technology sector weighed the most on relative performance. While shares of Apple rose over the period, our underweight position dragged on the portfolio. While we like Apple’s strong free cash flow, innovative products, and massive research and development programme, our underweight position illustrates our efforts to manage our position size in light of near-term risks from slowing iPhone demand and trade tensions. On the positive side, stock selection in the consumer discretionary sector helped relative results. Shares of UK-based online fashion and cosmetics retailer ASOS rose over the month on solid earnings results, with robust organic sales growth, better-than-expected earnings, and lower debt. With its strong fashion positioning, technological innovation, and leading service proposition, we think ASOS is a truly differentiated, high-quality business.

Holdings

Total
Holdings
159
Largest Holding Alphabet Class C 2.85% Was (30-Jun-2019) 3.03%
Other View Full Holdings Quarterly data as of 30-Sep-2019
Top 10 Holdings 17.55% View Top 10 Holdings Monthly data as of 31-Oct-2019

Largest Top Contributor^

Alphabet
By 1.38%
% of fund 2.77%

Largest Top Detractor^

Amazon.com
By -0.79%
% of fund 2.66%

^Absolute

Quarterly Data as of 30-Sep-2019

Top Purchase

Experian (N)
0.98%
Was (30-Jun-2019) 0.00%

Top Sale

Northrop Grumman (E)
0.00%
Was (30-Jun-2019) 0.72%

Quarterly Data as of 30-Sep-2019

30-Sep-2019 - Scott Berg, Portfolio Manager,

As always, our trading activity during the quarter was driven from the bottom up. The portfolio's sector and region allocations are driven primarily by individual stock considerations but are also influenced, to a lesser degree, by an assessment of macroeconomic and geopolitical considerations. We are monitoring global interest rates, US-China trade, and a variety of macro events that influence the equity risk premiums globally of the securities that we own. Currently, we continue to play it 'down the middle of the fairway' with the portfolio given the ongoing tug of different forces. As a result, we are largely sector neutral across the portfolio while continuing to focus on finding high-quality names with growing businesses in good industries.

Over the quarter, the portfolio's exposure to industrials and business services and information technology increased, while exposure decreased in consumer discretionary and financials. Regionally, our allocation to Europe increased, while exposure to North America decreased. Within emerging markets, we continue to favor what we consider the more fertile and demographically advantaged regions, such as India, Indonesia, the Philippines, Peru, and Vietnam. Our exposure to China is very purposeful in areas such as artificial intelligence and health care we think can be long-term holds.

Information Technology

We continue to believe that innovations in artificial intelligence (AI) are not only affecting technology companies, but also reshaping more traditional industries, ones viewed as less susceptible to business model disruption. We remain positioned to benefit from increasing AI adoption and application as well as the ongoing transition toward greater computing mobility, increasing use of the Web, and growing technology consumption in emerging markets. As a result, our holdings are tilted toward payment and cloud software companies.

  • We added to our core holding in Sweden-based Hexagon on weakness. The stock, which specializes in highly advanced measurement technologies for manufacturing and construction end markets, pulled back recently after the company issued a profit warning for the second quarter due to weakening demand, particularly in China. Despite the macro environment, we believe Hexagon has the ability to drive accelerating growth given its strong business model with significant recurring revenue streams and free cash flow, a diversified and unique portfolio of products, and an under-levered balance sheet with substantial optionality.
  • We initiated a position in Twilio, a leading cloud communications software company that enables developers to rapidly incorporate telecom connectivity (such as voice, messaging, or video) into Web and mobile applications. We think Twilio provides highly elastic, cost-effective solutions and is levered to strong secular growth in the digital economy.

Industrials and Business Services

We are focused on high-quality companies that can benefit from multiyear growth trends and increases in global trade and capital spending. We are attracted to less cyclical, durable earnings growers in industries with attractive growth dynamics and are largely avoiding companies with commodity capital expenditures exposure.

