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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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SICAV

European High Yield Bond Fund

Research-driven, targeting consistent high income.

ISIN LU1283501010 Bloomberg TRPGAHC:LX

3YR Return Annualised
(View Total Returns)

Total Assets
(EUR)

2.53%
€239.9m

1YR Return
(View Total Returns)

Manager Tenure

17.79%
5yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

-0.84
1.98%

Inception Date 07-Sep-2015

Performance figures calculated in CHF

31-Jan-2020 - Michael Della Vedova, Portfolio Manager,
Concerns about the impact of the coronavirus weighed on sentiment, suggesting that the largest risks to European high yield bonds lie outside the market. While the long-term repercussions are still unclear, European high yield bonds still benefit from positive fundamental and technical factors. We will continue to monitor the development of the ongoing coronavirus outbreak as well as seek to identify companies that can better withstand periods of near-term risk aversion.
Michael Della Vedova
Michael Della Vedova, Portfolio Manager

Mike Della Vedova is a global high yield portfolio manager in the Fixed Income Division. He is a portfolio manager for the Europe High Yield Bond Strategy and co-portfolio manager for the Global High Yield Bond Fund and Global High Income Bond Strategy. 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 high yield corporate bonds that are denominated in European currencies.

Investment Approach

  • The fund focuses primarily on European currency-denominated corporate debt issued by below investment-grade companies.
  • Invests mainly in BB and B rated bonds, with the ability to purchase lower-quality securities when compelling valuation and risk/reward opportunities arise.
  • The fund integrates fundamental proprietary research at the corporate bond, sovereign, and equity levels. This integral collaboration provides a holistic view of a company’s capital structure and management team, as well as its position in the larger market environment unique to each country.
  • Research focuses on quantitative and qualitative factors that drive an independent credit rating. Analysts look to identify long-term potential for balance sheet and external rating improvements while adhering to strict risk management practices.
  • Target excess-return will be primarily driven by individual security selection and, secondarily, by relative sector and credit quality allocations.

Portfolio Construction

  • At least 80% of assets will be invested in securities denominated in European currencies—mainly the euro and the pound.
  • Currency exposure is fully hedged back to the euro.
  • Up to 20% of assets may be invested outside of European currencies, including U.S. dollar high yield and investment-grade corporate bonds.
  • Target tracking error: 200–400 basis points

Performance (Class An | CHF)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Fund % 17.79% 2.53% 2.90% 3.16%
Indicative Benchmark % 15.84% 3.70% 4.43% 4.36%
Excess Return % 1.95% -1.17% -1.53% -1.20%

Inception Date 07-Sep-2015

Indicative Benchmark: ICE BofAML European Currency High Yield Constrained Excluding Subordinated Financials Index Hedged to CHF

Data as of 30-Apr-2021

Performance figures calculated in CHF

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Fund % 24.50% 2.55% 3.03% 3.08%
Indicative Benchmark % 21.86% 3.71% 4.70% 4.31%
Excess Return % 2.64% -1.16% -1.67% -1.23%

Inception Date 07-Sep-2015

Indicative Benchmark: ICE BofAML European Currency High Yield Constrained Excluding Subordinated Financials Index Hedged to CHF

Data as of 31-Mar-2021

Performance figures calculated in CHF

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 % -0.25% 0.42% 1.36% 0.68% 1.45%
Indicative Benchmark % -0.13% 0.48% 1.94% 0.62% 1.61%
Excess Return % -0.12% -0.06% -0.58% 0.06% -0.16%

Inception Date 07-Sep-2015

Indicative Benchmark: ICE BofAML European Currency High Yield Constrained Excluding Subordinated Financials Index Hedged to CHF

Indicative Benchmark: ICE BofAML European Currency High Yield Constrained Excluding Subordinated Financials Index Hedged to CHF

Performance figures calculated in CHF

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-Mar-2021 - Michael Della Vedova, Portfolio Manager,
European high yield bonds generated a positive return in March. After fluctuating within a narrow range, spreads ended the month marginally tighter on hopes of a global economic recovery. Despite the ECB’s accelerated bond purchases, a sell-off in sovereign yields occurred at various points. This, together with resurgent coronavirus cases and tightened restrictions in select European countries offset some of the positive return. Within the portfolio, our security selection in the basic industry, particularly our holdings in French and American aluminum manufacturers, supported relative returns. Our holdings within the banking, building materials and transportation sectors were also supportive, while our security selection with the retail sector held back relative gains. The impact from asset allocation decisions was neutral overall, with our underweight position in the wireline sector contributing positively and our allocation to cash, which is necessary for liquidity purposes, holding back relative performance.

