Download

Audience for the document: Share Class: Language of the document:

Download

Share Class: Language of the document:

Change Details

If you need to change your email address please contact us.
Subscriptions
OK
You are ready to start subscribing.
Get started by going to our products or insights section to follow what you're interested in.

Products Insights

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

You have successfully subscribed.

Notify me by email when
regular data and commentary is available
exceptional commentary is available
new articles become available

Thank you for your continued interest

Please enter valid search characters

SICAV

Emerging Markets Corporate Bond Fund

Accessing diversified emerging market corporate debt.

ISIN LU0596126465 Bloomberg TRPEMCI:LX

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

6.54%
$272.7m

1YR Return
(View Total Returns)

Manager Tenure

16.71%
5yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

0.19
2.18%

Inception Date 18-May-2011

Performance figures calculated in USD

30-Apr-2021 - Samy Muaddi, Portfolio Manager ,
Although the global economic slowdown has weighed on corporate fundamentals in emerging markets (EM), the default outlook is relatively benign. Furthermore, we believe the durable, high carry profile of EM corporate debt should continue to attract investors amid low global yields and elevated equity valuations. However, the coronavirus pandemic remains disruptive in many markets despite vaccine rollouts, and EM domestic growth recoveries will likely lag those of developed markets.
Samy Muaddi, CFA
Samy Muaddi, CFA, Co-Portfolio Manager

Samy Muaddi is a portfolio manager in the International Fixed Income Division. He is the lead manager of the Emerging Markets Corporate Bond Strategy and co-manages the Emerging Markets Bond and Global High Income Bond Strategies. He previously managed the firm’s Asia Credit Bond Strategy from its inception until 2020. Samy also is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price Associates, Inc.

Click for Manager Outlook
 

Strategy

Manager's Outlook

Following last year's strong rebound in EM debt, U.S. Treasury rate volatility weighed on the asset class in the first quarter of 2021. EM credit spreads have remained stable, however, reflecting both positive market views on global economic growth and the benign corporate default outlook in emerging markets. While the pandemic has weighed on corporate fundamentals, most issuers have weathered the storm and are poised to benefit from increasing global demand.

However, we remain concerned about a number of risks. The potential for further U.S. Treasury rates volatility, the withdrawal of fiscal support in some markets, and upcoming election cycles in some countries are headwinds. In addition, the coronavirus pandemic remains disruptive in many markets despite vaccine rollouts, and EM domestic growth recoveries will likely lag those of developed markets.

On the other hand, we believe risk assets can perform well in the near term as macro indicators continue to improve. We also maintain a favorable medium-term view as the broader global recovery and ample global liquidity should continue to support asset prices and further inflows into the asset class. EM corporate debt still offers a meaningful yield pickup across the rating spectrum compared to developed market credit, and the high carry provided by the asset class should continue to attract investors in an environment of very low global yields and stretched equity valuations.

At the country level, we see both idiosyncratic risks and opportunities. We are confident in China's ability to deleverage in a controlled fashion, but we are more wary of the pressures faced by the lowest quality issuers in the market. Most markets are fundamentally sound, but we have reduced exposure to more fragile markets, such as Turkey, Brazil, and South Africa due deteriorating credit profiles and institutional quality. We have instead rotated more exposure to Asia, and we continue to hold above average exposure to investment grade markets such as Indonesia, Mexico, and Chile.

We remain heavily underweight the cyclical energy and financials sectors while preferring domestically focused sectors such as technology, media, and telecommunications, utilities, and real restate. We continue to see the best value in the BBB to BB credit rating segment of the market, and we maintain our underweight to the single-A and CCC areas of the market.�

As always, our process is centered around bottom-up, fundamental research and effective security selection. This approach will become increasingly important as the market environment becomes less beta-driven and fundamentals come back to the fore.�

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 corporate bonds from emerging market issuers.

