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Strategy

Europe High Yield Bond

The Europe High Yield Bond Composite seeks to maximize total return primarily through investment in high yield corporate bonds denominated in European currencies.

3YR Return Annualised (Net)
(View Total Returns)

Tracking Error
(5 Years)

3.78%
2.04%

1YR Return (Net)
(View Total Returns)

Information Ratio
(5 Years)

3.49%
-0.04

Inception Date 31-Oct-2011

Performance figures calculated in EUR

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Michael Della Vedova
Michael Della Vedova, Portfolio Manager

Michael Della Vedova is a global high yield portfolio manager in the Fixed Income Division at T. Rowe Price. Mr. Della Vedova is a portfolio manager of the European High Yield Strategy and co-portfolio manager for the firm's Global High Yield Strategy. He is a vice president of T. Rowe Price Group, Inc. and T. Rowe Price International Ltd.

 

Valuations and performance are computed in USD and converted to EUR. When converting U.S. Dollar composite returns, benchmarks, dispersion and asset data, the same exchange rate source is used consistently. Total returns in non-U.S. Dollar currencies are calculated by adjusting U.S. Dollar performance by the percent change in the U.S. Dollar/foreign currency exchange rate (as determined by an independent third party) for the time periods selected. Net of fees performance is calculated using the currency-converted gross performance and then deducting the highest applicable EUR fee without the benefit of breakpoints. 

Strategy

Investment Approach

  • Strategy 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 strategy 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 excess return: 100–150 basis points over a full market cycle. (Not a formal objective and it can be changed without prior notice.)
  • Target tracking error: 200–400 basis points

Holdings

Issuers

Top
Issuers
10
Top 10 Issuers 25.67% Was (31-Mar-2019) 26.44%
Other View Top 10 Issuers

Monthly data as of 30-Jun-2019

Holdings

Total
Holdings
95
Largest Holding Cabot Financial Luxembourg 2.99% Was (31-Mar-2019) 2.84%
Top 10 Holdings 22.36%
Other View Full Holdings Quarterly data as of 30-Jun-2019

Quality Rating View quality analysis

  Largest Overweight Largest Underweight
Quality Rating B Rated BB Rated
By % 18.42% -45.95%
Portfolio 44.13% 22.04%
Benchmark 25.71% 67.99%

Average Credit Quality

B+

Monthly Data as of 30-Jun-2019
Benchmark:  ICE BofAML European Currency High Yield Constrained Excluding Subordinated Financials Index Hedged to EUR

Sources for credit quality: 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.  T. Rowe Price does not evaluate these ratings, but simply assigns them to the appropriate credit quality category as determined by the rating agency. T. Rowe Price uses the rating of the underlying investment vehicle for credit default swaps. Short-Term holdings are not rated.

Maturity View maturity analysis

  Largest Overweight Largest Underweight
Maturity 5-7 Years 1-3 Years
By % 16.82% -15.61%
Portfolio 48.51% 3.79%
Benchmark 31.69% 19.40%

Weighted Average Maturity

5.52 Years

Monthly Data as of 30-Jun-2019
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 3-5 Years
By % 4.56% -6.29%
Portfolio 22.18% 24.43%
Benchmark 17.62% 30.72%

Weighted Average Duration

2.45 Years

Monthly Data as of 30-Jun-2019
Benchmark:  ICE BofAML European Currency High Yield Constrained Excluding Subordinated Financials Index Hedged to EUR

Industry

Total
Industries
28
Largest Industry Cable Operators 15.11% Was (31-Mar-2019) 15.81%
Other View complete Industry Diversification

Monthly Data as of 30-Jun-2019

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

Largest Overweight

Cable Operators
By8.25%
Portfolio 15.11%
Benchmark 6.86%

Largest Underweight

Other Telecommunications
By-8.98%
Portfolio 0.43%
Benchmark 9.41%

Monthly Data as of 30-Jun-2019

Countries

Total
Countries
20
Largest Country United States 23.72% Was (31-Mar-2019) 22.66%
Other View complete Country Diversification

Monthly Data as of 30-Jun-2019

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

Largest Overweight

United States
By9.48%
Portfolio 23.72%
Benchmark 14.24%

Largest Underweight

Italy
By-6.05%
Portfolio 4.59%
Benchmark 10.65%

Monthly Data as of 30-Jun-2019

Currency

Total
Currencies
5
Largest Currency euro 99.85% Was (31-Mar-2019) 99.37%
Other View complete Currency Diversification

Monthly Data as of 30-Jun-2019

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

Largest Overweight

euro
By 12.33%
Portfolio 99.85%
Benchmark 87.51%

Largest Underweight

British pound sterling
By -12.36%
Portfolio 0.13%
Benchmark 12.49%

Monthly Data as of 30-Jun-2019

Team (As of 31-Aug-2019)

Michael Della Vedova

Michael Della Vedova is a global high yield portfolio manager in the Fixed Income Division at T. Rowe Price. Mr. Della Vedova is a portfolio manager of the European High Yield Strategy and co-portfolio manager for the firm's Global High Yield Strategy. He is a vice president of T. Rowe Price Group, Inc. and T. Rowe Price International Ltd.

Mr. Della Vedova has 26 years of investment experience, 10 of which have been with T. Rowe Price. Prior to joining the firm in 2009, he was a cofounder and partner of Four Quarter Capital, a credit hedge fund focusing on below investment-grade European corporate debt. Mr. Della Vedova also spent six years as a senior analyst and assistant portfolio manager with Muzinich & Company Limited in London.

Mr. Della Vedova earned both an LL.B. and a B.Com. in finance from the University of New South Wales and a G.D.L.P. from the University of Technology, Sydney, Australia. He also was admitted as a solicitor to the Supreme Court of New South Wales, Sydney.

  • Portfolio manager
    since
    2011
  • Years at
    T. Rowe Price
    10
  • Years investment
    experience
    26
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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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