SICAV

Diversified Income Bond Fund

Formerly Global Multi-Sector Bond Fund

The fund invests mainly in a diversified portfolio of high yield corporate bonds from issuers around the world, including emerging markets.

ISIN LU1244139231 Bloomberg TRPGMSI:LX

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

3.38%
$142.8m

1YR Return
(View Total Returns)

Manager Tenure

0.43%
1yr

Information Ratio
(3 Years)

Tracking Error
(3 Years)

-0.27
6.61%

Inception Date 15-Dec-2016

Performance figures calculated in USD

Other Literature

30-Jun-2020 - Ken Orchard, Portfolio Manager ,
While the second quarter brought a welcomed recovery, the outlook could be challenging as the marginal benefits of stimulus begin to wane and governments continue to deal with the coronavirus outbreak. For now, we remain constructive on credit as spreads remain relatively attractive and central banks continue to provide support. However, we expect further bouts of market volatility this year with a positive outlook in 2021 as the probability of a vaccine increases, and political uncertainty subsides.
Kenneth A.  Orchard
Kenneth A. Orchard, Portfolio Manager

Kenneth Orchard is a senior portfolio manager in the Fixed Income Division of T. Rowe Price and a member of the Global Fixed Income Investment team, with responsibility for cochairing the Fixed Income Sector Strategy Advisory Group . He is the portfolio manager for the Global Multi-Sector Bond and Diversified Income Bond Strategies and co-portfolio manager for the International Bond Strategies . 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 bonds of all types from issuers around the world, including emerging markets.

Investment Approach

  • To seek diversified sources of income and return by utilizing the full global opportunity set and managing risk.
    • Active tactical allocation across an expanded global opportunity set of 14 fixed income sectors, 80+ countries, and 40+ currencies.
    • Best ideas security selection from proprietary global research platform.
    • Actively diversify risk across both quantitative risk factors and qualitative investment themes.
    • Avoid concentration in any one sector or interest rate cycle.
    • Focus on risk-adjusted returns over a medium to long-term horizon.
  • Target tracking error range: 100-500 basis points

Portfolio Construction

  • Up to 50% of assets may be unhedged to exploit currency valuation opportunities
  • 40% of bonds may be invested outside of the U.S.
  • High Yield: Max 50%, excluding securitized assets
  • Emerging Markets: Max 25% Hard Currency, Max 25% Local Currency
  • Portfolio Average Credit Quality: Target Investment Grade
  • Duration range: 0 to 8 years
  • Number of securities: 200-500

Performance (Class I)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Since Manager Inception
Annualised
Fund % 0.43% 3.38% N/A 4.53% 5.63%
Indicative Benchmark % 6.07% 5.14% N/A 5.03% 8.54%
Excess Return % -5.64% -1.76% N/A -0.50% -2.91%

Inception Date 15-Dec-2016

Manager Inception Date 31-Oct-2018

Indicative Benchmark: Bloomberg Barclays Global Aggregate Bond USD Hedged Index

Data as of  30-Jun-2020

Performance figures calculated in USD

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Fund % 0.43% 3.38% N/A 4.53%
Indicative Benchmark % 6.07% 5.14% N/A 5.03%
Excess Return % -5.64% -1.76% N/A -0.50%

Inception Date 15-Dec-2016

Indicative Benchmark: Bloomberg Barclays Global Aggregate Bond USD Hedged Index

Data as of  30-Jun-2020

Performance figures calculated in USD

Recent Performance

  Month to DateData as of 06-Aug-2020 Quarter to DateData as of 06-Aug-2020 Year to DateData as of 06-Aug-2020 1 MonthData as of 30-Jun-2020 3 MonthsData as of 30-Jun-2020
Fund % 0.59% 2.82% -0.17% 2.18% 9.76%
Indicative Benchmark % 0.13% 1.22% 5.17% 0.50% 2.42%
Excess Return % 0.46% 1.60% -5.34% 1.68% 7.34%

Inception Date 15-Dec-2016

Indicative Benchmark: Bloomberg Barclays Global Aggregate Bond USD Hedged Index

Indicative Benchmark: Bloomberg Barclays Global Aggregate Bond USD Hedged 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.