Investment Approach

  • Focus primarily on corporate debt issued by companies domiciled within emerging market countries.
  • Integrate proprietary credit research and relative value analysis.
  • Establish independent credit rating for each company and country.
  • Add value primarily through individual security selection decisions.
  • Limit risk through diversification.
  • Employ long-term investment horizon combined with low portfolio turnover.
  • Utilize collaboration across macroeconomic, equity and corporate debt teams to take a comprehensive view of corporate debt securities.
  • Diversification cannot assure a profit or protect against loss in a declining market.
  • 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

  • Diversified portfolio structure: typically 100-150 securities
  • Duration bands: managed within +/- 1 year of the benchmark
  • Expected average credit quality: BB
  • Maximum corporate issuer exposure of 3%
  • Country exposure will range between +/- 20% of index
  • Corporate sector exposure will range between +/- 20% of index
  • Expected tracking error will range between 250 - 450 bps

Performance (Class I)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Since Manager Inception
Annualised
Fund % 16.71% 6.54% 6.31% 5.50% 7.02%
Indicative Benchmark % 14.33% 6.58% 5.90% 5.42% 6.40%
Excess Return % 2.38% -0.04% 0.41% 0.08% 0.62%

Inception Date 18-May-2011

Manager Inception Date 30-Sep-2015

Indicative Benchmark: J.P. Morgan Corporate Emerging Market Bond Index Broad Diversified

Data as of 30-Apr-2021

Performance figures calculated in USD

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Fund % 23.11% 6.23% 6.54% 5.49%
Indicative Benchmark % 18.31% 6.13% 6.14% 5.40%
Excess Return % 4.80% 0.10% 0.40% 0.09%

Inception Date 18-May-2011

Indicative Benchmark: J.P. Morgan Corporate Emerging Market Bond Index Broad Diversified

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 % 0.06% 0.65% -0.35% 0.59% -0.29%
Indicative Benchmark % 0.22% 0.82% 0.02% 0.60% -0.14%
Excess Return % -0.16% -0.17% -0.37% -0.01% -0.15%

Inception Date 18-May-2011

Indicative Benchmark: J.P. Morgan Corporate Emerging Market Bond Index Broad Diversified

Indicative Benchmark: J.P. Morgan Corporate Emerging Market Bond Index Broad Diversified

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.

30-Apr-2021 - Samy Muaddi, Portfolio Manager ,
Emerging markets (EM) corporate debt generated modest positive total returns in April, rebounding from recent weakness. An uptick in growth and assurances of ongoing accommodative monetary policies revived investors’ risk appetites and pushed U.S. Treasury yields slightly slower. Within the portfolio, the financial sector was a source of strength, led by our avoidance of Huarong Asset Management which fell into distress amid rumours of a potential default. Our selections of higher-yielding Turkish banks Yapi Ve Kredi Bankasi and Akbank were also positive as they partially recovered from recent weakness. Our underweight allocation to the lower-yielding sector added further value amid heightened demand for yield. Within the utilities sector, our positions in high-quality ACWA Power advanced, supported by its longer duration. Higher-yielding Oman Grid also contributed amid increased risk appetites. In contrast, our selection of higher-yielding Chinese property developers within the real estate sector held back relative performance. Our holdings of Times China and Agile underperformed amid China's tightening of restrictions on debt for property developers.

Holdings

Issuers

Top
Issuers
10
Top 10 Issuers 13.34% Was (31-Mar-2021) 13.83%
Other View Top 10 Issuers

Monthly data as of30-Apr-2021

Holdings

Total
Holdings
201
Largest Holding MAF Global Securities 1.20% Was (31-Dec-2020) 0.90%
Top 10 Holdings 10.57%
Other View Full Holdings Quarterly data as of  31-Mar-2021

Quality Rating View quality analysis

  Largest Overweight Largest Underweight
Quality Rating BB A
By % 16.01% -14.23%
Fund 35.66% 4.68%
Indicative Benchmark 19.65% 18.90%

