SICAV

US Large-Cap Value Equity Fund

Invest in large US companies with hidden value and potential overlooked by the market majority.

ISIN LU0133100338 Bloomberg TRPULVI:LX

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

0.11%
$570.4m

1YR Return
(View Total Returns)

Manager Tenure

-10.00%
18yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

-0.09
4.34%

Inception Date 27-Mar-2002

Performance figures calculated in USD

Other Literature

31-Jan-2020 - Heather McPherson, Portfolio Manager,
Given the strength of the U.S market over the past year, we believe company valuations as a whole are unattractive and investors may be too complacent. Against this backdrop, opportunities are likely to be more idiosyncratic, and we continue to look for companies with improving fundamentals and compelling risk/reward profiles that have been overly discounted by the market. As always, we seek to look past the noise to make long-term investments in higher-quality companies.
John D.  Linehan, CFA
John D. Linehan, CFA, Co-Portfolio Manager

John D. Linehan is the portfolio manager for the U.S. Large Cap Equity Income Strategy, U.S. Select Value Strategy and co-portfolio manager for the US Large-Cap Value Equity Strategy in the U.S. Equity Division. In addition, he is the chief investment officer of Equity and a member of the firm's U.S. Equity Steering and Equity Brokerage and Trading Control Committees. He also is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price Associates, Inc.

 

Strategy

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 from large capitalization companies in the United States that are selling at discounted valuations relative to their historical average and/or the average of their industries.

Investment Approach

  • Focus on relative value relationships to opportunistically identify attractively valued companies.
  • Fundamental research is key to uncovering companies with potential for stock price mean reversion.
  • Integrate qualitative inputs to assess potential for improved investor perception.
  • Verify relative valuation anomalies through quantitative analysis.
  • Balance valuation analysis and qualitative overlay.

Portfolio Construction

  • Typically 70-80 stock portfolio
  • Individual positions typically are below 3%, but higher conviction ideas can range to 5%
  • Sector weights will typically vary from 0.5X to 2.0X of primary value sectors of the Russell 1000 Value Index
  • Reserves will range from 0% to 2%

Performance (Class I)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Fund % -10.00% 0.11% 6.47% 8.60%
Indicative Benchmark % -5.78% 1.85% 6.84% 9.14%
Excess Return % -4.22% -1.74% -0.37% -0.54%

Inception Date 27-Mar-2002

Indicative Benchmark: Russell 1000 Value Net 30% Index

Data as of  30-Sep-2020

Performance figures calculated in USD

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Fund % -10.00% 0.11% 6.47% 8.60%
Indicative Benchmark % -5.78% 1.85% 6.84% 9.14%
Excess Return % -4.22% -1.74% -0.37% -0.54%

Inception Date 27-Mar-2002

Indicative Benchmark: Russell 1000 Value Net 30% Index

Data as of  30-Sep-2020

Performance figures calculated in USD

Recent Performance

  Month to DateData as of 29-Oct-2020 Quarter to DateData as of 29-Oct-2020 Year to DateData as of 29-Oct-2020 1 MonthData as of 30-Sep-2020 3 MonthsData as of 30-Sep-2020
Fund % -0.07% -0.07% -15.09% -3.56% 5.76%
Indicative Benchmark % -1.24% -1.24% -13.19% -2.51% 5.40%
Excess Return % 1.17% 1.17% -1.90% -1.05% 0.36%

Inception Date 27-Mar-2002

Indicative Benchmark: Russell 1000 Value Net 30% Index

Indicative Benchmark: Russell 1000 Value Net 30% 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.

Index returns shown with reinvestment of dividends after the deduction of withholding taxes. 

Effective 1 June 2019, 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.