30-Jun-2020 - Ken Orchard, Portfolio Manager ,
Global fixed income markets posted positive total returns in U.S. dollar-hedged terms in June, as credit sectors outperformed global government bonds. Within the portfolio, holding securitised debt helped as commercial mortgage-backed securities (CMBS) and asset-backed securities (ABS) performed well. While some U.S. states saw accelerating coronavirus cases at the end of June, CMBS and ABS benefitted from the U.S. Federal Reserve’s (Fed) launch of the Term Asset-Backed Securities Loan Facility, broader increased appetites for risk, and a gradual easing of lockdown measures in many parts of the U.S. A sizable allocation to global investment-grade corporate debt also contributed as low absolute sovereign yields spurred demand for yield. In the U.S., the market reacted favourably to the Fed's announcement that it will begin buying a broad basket of individual corporate bonds and shift away from purchases of exchange-traded funds. Negative effects were minimal, but our duration exposure in Chile weighed on performance as longer-dated sovereign yields increased.

Holdings

Issuers

Top
Issuers
10
Top 10 Issuers 20.14% Was (31-May-2020) 18.01%
Other View Top 10 Issuers

Monthly data as of 30-Jun-2020

Holdings

Total
Holdings
387
Largest Holding Bonos de la Tesoreria de la Republica en pesos 3.23% Was (31-Mar-2020) 3.05%
Top 10 Holdings 15.53%
Other View Full Holdings Quarterly data as of 30-Jun-2020

Quality Rating View quality analysis

  Largest Overweight Largest Underweight
Quality Rating BB US Government Agency Securities
By % 21.17% -10.89%
Fund 21.53% 0.00%
Indicative Benchmark 0.36% 10.89%

Average Credit Quality

BBB-

Monthly Data as of 30-Jun-2020
Indicative Benchmark:  Bloomberg Barclays Global Aggregate Bond USD Hedged Index

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 0-1 Years 1-3 Years
By % 8.38% -8.37%
Fund 8.38% 14.36%
Indicative Benchmark 0.00% 22.74%

Weighted Average Maturity

6.29 Years

Monthly Data as of 30-Jun-2020
Indicative Benchmark:  Bloomberg Barclays Global Aggregate Bond USD Hedged Index

Duration View duration analysis

  Largest Overweight Largest Underweight
Duration Under 1 Year Over 10 Years
By % 9.99% -15.77%
Fund 12.49% 7.50%
Indicative Benchmark 2.50% 23.27%

Weighted Average Duration

3.91 Years

Monthly Data as of 30-Jun-2020
Indicative Benchmark:  Bloomberg Barclays Global Aggregate Bond USD Hedged Index

Sectors

Total
Sectors
7
Largest Sector Global Sovereign 34.13% Was (31-May-2020) 29.85%
Other View complete Sector Diversification

Monthly Data as of 30-Jun-2020

Indicative Benchmark: Bloomberg Barclays Global Aggregate Bond USD Hedged Index

Largest Overweight

Global High Yield
By16.19%
Fund 16.19%
Indicative Benchmark 0.00%

Largest Underweight

Global Sovereign
By-32.57%
Fund 34.13%
Indicative Benchmark 66.70%

Monthly Data as of 30-Jun-2020

30-Jun-2020 - Ken Orchard, Portfolio Manager ,
We added to the portfolio’s holdings in securitised credit over the month. Valuations for securitised looked compelling versus investment-grade corporate bonds, and we were able to gain exposure to high-quality attractive yields. We added about 50 basis points in global high yield. Some higher quality energy names offered good relative value given our near-term constructive view on oil and energy.

