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European Smaller Companies Equity Fund

Seeking to identify tomorrow’s winning European growth companies.

ISIN LU0382931250 Bloomberg TPESCEA:LX

3YR Return Annualised
(View Total Returns)

Total Assets


1YR Return
(View Total Returns)

Manager Tenure


Information Ratio
(5 Years)

Tracking Error
(5 Years)


Inception Date 26-Nov-2008

Performance figures calculated in EUR

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31-May-2020 - Ben Griffiths, Portfolio Manager,
European small-cap equities have rebounded strongly since March on waves of stimulus, but we sense that the market fundamentals could still deteriorate further. We are working with our analysts to identify those companies that will emerge stronger on the other side of the crisis. The dramatic rate of deterioration caused by the coronavirus is likely to result in shocks to many companies’ liquidity and leverage, and we will look to be ahead of any such outcomes.
Benjamin Griffiths
Benjamin Griffiths, Portfolio Manager

Ben Griffiths is the portfolio manager for the European Smaller Companies Equity Strategy in the International Equity Division, covering European small-cap stocks and co-portfolio manager of the International Small-Cap Equity Strategy.  Ben is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price International Ltd. 

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Manager's Outlook

The novel coronavirus pandemic is causing a severe economic and social shock globally. In Europe, which has lagged other regions, we now face a deep recession, with almost unprecedented strains on many industries. Both the depth and duration of the crisis caused by the outbreak are unknown.

The monetary policy response has been appreciable as have some national fiscal actions, although a more concerted effort across the eurozone has taken longer to materialize.

There is no visibility on how far company earnings might drop. Nor do dividends or sales provide any anchor. We sense that the market fundamentals could still deteriorate further, more than the recent rally seems to be discounting, and so we are being patient.

We are working hard with our analysts to identify those companies that will emerge stronger on the other side of the crisis. The dramatic rate of deterioration is likely to result in shocks to many companies' liquidity and leverage, and we, and the better-managed companies, will look to be ahead of any such outcomes. �

Experience in previous sell-offs has taught us that the correct actions in this environment can have a marked impact upon long-term performance. Not only will we be rewarded for identifying the exceptional companies for the next decade, but they can also be accessed at exceptional prices.

We are taking selective advantage of relative strength to cut our exposures if we cannot identify any meaningful fundamental change. We are also using bouts of weakness to defend existing positions where we have a high degree of confidence in their franchise, management, and financial position.

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 of smaller publicly traded European companies.

Investment Approach

  • Invests in European small- and mid-cap companies capable of sustaining above-average, long-term earnings growth and selling at reasonable prices.
  • Benchmark-unconstrained approach exploits diverse opportunities in developed Europe, peripheral, and European Union (EU) accession countries.
  • Exposure to companies at different stages in the growth cycle offers the potential for more consistent performance across market cycles.
  • Long-term investment horizon emphasizes bottom-up stock selection as the primary source of excess return.
  • Dedicated London-based research team seeks companies with:
    • Attractive industry structure.
    • Compelling business models.
    • Strong growth prospects.
    • Solid management teams.
    • Reasonable valuations.

Portfolio Construction

  • Typically 70-100 stock portfolio
  • Diversification at the security, country, region, and sector levels offers the potential for attractive risk-adjusted returns
  • Bias toward high-quality stocks provides the potential for downside risk protection
  • Risk parameters
    • Emerging Europe exposure: maximum 10%
    • Typical position size: 0.50% to 5.00%
    • Low turnover expected
    • Expected tracking error: 3% to 7%

Performance (Class A)

Annualised Performance

  1 YR 3 YR
5 YR
10 YR
Since Manager Inception
Fund % 5.74% 1.53% 5.08% 11.25% 4.90%
Indicative Benchmark % -2.63% -1.07% 1.97% 9.68% 2.31%
Excess Return % 8.37% 2.60% 3.11% 1.57% 2.59%

Inception Date 26-Nov-2008

Manager Inception Date 31-Dec-2015

Indicative Benchmark: MSCI Europe Small Cap Index Net

Data as of  31-May-2020

Performance figures calculated in EUR

  1 YR 3 YR
5 YR
10 YR
Fund % -15.77% -3.45% 1.48% 8.34%
Indicative Benchmark % -18.13% -4.33% -0.23% 7.47%
Excess Return % 2.36% 0.88% 1.71% 0.87%