Average Credit Quality

BB+

Monthly Data as of  30-Apr-2021
Indicative Benchmark:  J.P. Morgan Corporate Emerging Market Bond Index Broad 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 5-7 Years 1-3 Years
By % 8.12% -12.26%
Fund 24.34% 9.54%
Indicative Benchmark 16.22% 21.80%

Weighted Average Maturity

8.38 Years

Monthly Data as of  30-Apr-2021
Indicative Benchmark:  J.P. Morgan Corporate Emerging Market Bond Index Broad Diversified

Duration View duration analysis

  Largest Overweight Largest Underweight
Duration 5-7 Years 1-3 Years
By % 9.86% -14.58%
Fund 27.39% 10.58%
Indicative Benchmark 17.53% 25.17%

Weighted Average Duration

5.46 Years

Monthly Data as of  30-Apr-2021
Indicative Benchmark: J.P. Morgan Corporate Emerging Market Bond Index Broad Diversified

31-Mar-2021 - Samy Muaddi, Portfolio Manager ,

Overweight Domestically Oriented Sectors

The technology, media, and telecommunications sector remained our largest overweight, and we added our allocation to the sector. The generally higher-quality sector can be defensive during bouts of market volatility. We added to issuers in several regions, including Helios Towers, Liberty Cablevision, and Bharti Airtel.

The utilities sector remains an overweight, primarily focused on companies in countries with strong fundamentals. We increased holdings of IENOVA in Mexico and Perusahaan Listrik Negar in Indonesia. These high-quality issuers provide regional diversification and are relatively defensive.

Real estate sector holdings increased as we added to higher-conviction Chinese property developers Yanlord and Times China, while reducing Yuzhou.

Underweight Lower-Yielding and Less-Attractive Risk-Adjusted Relative Value

The financials sector remains the largest underweight, though we added financial holdings during the quarter. We added to a perpetual issue from Banco Mercantil de Norte and initiated a position in Bank Negara Indonesia on new issue.

We trimmed holdings in the oil and gas sector, maintaining our significant underweight by reducing positions in lower-rated names. We eliminated ADES and significantly reduced YPF and Petrobras. The portfolio remains focused on quasi-sovereigns, adding tactically to Petroleos Mexicanos and Thai Oil.

We remain underweight the metals and mining sector. Amid political uncertainty in Brazil, we reduced holdings in Usinas Siderurgicas de Minas and Nexa.

Credit Quality Considerations

From a secular perspective, we find the most value in BBB and BB credits. These segments generally offer opportunities to identify companies with improving fundamentals that are rating upgrade candidates or provide a stable and attractive risk-adjusted yield.

We modestly decreased risk in the portfolio over the quarter. We increased our holdings of BBB rated names that offer attractive risk-adjusted value, such as Indian port operator Adani Ports. We trimmed BB rated Transnet as South Africa continues to struggle with coronavirus shutdowns. We continue to generally avoid distressed issuers in the CCC and below segment given their increased volatility, history of poor risk-adjusted returns and elevated default risk in the current environment.

Sectors

Total
Sectors
14
Largest Sector Financial 19.63% Was (31-Mar-2021) 18.27%
Other View complete Sector Diversification

Monthly Data as of 30-Apr-2021

Indicative Benchmark: J.P. Morgan Corporate Emerging Market Bond Index Broad Diversified

Largest Overweight

TMT
By6.80%
Fund 17.00%
Indicative Benchmark 10.19%

Largest Underweight

Financial
By-11.14%
Fund 19.63%
Indicative Benchmark 30.77%

Monthly Data as of 30-Apr-2021

30-Apr-2021 - Samy Muaddi, Portfolio Manager ,
Our focus is on companies that we believe are well positioned to benefit from domestic economic growth, such as those in consumer-related sectors, including technology, media, and telecommunications; utilities; and real estate. In contrast, we continue to have a lower exposure to financials given rich valuations in some areas and poor transparency. We also maintain a significant underweight exposure to the oil and gas sector.