Holdings

Issuers

Top
Issuers
10
Top 10 Issuers 22.43% Was (31-Mar-2021) 23.97%
Other View Top 10 Issuers

Monthly data as of30-Apr-2021

Holdings

Total
Holdings
108
Largest Holding Iceland Bondco 3.25% Was (31-Dec-2020) 3.20%
Top 10 Holdings 21.02%
Other View Full Holdings Quarterly data as of  31-Mar-2021

Quality Rating View quality analysis

  Largest Overweight Largest Underweight
Quality Rating B Rated BB Rated
By % 27.32% -48.74%
Fund 50.11% 21.94%
Indicative Benchmark 22.80% 70.68%

Average Credit Quality

B

Monthly Data as of  30-Apr-2021
Indicative Benchmark:  ICE BofAML European Currency High Yield Constrained Excluding Subordinated Financials Index Hedged to EUR

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 % 11.69% -17.98%
Fund 34.68% 3.51%
Indicative Benchmark 22.99% 21.49%

Weighted Average Maturity

5.53 Years

Monthly Data as of  30-Apr-2021
Indicative Benchmark:  ICE BofAML European Currency High Yield Constrained Excluding Subordinated Financials Index Hedged to EUR

Duration View duration analysis

  Largest Overweight Largest Underweight
Duration Under 1 Year 1-3 Years
By % 7.07% -6.15%
Fund 17.53% 28.86%
Indicative Benchmark 10.45% 35.01%

Weighted Average Duration

2.95 Years

Monthly Data as of  30-Apr-2021
Indicative Benchmark: ICE BofAML European Currency High Yield Constrained Excluding Subordinated Financials Index Hedged to EUR

31-Dec-2020 - Michael Della Vedova, Portfolio Manager,

We continued to draw on our bottom-up fundamental research to identify names that we felt continued to offer long-term potential. The primary market was active over the period, offering additional potential opportunities. However, we remained selective and stayed focused on names with stable fundamentals rather than chasing market direction.��

Long-term credit convictions drive industry allocation

Our research-based, flexible approach will remain important going forward as we expect to see greater market emphasis on fundamentals. The cable and satellite TV sector remained one of the portfolio's largest sector overweight positions and has been a top contributor to performance over the volatile year. We took the opportunity to take profits and trim some positions during the quarter that were trading at very tight spread levels. However, we remain positive on the overall outlook for this sector given its regular income and defensive qualities. By contrast, we remained underweight the automotive sector due to concerns over long-term industry disruption.

B rated names continue to offer attractive relative value

Our overall rating allocation is a by-product of our bottom-up security selection. While the near term could see further swings in market direction, we continue to identify names within the B rated category that offer attractive valuations relative to favorable fundamentals. These convictions drive our overweight exposure to the rating bracket. We hold a corresponding underweight to the BB bracket, instead prioritizing companies within brackets that offer long-term performance potential.

Sovereign views and policies are a key input to risk assessment

Proprietary sovereign views serve as a key input in our overall risk assessment. Our research-based flexible approach will be particularly important going forward. As different fiscal, monetary, and health responses play out between countries, our ability to capture dislocations can help avoid further volatility while being best positioned for a continued recovery.

We expect European corporate defaults to rise as the economic environment remains challenging. An additional layer of complexity is divergent bankruptcy policies and recovery rates across countries, highlighting the importance of an active approach to high yield investing. We believe our research in this area helps us account for the different levels of risk related to variance in default and recovery policies and where spread levels offer the best compensation for these risks. Our holistic view of capital structures and willingness to invest in holding companies is reflected in an allocation to companies domiciled in Luxembourg. Any non-euro-denominated bonds are fully hedged back to the euro.

Industry

Total
Industries
27
Largest Industry Automotive 8.86% Was (31-Mar-2021) 8.59%
Other View complete Industry Diversification

Monthly Data as of 30-Apr-2021

Indicative Benchmark: ICE BofAML European Currency High Yield Constrained Excluding Subordinated Financials Index Hedged to EUR

Largest Overweight

Cable & Satellite TV
By3.59%
Fund 6.44%
Indicative Benchmark 2.86%

Largest Underweight

Energy
By-4.12%
Fund 1.16%
Indicative Benchmark 5.27%

Monthly Data as of 30-Apr-2021

31-Mar-2021 - Michael Della Vedova, Portfolio Manager,
We maintain an overweight exposure to the cable and satellite TV sector. This positioning is based on expectations that the sector will benefit over the long term from secular trends in media consumption and stable, recurring revenue business models. Conversely, we remain underweight the automotive sector due to concerns over long-term industry disruption. We also maintained an underweight exposure to the wireline sector to help fund other positions that we believe could perform better.