30-Sep-2020 - Heather McPherson, Portfolio Manager,
U.S. equities endured their first monthly losses since March as the continued gridlock in Washington over another potential round of stimulus and the controversy over replacing Supreme Court Justice Ruth Bader Ginsburg weighed on the market. Investors appeared particularly concerned about the lack of additional aid for fiscally strained states and municipalities, while news on potential coronavirus vaccines as well as fears over a second wave of infections in Europe were also important drivers of sentiment. The month’s economic data generally pointed to a continuing, but slowing, recovery. Housing remained the bright spot in the U.S. economy, with new home sales reaching their highest level since September 2006. Within the portfolio, consumer discretionary had the most negative impact on relative results due to our security choices and underweight allocation. Shares of Magna International fell amid continued coronavirus-related uncertainty and as plant shutdowns affected production. Stock selection in financials also hurt performance. Conversely, the communication services sector was the leading contributor to relative results due to security selection. Shares of Fox outperformed as investors appeared encouraged by the resumption of live football broadcasting. Stock selection in materials added further value.

Holdings

Total
Holdings
86
Largest Holding UPS 3.17% Was (30-Jun-2020) 2.30%
Other View Full Holdings Quarterly data as of 30-Sep-2020
Top 10 Holdings 25.65% View Top 10 Holdings Monthly data as of 30-Sep-2020

Largest Top Contributor^

UPS
By 0.32%
% of fund 3.14%

Largest Top Detractor^

GE
By -0.03%
% of fund 2.29%

^Absolute

Quarterly Data as of 30-Sep-2020

Top Purchase

Coca-Cola (N)
0.77%
Was (30-Jun-2020) 0%

Top Sale

CenterPoint Energy (E)
0.00%
Was (30-Jun-2020) 0.76%

Quarterly Data as of 30-Sep-2020

30-Jun-2020 - Heather McPherson, Portfolio Manager,

We used the year-to-date volatility to go name by name through the portfolio and reconsider our thesis on each holding. We also sold several names on relative strength that saw their share prices appreciate during the market rebound.

Financials

The financials sector represents a significant absolute weighting in the portfolio. We tend to prefer defensively positioned names with solid balance sheets and diversified revenue streams, as we are mindful of the adverse impact of lower interest rates on bank lending margins and potential weakening of the credit cycle.

  • We sold shares of JPMorgan Chase. The global bank has above-average balance sheet strength and diversified business lines that are highly levered to consumers. However, we believe the stock is trading at a relative valuation premium, and we are wary that the market is underappreciating the earnings and credit headwinds the business may face.
  • We bought shares of Bank of America due to its attractive relative valuation. Although we acknowledge risks remain as we work through the coronavirus pandemic, we continue to like management's efforts to improve the bank's cost structure and risk characteristics. We also value Bank of America's strong, domestic-focused retail deposit base.

Consumer Discretionary

The sector is composed of a diverse group of industries, including retailers, diversified consumer services, auto manufacturers, and hotel and restaurant operators. We are cautious on several industries within the sector that we believe are exposed to short- and long-term headwinds, such as the coronavirus pandemic and the shift from brick-and-mortar shopping to e-commerce.

  • We bought shares of TJX at an attractive relative valuation. We are encouraged by early signs of solid consumer demand following the partial reopening of TJX stores in May. We believe the off-price retail space stands to benefit from the eventual resumption of U.S. economic activity following the coronavirus pandemic. Additionally, we believe TJX has the balance sheet strength that may be required in this uncertain operating environment.

Health Care

We have a varied view of the sector, considering the myriad challenges and opportunities health care companies face, including potential drug pricing reform, mergers and acquisitions, and an aging U.S. population.

  • We sold shares of medical device maker Medtronic. While we remain positive on the company given its defensive earnings growth profile and diverse end markets, we are wary about the near-term impact of the coronavirus pandemic on the medical device space.
  • We sold shares of Johnson & Johnson, one of the largest and most diverse health care companies in the world. We are cautious about the company's high COVID-19 exposure relative to peers. A significant impact to the devices business is expected over the near term as hospitals may take longer than anticipated to pass peak coronavirus admissions and repurpose facilities back toward elective procedures.