Inception Date 26-Nov-2008

Indicative Benchmark: MSCI Europe Small Cap Index Net

Data as of  31-Mar-2020

Performance figures calculated in EUR

Recent Performance

  Month to DateData as of 02-Jul-2020 Quarter to DateData as of 02-Jul-2020 Year to DateData as of 02-Jul-2020 1 MonthData as of 31-May-2020 3 MonthsData as of 31-May-2020
Fund % 2.37% 2.37% 1.98% 7.96% 5.18%
Indicative Benchmark % 1.92% 1.92% -13.97% 5.16% -7.81%
Excess Return % 0.45% 0.45% 15.95% 2.80% 12.99%

Inception Date 26-Nov-2008

Indicative Benchmark: MSCI Europe Small Cap Index Net

Indicative Benchmark: MSCI Europe Small Cap Index Net

Performance figures calculated in EUR

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 July 2018, 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. 

31-May-2020 - Ben Griffiths, Portfolio Manager,
The MSCI Europe Small Cap Index advanced in May amid rising hopes for an economic recovery as countries began easing lockdown restrictions and policymakers suggested they were preparing fresh stimulus. Small-cap stocks rose more than their large-cap peers, with growth outstripping value. At the portfolio level, the top-contributing sectors were consumer discretionary, financials, communication services and consumer staples mainly due to stock selection. Conversely, information technology (IT) was the only sector that dragged on returns. In consumer discretionary, safety helmet manufacturer Mips performed best in relative terms. The shares rose as China emerged from coronavirus lockdowns and third-party manufacturers resumed production of helmets; the company recorded a strong inflow of new helmet projects and an increase in new clients. However, IQE, a leading global manufacturer of advanced semiconductor materials, dented relative performance within IT. Mobile phone handset production has fallen due to the coronavirus, the supply chain is shifting to Asia due to U.S.-China tensions and the U.S. has tightened its ban on semiconductor shipments to Chinese mobile giant Huawei, which affects IQE’s main U.S. wireless customers and could curb potential 5G business.


Largest Holding Ambu 3.60% Was (31-Dec-2019) 1.88%
Other View Full Holdings Quarterly data as of 31-Mar-2020
Top 10 Holdings 21.06% View Top 10 Holdings Monthly data as of 31-May-2020

Largest Top Contributor^

By 1.55%
% of fund 3.51%

Largest Top Detractor^

Intermediate Capital
By -0.01%
% of fund 1.76%


Quarterly Data as of 31-Mar-2020

Top Purchase

Ssp (N)
Was (31-Dec-2019) 0.00%

Top Sale

Sabre Insurance (E)
Was (31-Dec-2019) 0.78%

Quarterly Data as of 31-Mar-2020

31-Mar-2020 - Ben Griffiths, Portfolio Manager,

Seeking to Identify Long-Term Winners

Considerable work is being done to identify companies that will emerge on the other side of the coronavirus-induced crisis. However, we are being patient because we believe market uncertainty may continue for some time.

Our focus remains on those small growth companies that can be much larger in five to 10 years' time, and so our structural overweights to sectors such as health care, IT, and the "new economy" tech-related areas within communication services and consumer discretionary will remain.

At the margin, we may add more cyclical stocks to the portfolio, particularly within the industrials space, as well as reinforce existing positions. We have also been leaning a bit more into the UK, given the removal of some Brexit-related uncertainty, extending our overweight position (although the underlying exposure to domestic revenues has only moved close to a benchmark position).

We continue to have high conviction in many names at the smaller end of our size range (i.e., below EUR 1 billion), and we will look for exciting new additions. But we believe it is appropriate to be less tolerant now of those smaller names where our conviction has waned. We still expect the portfolio to be at the smaller end than the benchmark but to a lesser degree than previously

  • We invested in new names that increased our overweights in communication services and consumer discretionary.
  • We deepened our underweight in industrials and business services.
  • We adjusted our investments in financials.
  • Our largest overweight exposures are to communication services, health care, and information technology.
  • Our largest underweights were industrials and business services and real estate.

Communication Services

We further increased our overweight in communication services by adding Rightmove, the dominant UK online property/real estate portal, which sold off heavily after the market peaked in mid-February.

Our largest industry bet is entertainment, where we hold shares in four games developers, one of the fastest-growing segments of the industry. Our holdings include Codemasters Group Holdings, a UK-based video game developer and publisher; Team17, a company that is one of the longest-running independent video game developers; Frontier Developments, a world management games specialist; and Stillfront, a Sweden-based publisher of digital games.