Countries

Total
Countries
20
Largest Country United States 24.19% Was (31-Mar-2021) 23.86%
Other View complete Country Diversification

Monthly Data as of 30-Apr-2021

Indicative Benchmark: ICE BofAML European Currency High Yield Constrained Excluding Subordinated Financials Index Hedged to EUR

Largest Overweight

United States
By10.80%
Fund 24.19%
Indicative Benchmark 13.39%

Largest Underweight

Italy
By-8.41%
Fund 4.32%
Indicative Benchmark 12.73%

Monthly Data as of 30-Apr-2021

30-Sep-2017 - Michael Della Vedova, Portfolio Manager,
We do not expect to add value via currency management and typically hedge our non-euro exposure back to euros to limit volatility, keeping the focus on credit selection.

Currency

Total
Currencies
5
Largest Currency 99.90% Was (31-Mar-2021) 99.85%
Other View completeCurrency Diversification

Monthly Data as of  30-Apr-2021

Indicative Benchmark : ICE BofAML European Currency High Yield Constrained Excluding Subordinated Financials Index Hedged to EUR

Largest Overweight

euro
By 11.08%
Fund 99.90%
Indicative Benchmark 88.82%

Largest Underweight

British pound sterling
By -11.09%
Fund 0.10%
Indicative Benchmark 11.18%

Monthly Data as of  30-Apr-2021

The fund is fully hedged back to euro, although direct exposure may total less than 100%. It is important to note that there can be no assurances that the currency hedging employed will fully eliminate the shareholder's exposure to exchange rate fluctuations.

31-Jul-2017 - Michael Della Vedova, Portfolio Manager,
We do not expect to add value via currency management and typically hedge our non-euro exposure back to euros to limit volatility, keeping the focus on credit selection.

Team (As of 12-May-2021)

Michael Della Vedova

Mike Della Vedova is a global high yield portfolio manager in the Fixed Income Division. He is a portfolio manager for the Europe High Yield Bond Strategy and co-portfolio manager for the Global High Yield Bond Fund and Global High Income Bond Strategy. He is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price International Ltd.

Mike’s investment experience began in 1994, and he has been with T. Rowe Price since 2009, beginning in the Fixed Income department. Prior to this, Mike was cofounder and partner of Four Quarter Capital, a credit hedge fund focusing on below investment-grade European corporate debt. Mike also was employed by Muzinich & Company as a senior analyst and assistant portfolio manager in London.

Mike earned an LL.B. and a B.Com. in finance from the University of New South Wales and a Graduate Diploma in Legal Practice (GDLP) from the University of Technology, Sydney. He also was admitted as a solicitor to the Supreme Court of New South Wales.

  • Fund manager
    since
    2015
  • Years at
    T. Rowe Price
    11
  • Years investment
    experience
    27
Michael Lesesne

Michael Lesesne is a global high yield portfolio specialist in the Fixed Income Division. He supports the High Yield, Floating Rate Bank Loan, and Credit Opportunities Strategies, working closely with clients, prospects, and consultants. Michael is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price Associates, Inc.

Michael’s investment experience began in 1991, and he has been with T. Rowe Price since 2012, beginning as a global high yield portfolio specialist in the Fixed Income Investment Specialists department. Prior to T. Rowe Price, Michael was employed by Lord Abbett as a partner and director of credit research. Before that, Michael was a senior high yield credit analyst at Weiss, Peck & Greer and at TIAA-CREF.

Michael earned a B.A. in business economics from Brown University and an M.B.A. in finance from Columbia Business School.

  • Years at
    T. Rowe Price
    8
  • Years investment
    experience
    29

Fee Schedule

Share Class Minimum Initial Investment and Holding Amount (EUR) Minimum Subsequent Investment (EUR) Minimum Redemption Amount (EUR) Sales Charge (up to) Investment Management Fee (up to) Ongoing Charges
Class A €1,000 €100 €100 5.00% 115 basis points 1.28%
Class I €2,500,000 €100,000 €0 0.00% 60 basis points 0.67%
Class Q €1,000 €100 €100 0.00% 60 basis points 0.71%
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.