Communication Services

The communication services sector contains several types of companies, including media and entertainment businesses and telecommunication services names. Our main industry exposure is to the entertainment and media industries, where we hold companies that produce or distribute must-see content and typically generate strong cash flow. We also hold positions in the diversified telecommunication services industry, where we generally prefer high-quality companies that have solid balance sheets, stable cash flow growth, and high dividend payout ratios.

  • Verizon Communications features a leading U.S. wireless network. The stock has held up relatively well amid the coronavirus pandemic due to investor expectations of resilient demand for wireless services. However, we believe the business faces threats from rising competitive intensity in the wireless space, and we utilized relative strength to reduce our position size.

Sectors

Total
Sectors
11
Largest Sector Financials 19.46% Was (31-Aug-2020) 19.53%
Other View complete Sector Diversification

Monthly Data as of 30-Sep-2020

Indicative Benchmark: Russell 1000 Value Index

Top Contributor^

Information Technology
Net Contribution 0.86%
Sector
-0.10%
Selection 0.97%

Top Detractor^

Financials
Net Contribution -1.13%
Sector
-0.04%
Selection
-1.09%

^Relative

Quarterly Data as of 30-Sep-2020

Largest Overweight

Energy
By2.55%
Fund 6.54%
Indicative Benchmark 3.99%

Largest Underweight

Consumer Discretionary
By-4.94%
Fund 2.63%
Indicative Benchmark 7.57%

Monthly Data as of 30-Sep-2020

30-Sep-2020 - Heather McPherson, Portfolio Manager,
We generally view the information technology sector as cyclical, with many companies operating at different stages within their industry’s specific cycle. Within the sector, we favour the semiconductors and semiconductor equipment industry, which we believe should benefit from the continued proliferation of internet-connected devices. In September, we sold shares of several companies on strength following share price appreciation. We also sold shares of certain prominent names within the portfolio in order to manage our position size.

Team (As of 01-Oct-2020)

John D.  Linehan, CFA

John D. Linehan is the portfolio manager for the U.S. Large Cap Equity Income Strategy, U.S. Select Value Strategy and co-portfolio manager for the US Large-Cap Value Equity Strategy in the U.S. Equity Division. In addition, he is the chief investment officer of Equity and a member of the firm's U.S. Equity Steering and Equity Brokerage and Trading Control Committees. He also is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price Associates, Inc.

John’s investment experience began in 1987, and he has been with T. Rowe Price since 1998, beginning as an investment analyst, covering paper and forest products and the airline industry, in the U.S. Equity Division. From 2003 to 2009, he was the portfolio manager of the US Value Strategy, and from 2009 to 2014, he was head of U.S. Equity and chairman of the U.S. Equity Steering Committee. Prior to T. Rowe Price, John was an executive in the oil trading and consulting industry, first as vice president and managing director for Delaney Petroleum, then as vice president and managing director for E.T. Petroleum. He also was an associate in mortgage-backed securities trading at Banker Trust NY.

John earned a B.A. in economics from Amherst College and an M.B.A. from Stanford Graduate School of Business, where he was the Henry Ford II Scholar, an Arjay Miller Scholar, and the winner of the Alexander A. Robichek Award in finance. John also has earned the Chartered Financial Analyst® designation.

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

  • Fund manager
    since
    2002
  • Years at
    T. Rowe Price
    22
  • Years investment
    experience
    31
Mark S.  Finn, CFA, CPA

?Mark Finn is the portfolio manager of the US Large-Cap Value Equity Strategy, which includes the Value Fund, and co-portfolio manager of the Large-Cap Value Fund in the U.S. Equity Division. He is chairman of the Investment Advisory Committee of the U.S. Large Cap Value Equity Strategy. Mark is also a vice president and an Investment Advisory Committee member of the US Large-Cap Equity Income, Global Natural Resources Equity, US Quantitative U.S., US Quantitative Large, US Mid-Cap Value Equity, and Retirement Strategies.