We are also overweight interactive media and services, where we hold Russian internet company Mail.Ru, which offers a range of online communication products and entertainment services; Scout24 Holding, an online classified advertising company that operates mainly in Germany; and Karnov Group, a supplier of information solutions for professionals in the areas of legal, tax, and auditing in Scandinavia.

  • Rightmove is a well-established, market-leading consumer brand with high barriers to entry. Its dominant market share, further expanded by the popularity of its app, creates strong network effects. This is further supported by high margins, 100% cash conversion, and a shareholder-friendly management. Revenues are subscription-led, giving Rightmove a strong recurring revenue base with good visibility. In our view, the high-single-digit growth rate of average revenue per advertiser is sustainable due to product innovation, and Rightmove growth could exceed expectations when we see a recovery in UK real estate transactions.

Consumer Discretionary

We raised our overweight allocation to the consumer discretionary sector, adding SSP, which operates branded catering and retail units at airports and railway stations around the world as a concessionaire.

We own a broad swath of companies, with our largest industry bets in internet and direct marketing; textiles, apparel, and luxury goods; leisure products; and hotels, restaurants, and leisure. In internet and direct marketing, we own shares in Takeaway.com, a leading online takeaway food delivery aggregator; Trainline, the UK's leading online rail and coach booking platform; and Hellofresh, a Germany-based online provider of meal kits.

Our textiles, apparel, and luxury goods holdings include UK lifestyle brand Joules, which designs clothes, accessories, and homeware, and Watches of Switzerland, a retailer of watches and jewelry in the UK. Our leisure product names include Mips, a maker of helmets for reducing rotational forces on the brain caused by impacts to the head, and Thule, a Sweden-based company that develops and manufactures sport, outdoor, and cargo products. In hotels, restaurants, and leisure, our largest position is Malta-based Kambi, which provides outsourced online sports betting services.

  • We started an investment in SSP on share price weakness. The next few months will be incredibly tough for SSP. However, we believe the shares could double in value as this high-quality company is exposed to attractive structural growth (growth in travel), is positioned to expand into a large underpenetrated food offering in U.S. and Asia Pacific airports, and has a highly regarded management team.

Information Technology

We raised our exposure to information technology (IT), increasing our position in Barco, a Belgium-based company specializing in the design and development of professional visualization equipment and solutions. However, we reduced our position in Wirecard, an online payment processing provider, which may struggle in a recessionary environment.

IT is one of our largest absolute and relative positions, which is consistent with our growth approach. We continue to favor companies in software, semiconductors, and semiconductor equipment and IT services, with innovative and resilient business models that are supported by solid bases of recurring revenues or driven by structural trends.

Keywords Studios, a leading outsourcer of video and digital games, and Amadeus IT, a leading global distribution system provider, are our largest holdings in IT services. Within software, we hold WANdisco, a big data technology company and specialist in distributed computing, and First Derivatives, a provider of software and consulting services, particularly to finance, technology, and energy organizations. IQE, a leading global manufacturer of advanced semiconductor materials, and Aixtron, a leading Germany-based provider of deposition equipment to the compound semiconductor industry, are our largest investments in semiconductors.

Industrials and Business Services

We increased our underweight in industrials and business services, selling stocks that have not met expectations, such as Balco, a Sweden-based company that specializes in glazed balconies, and Inwido, a Sweden-based manufacturer of windows and doors. We also opened an investment in Trelleborg, a Sweden-based engineering company active in the polymer technology sector.

We are overweight professional services, building products, and industrial conglomerates. In the former, our largest position is Intertrust, an international trust and corporate management company, followed by Alpha Financial Markets, a leading global consultant to the asset and wealth management industry. In the latter, we own shares in DCC, an ex-venture capital company that provides international sales, marketing, and support services. The company offers diversified exposure to the UK/Irish economies and has an impressive long-term record of growing earnings and dividends. Our holdings in building products include Balco Group, which provides balcony solutions across Europe.

In the machinery industry, we own Weir Group, a global manufacturer of industrial pumps and fracking equipment; Va-Q-Tec, which designs and manufactures customized vacuum insulation panels; and Rotork, the world's leading designer and manufacturer of heavy-duty industrial valve actuators devices. We also hold Norma, a Germany-based maker of clamps, connectors, and fluid systems that we expect to benefit from the trend of engine downsizing and carbon dioxide emission control and from the stronger global focus on leakage control of gases and fluids.