Countries

Total
Countries
37
Largest Country China 10.02% Was (31-Mar-2021) 12.03%
Other View complete Country Diversification

Monthly Data as of 30-Apr-2021

Indicative Benchmark: J.P. Morgan Corporate Emerging Market Bond Index Broad Diversified

Largest Overweight

Mexico
By4.74%
Fund 9.27%
Indicative Benchmark 4.53%

Largest Underweight

Qatar
By-3.73%
Fund 0.00%
Indicative Benchmark 3.73%

Monthly Data as of 30-Apr-2021

31-Dec-2016 - Samy Muaddi, Portfolio Manager ,
Countries with strong reform agendas including Brazil, Argentina, and Indonesia, remain a key focus of the strategy. On the other hand, we have trimmed our exposure to Mexico, largely through longer-maturity industrials, given the uncertainties around the potential renegotiation of North American free trade agreements

Currency

Total
Currencies
4
Largest Currency 99.69% Was (31-Mar-2021) 99.69%
Other View completeCurrency Diversification

Monthly Data as of  30-Apr-2021

Indicative Benchmark : J.P. Morgan Corporate Emerging Market Bond Index Broad Diversified

Largest Overweight

Indian rupee
By 0.31%
Fund 0.31%
Indicative Benchmark 0.00%

Largest Underweight

U.S. dollar
By -0.31%
Fund 99.69%
Indicative Benchmark 100.00%

Monthly Data as of  30-Apr-2021

Team (As of 12-May-2021)

Samy Muaddi, CFA

Samy Muaddi is a portfolio manager in the International Fixed Income Division. He is the lead manager of the Emerging Markets Corporate Bond Strategy and co-manages the Emerging Markets Bond and Global High Income Bond Strategies. He previously managed the firm’s Asia Credit Bond Strategy from its inception until 2020. Samy also is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price Associates, Inc.

Samy has been with T. Rowe Price since 2006, beginning as an associate analyst in the Fixed Income Division. After that, he was a credit analyst and then an associate portfolio manager on the Emerging Markets team before assuming his current role.

Samy earned a B.A., summa cum laude, in economics from the University of Maryland. He also has earned the Chartered Financial Analyst® designation. Samy is an adjunct professor at Georgetown University in the Walsh Graduate School of Foreign Service.

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

  • Fund manager
    since
    2015
  • Years at
    T. Rowe Price
    15
  • Years investment
    experience
    15
Siby Thomas, CFA

Siby Thomas is a portfolio manager co-managing the Emerging Markets Corporate Bond Strategy in the Global Fixed Income Division. He is a vice president of the Multi-Sector Account Portfolios, Inc., and the International Funds, Inc., and a member of the Investment Advisory Committees for the Emerging Markets Corporate Multi-Sector Account Portfolio and the Emerging Markets Corporate Bond Fund. Siby also is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price Associates, Inc.

Siby has been with T. Rowe Price since 2009, beginning as an emerging markets corporate credit analyst in the Fixed Income Division. Prior to this, he was an M.B.A. intern with T. Rowe Price. Prior to his current role, he was an associate portfolio manager on the Emerging Markets team. Before joining the firm, Siby was employed by Sargent & Lundy Engineers as a mechanical associate in the nuclear power division. 

Siby earned a B.S. in mechanical engineering from the University of Illinois and an M.B.A. in finance, accounting, and international business from the University of Chicago, Booth School of Business. He also has earned the Chartered Financial Analyst® designation. 

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

  • Fund manager
    since
    2020
  • Years at
    T. Rowe Price
    11
  • Years investment
    experience
    11

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% 135 basis points 1.52%
Class I $2,500,000 $100,000 $0 0.00% 70 basis points 0.80%
Class Q $1,000 $100 $100 0.00% 70 basis points 0.87%
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.