Mark’s investment experience began in 1998, and he has been with T. Rowe Price since 1990, beginning as controller of Investment Services in the Finance department. After that, he was principal accounting officer for the firm’s realty income strategies and an equity research analyst. Prior to T. Rowe Price, Mark was employed by Price Waterhouse LLP as an auditor, working on engagements for both public and private companies.  

Mark earned a B.S. in accounting from the University of Delaware. He also has earned the Chartered Financial Analyst® designation.

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

  • Fund manager
    since
    2010
  • Years at
    T. Rowe Price
    29
  • Years investment
    experience
    22
Heather K. McPherson

Heather McPherson is a co-portfolio manager for the US Large-Cap Value Equity Strategy and an associate portfolio manager for the US Large-Cap Equity Income Strategy in the U.S. Equity Division. Heather is a member of the firm's U.S. Equity Steering Committee and is a vice president and an Investment Advisory Committee member of the US Large-Cap Equity Income, US Large-Cap Core Equity, US Quantitative Large, Global Natural Resources Equity, US Mid-Cap Value Equity, and US Large-Cap Value Equity Strategies. She is a trustee of the T. Rowe Price Foundation. Heather also is a vice president of T. Rowe Price Group, Inc. 

Heather’s investment experience began in 2001, and she has been with T. Rowe Price since 2002, beginning in the U.S. Equity Division. Prior to this, Heather was employed by Salomon Smith Barney as a summer intern, covering the storage area networking industry. Heather also was employed by Putnam Lovell Securities, Inc., as a vice president of finance and administration.

Heather earned a B.S. in managerial economics from the University of California, Davis, and an M.B.A. from Duke University, The Fuqua School of Business.

  • Fund manager
    since
    2015
  • Years at
    T. Rowe Price
    18
  • Years investment
    experience
    20
Caleb N. Fritz, CFA

Caleb Fritz is a portfolio specialist in the U.S. Equity Division. He acts as a proxy for equity portfolio managers with institutional clients, consultants, and prospects and supports the large-cap value strategies. Caleb also is a vice president of T. Rowe Price Group, Inc.

Caleb’s investment experience began in 2000. He was with T. Rowe Price from 2000 to 2003, beginning in the Participant Service Center, and returned in 2010 until the present. Prior to his current position, he was a lead portfolio analyst providing analytical support to investment, client service, and marketing staff for the firm’s large-cap value and health sciences portfolios. Prior to returning to the firm, Caleb was employed by Legg Mason Capital Management as an associate analyst covering the health care sector.  

Caleb earned a B.A. and an M.A. from the University of South Florida. He also has earned the Chartered Financial Analyst® designation.

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

  • Years at
    T. Rowe Price
    12
  • Years investment
    experience
    20
Eric Papesh, CFA, BA, MBA

Eric Papesh is a portfolio specialist based in London in the U.S. Equity Division. Eric supports the US Smaller Companies Equity and US Large-Cap Equity Income Strategies offered in the Europe, Middle East, and Africa and Asia-Pacific regions. Eric is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price International Ltd. 

Eric’s investment experience began in 1994, and he has been with T. Rowe Price since 2014, beginning in the ISG as a portfolio specialist. Prior to this, Eric was employed by Russell Investments where he focused on U.S. equity investment strategies.

Eric earned a B.A. in business administration, with concentrations in finance and information systems, and an M.B.A. in business administration from the University of Washington. Eric has earned the Chartered Financial Analyst® designation.

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

  • Years at
    T. Rowe Price
    5
  • Years investment
    experience
    25

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% 150 basis points 1.61%
Class I $2,500,000 $100,000 $0 0.00% 65 basis points 0.70%
Class J $10,000,000 $0 $0 0.00% 0 basis points 0.02%
Class Q $1,000 $100 $100 0.00% 65 basis points 0.77%

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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