Regions

Total
Regions
6
Largest Region North America 41.70% Was (31-Mar-2020) 34.63%
Other View complete Region Diversification

Monthly Data as of 30-Jun-2020

Indicative Benchmark: Bloomberg Barclays Global Aggregate Bond USD Hedged Index

Largest Overweight

Latin America
By11.11%
Fund 12.08%
Indicative Benchmark 0.97%

Largest Underweight

Japan
By-14.69%
Fund 0.44%
Indicative Benchmark 15.13%

Monthly Data as of 30-Jun-2020

Countries

Total
Countries
55
Largest Country United States 40.97% Was (31-May-2020) 36.12%
Other View complete Country Diversification

Monthly Data as of 30-Jun-2020

Indicative Benchmark: Bloomberg Barclays Global Aggregate Bond USD Hedged Index

Largest Overweight

Chile
By3.48%
Fund 3.64%
Indicative Benchmark 0.16%

Largest Underweight

Japan
By-14.69%
Fund 0.44%
Indicative Benchmark 15.13%

Monthly Data as of 30-Jun-2020

30-Jun-2020 - Ken Orchard, Portfolio Manager ,
We added to U.S. duration via taxable municipal bond purchases. Taxable munis have looked compelling relative to U.S. investment-grade corporates. Given our expectation for the U.S. yield curve to steepen, the portfolio remains underweight U.S. duration relative to the benchmark.

Currency

Total
Currencies
21
Largest Currency U.S. dollar 98.21% Was (31-May-2020) 96.86%
Other View complete Currency Diversification

Monthly Data as of 30-Jun-2020

Indicative Benchmark : Bloomberg Barclays Global Aggregate Bond USD Hedged Index

Largest Overweight

U.S. dollar
By 54.60%
Fund 98.21%
Indicative Benchmark 43.61%

Largest Underweight

euro
By -28.26%
Fund -4.65%
Indicative Benchmark 23.61%

Monthly Data as of 30-Jun-2020

30-Jun-2020 - Ken Orchard, Portfolio Manager ,
In early June, we trimmed the portfolio’s Chilean peso position due to the strength of performance and ahead of its sell-off in the latter half of the month. We reduced our exposure to the euro as well given its strong rally since May. Meanwhile, we added to our exposure of the U.S. dollar, trimming our underweight position.

Team (As of 05-Aug-2020)

Kenneth A.  Orchard

Kenneth Orchard is a senior portfolio manager in the Fixed Income Division of T. Rowe Price and a member of the Global Fixed Income Investment team, with responsibility for cochairing the Fixed Income Sector Strategy Advisory Group . He is the portfolio manager for the Global Multi-Sector Bond and Diversified Income Bond Strategies and co-portfolio manager for the International Bond Strategies . He is a vice president of T. Rowe Price Group, Inc. and T. Rowe Price International Ltd.

Mr. Orchard has 15 years of investment experience, eight of which have been with T. Rowe Price. Prior to joining the firm in 2010, he worked as a senior credit officer for the Sovereign Risk Group at Moody's Investors Service, where he helped design and review its sovereign rating methodology. Mr. Orchard also worked as a senior economist for Emerging Market Economics in London and as an assistant portfolio manager for HSBC Asset Management in Vancouver.

Mr. Orchard earned a B.A. in international relations from the University of British Columbia and an M.Sc. in public financial policy from the London School of Economics. He also has earned the Chartered Financial Analyst designation.

  • Fund manager
    since
    2018
  • Years at
    T. Rowe Price
    9
  • Years investment
    experience
    16
Terry  A.  Moore

Terry Moore is a portfolio specialist in the Fixed Income Division of T. Rowe Price. He is a member of the Global Multi-Sector, Dynamic Global Bond, International Bond, and Customized Fixed Income Solutions teams, working closely with clients, consultants, and prospects. Mr. Moore is a vice president of T. Rowe Price Group, Inc.

Mr. Moore has 23 years of investment experience, nine of which have been at T. Rowe Price. Prior to joining the firm in 2009, he was a portfolio manager and principal with Smith Breeden Associates, where he managed a variety of fixed income portfolios with a focus on residential mortgage-backed securities. He also worked at Goldman Sachs & Co. trading asset-backed securities.

Mr. Moore earned a B.A. in economics and political science from the University of North Carolina at Chapel Hill and an M.B.A. from Duke University, The Fuqua School of Business, where he was a Fuqua Scholar. He also has earned the Chartered Financial Analyst designation.

  • Years at
    T. Rowe Price
    10
  • Years investment
    experience
    24

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% 100 basis points 1.17%
Class I $2,500,000 $100,000 $0 0.00% 50 basis points 0.60%
Class Q $1,000 $100 $100 0.00% 50 basis points 0.67%

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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