  • We initiated a position in Wartsila, an internal combustion engine manufacturer, with applications in the marine and power generation markets. Equipment sold is maintenance intensive, and the company generates approximately 40% of sales from aftermarket services, which we believe is an extremely resilient earnings stream. The stock pulled back in July after the company reported weak second-quarter earnings and lowered their 2019 guidance. Despite near-term headwinds, we think Wartsila is a high-quality engineering business that can compound earnings over the long term through a best-in-class services business that is driven by two high-growth businesses.
  • We initiated a position in diversified global industrial company Siemens. We think Siemens is a misunderstood company that has sold off in recent months on cyclical weakness, which created an attractive entry point for us. We believe Siemens can drive earnings growth and improvement via two main areas: Cost-cutting and productivity growth as the company becomes more focused and disposes of non-core, less successful business segments, and, in particular, growth in its digital industries segment, where it is has a leading-edge, high-quality business.
  • We eliminated our position in global security lock maker Assa Abloy, partly to fund our new position in Siemens. The stock has been a strong contributor for the portfolio, but we now feel the risk/reward profile has become more balanced and there is less upside potential, so we elected to exit our position.

Financials

Our holdings in this area are broadly diversified, but we retain a focus on commercial banks in fertile emerging market economies and high-quality U.S. banks and U.S. capital markets companies with global exposure. We scaled back some of our positions in India given some recent stresses in the country's financial system; however, we still have strong longer-term conviction in the private banks we own due to their regulatory advantages over state-owned banks and better balance sheets and management teams. Additionally, the country's real GDP growth, normal interest rates, and low debt levels are attractive from an investment standpoint, especially compared with the developed world.

  • We eliminated our position in private Swiss bank Julius Baer. Given the recent signs of slowing global growth and falling interest rates, we think the risk/reward profile for the firm has become less attractive, and we chose to exit our position in favor of higher conviction names like CME Group.
  • We eliminated our position in private Indian bank Yes Bank. The company has battled a variety of issues over the past year, including the removal of the CEO, credit issues, and a more challenged macroeconomic and industry backdrop adding to the firm's woes. We have higher conviction in other Indian financials like HDFC Bank and Kotak Mahindra, so we chose to exit our position and reallocate to those higher quality names in the region.

Energy

Our current outlook for the sector remains subdued given the global oversupply of oil. While escalating tensions in the Middle East between Saudi Arabia and Iran are another complicating factor, we expect the surge in U.S. shale oil production and productivity will continue to drive oversupply for some time to come. Our focus in the sector is on companies with high-quality balance sheets, low-cost production, and better production growth profiles.

  • We eliminated our positions in European integrated oil and gas firm Galp Energeia and U.S. onshore exploration and production company Continental Resources. We are more bearish on energy in the current environment and chose to move on from these names and consolidate funds into our three highest conviction names within the sector: Concho Resources, Total, and EOG Resources.

Sectors

Total
Sectors
11
Largest Sector Information Technology 19.08% Was (30-Sep-2019) 18.23%
Other View complete Sector Diversification

Monthly Data as of 31-Oct-2019

Indicative Benchmark: MSCI All Country World Index

Top Contributor^

Materials
Net Contribution 0.46%
Sector
0.09%
Selection 0.37%

Top Detractor^

Consumer Discretionary
Net Contribution -1.12%
Sector
-0.01%
Selection
-1.12%

^Relative

Quarterly Data as of 30-Sep-2019

Largest Overweight

Consumer Discretionary
By3.79%
Fund 14.61%
Indicative Benchmark 10.83%

Largest Underweight

Energy
By-3.44%
Fund 1.87%
Indicative Benchmark 5.30%

Monthly Data as of 31-Oct-2019

31-Oct-2019 - Scott Berg, Portfolio Manager,
Our current outlook for the energy sector remains subdued given the global oversupply of oil. While escalating tensions in the Middle East between Saudi Arabia and Iran are another complicating factor, we expect the surge in U.S. shale oil production and productivity will continue to drive oversupply for some time to come. Our focus in the sector is on companies with high-quality balance sheets, low-cost production, and better production growth profiles.

Countries

Total
Countries
29
Largest Country United States 45.81% Was (30-Sep-2019) 46.07%
Other View complete Country Diversification

Monthly Data as of 31-Oct-2019

Indicative Benchmark: MSCI All Country World Index

Largest Overweight

India
By5.76%
Fund 6.81%
Indicative Benchmark 1.04%

Largest Underweight

United States
By-9.49%
Fund 45.81%
Indicative Benchmark 55.30%

Monthly Data as of 31-Oct-2019

Currency

Total
Currencies
23
Largest Currency U.S. dollar 57.57% Was (30-Sep-2019) 57.20%
Other View complete Currency Diversification

Monthly Data as of 31-Oct-2019

Indicative Benchmark : MSCI All Country World Index

Largest Overweight

Indian rupee
By 5.75%
Fund 6.80%
Indicative Benchmark 1.04%

Largest Underweight

Japanese yen
By -5.97%
Fund 1.45%
Indicative Benchmark 7.42%

Monthly Data as of 31-Oct-2019

Team (As of 31-Aug-2019)

R. Scott Berg

Scott Berg is the portfolio manager for the T. Rowe Price Global Growth Equity Strategy and a vice president of T. Rowe Price Group, Inc.

Mr. Berg has 17 years of investment experience, all of which have been with T. Rowe Price. He joined the firm in 2002 as a research analyst covering the business services sector after serving as a summer intern in 2001. In 2005, he joined the global equity team as an associate portfolio manager and in 2008 launched the Global Growth Equity Strategy. Prior to T. Rowe Price, he was the manager of financial analysis and planning for Mead Consumer and Office Products. Previously, Mr. Berg was also employed by McKinsey & Company as a business analyst and was a core team member on the firm's global growth initiative.

Mr. Berg graduated first in his class from Macquarie University in Australia, with a B.Ec. in actuarial studies and finance. He also holds an M.B.A. from the Stanford Graduate School of Business, where he again graduated at the top of his class. Mr. Berg has earned the Chartered Financial Analyst designation.

  • Fund manager
    since
    2009
  • Years at
    T. Rowe Price
    17
  • Years investment
    experience
    17
Harishankar Balkrishna

Hari Balkrishna is an associate portfolio manager for the Global Growth Equity Strategy in the Equity Division of T. Rowe Price. Mr. Balkrishna is a vice president of T. Rowe Price Group, Inc. and T. Rowe Price International Ltd.

Mr. Balkrishna has 12 years of investment experience. He completed an internship at T. Rowe Price in 2009. Prior to joining the firm in 2010, he worked at Goldman Sachs, Sydney, Australia, in the financial institutions group of the Investment Banking Division.

Mr. Balkrishna has a bachelor of commerce in finance and accounting (university medal and first-class honours) from the University of New South Wales and also has earned an M.B.A., with distinction, from Harvard Business School.

  • Fund manager
    since
    2015
  • Years at
    T. Rowe Price
    9
  • Years investment
    experience
    12
Kurt A.  Umbarger

Kurt Umbarger is the regional head of the Equity Investment Specialist Group of T. Rowe Price. Previously, he was a global equity portfolio specialist in the International Equity Division. He is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price International Ltd.

Mr. Umbarger has 26 years of investment experience, all of which have been at T. Rowe Price. He joined the firm in 1992 and has been a portfolio specialist since 2001.  Prior to joining the global equity team in 2005, Mr. Umbarger worked with the international and emerging market equity teams. As a portfolio specialist, he has traveled the world, working closely with institutional clients, consultants, and prospects.

Mr. Umbarger earned a B.S. in finance from Towson University and an M.S.F. in finance from Loyola University Maryland. He also has earned the Chartered Financial Analyst designation and is a Series 6, 7, 63, and 65 registered representative.

  • Years at
    T. Rowe Price
    26
  • Years investment
    experience
    26
Laurence Taylor

Laurence Taylor is a portfolio specialist in the Equity Division at T. Rowe Price, representing the firm's global equity strategies to institutional clients, consultants and prospects. Mr. Taylor is a vice president of T. Rowe Price Group, Inc. and T. Rowe Price International Ltd.

Mr. Taylor has 19 years of investment experience, 10 of which have been with T. Rowe Price. Prior to joining the firm in 2008, Mr. Taylor was a quantitative portfolio manager at AXA Rosenberg, with responsibility for European institutional clients, and began his career at Hewitt Associates in the UK investment practice. At Hewitt, Mr. Taylor provided investment advice to European institutions as a client-facing consultant before specializing in the research and selection of global and regional equity managers in the manager research team.

Mr. Taylor obtained his B.A., with honours, from Greenwich University and has earned the Chartered Financial Analyst designation.

  • Years at
    T. Rowe Price
    11
  • Years investment
    experience
    20

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% 160 basis points 1.77%
Class I $2,500,000 $100,000 $0 0.00% 75 basis points 0.82%
Class Q $15,000 $100 $100 0.00% 75 basis points 0.92%
Class S $10,000,000 $0 $0 0.00% 0 basis points 0.07%

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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