We altered the mix of our financials holdings, selling Sabre Insurance�and moving to a zero-weight exposure to the industry.

We are also underweight in banks. In addition to the headwinds deleveraging, litigation issues, and increased regulation, they must now cope with a sharp recession and a more prolonged period of low interest rates that will further erode earnings. We hold Bawag, Austria's fourth-biggest bank; FinecoBank Banca Fineco, an Italian financial service company that specializes in online brokerage; and Van Lanschot Kempen, a Dutch diversified bank that is now increasing its focus on wealth and asset management.

We remain overweight the capital markets industry, focusing on the relatively higher-quality asset managers that are durable growth companies. Our largest holdings include Intermediate Capital, a UK-based specialist asset manager; XPS Pension Group, a UK-based holding company that�is engaged in the pensions actuarial, consulting, and administration business; and Draper Esprit, a Pan-European venture capital fund that invests in disruptive tech companies at the early stages of growth.

  • We exited Sabre Insurance, raising funds for more interesting opportunities. The company passed a special dividend as it faces higher claims risk from COVID-19, the disease from the coronavirus, over time. The 2019 profit after tax missed expectations.
  • We opened a new position in Funding Circle Holdings, an online platform that channels funds to small businesses. The company can make inroads into a traditional activity of banks, which, however, are more reluctant to lend to SMEs in a recession. Results for 2019 were encouraging, with solid growth in loans under management and revenues. The company guided for 15% growth in U.S. and UK revenue combined. Funding Circle said it enjoyed a good start to the year and that the coronavirus crisis was having little impact on its operations.


Largest Sector Health Care 21.34% Was (30-Apr-2020) 21.30%
Other View complete Sector Diversification

Monthly Data as of 31-May-2020

Indicative Benchmark: MSCI Europe Small Cap Index

Top Contributor^

Health Care
Net Contribution 1.85%
Selection 0.14%

Top Detractor^

Net Contribution -0.65%


Quarterly Data as of 31-Mar-2020

Largest Overweight

Health Care
Fund 21.34%
Indicative Benchmark 11.59%

Largest Underweight

Industrials & Business Services
Fund 11.79%
Indicative Benchmark 21.09%

Monthly Data as of 31-May-2020

31-May-2020 - Ben Griffiths, Portfolio Manager,
We continued to exit holdings that have failed to meet our expectations or have performed strongly and have little room to rise further. They included Mail.Ru, an internet company that offers a range of online communication and entertainment services, to raise funds for investment in more attractive opportunities; Hurricane Energy, a UK shale company that suspended production guidance; and Stemmer Imaging, a Germany-based provider of machine vision technology, whose performance since its IPO in 2018 has been disappointing and which now faces challenging conditions. We reduced our underweight in financials, opening a position in a specialist non-life insurer.


Largest Country United Kingdom 38.02% Was (30-Apr-2020) 37.48%
Other View complete Country Diversification

Monthly Data as of 31-May-2020

Indicative Benchmark: MSCI Europe Small Cap Index

Top Contributor^

United Kingdom
Net Contribution 2.65%
Selection 3.16%

Top Detractor^

Net Contribution -0.22%


Quarterly Data as of 31-Mar-2020

Largest Overweight

United Kingdom
Fund 38.02%
Indicative Benchmark 28.57%

Largest Underweight

Fund 6.31%
Indicative Benchmark 10.55%

Monthly Data as of 31-May-2020

30-Sep-2018 - Ben Griffiths, Portfolio Manager,
By paring back our position in the aforementioned online payments processor, we reduced our exposure to Germany. Our country positions otherwise did not change materially during the month.

Team (As of 02-Jul-2020)

Benjamin Griffiths

Ben Griffiths is the portfolio manager for the European Smaller Companies Equity Strategy in the International Equity Division, covering European small-cap stocks and co-portfolio manager of the International Small-Cap Equity Strategy.  Ben is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price International Ltd. 

Ben’s investment experience began in 1999, and he has been with T. Rowe Price since 2006, beginning in the Equity Division. Prior to this, Ben was employed by Baillie Gifford as an investment manager. 

Ben earned a B.A. in investment analysis from Stirling University and an M.Eng. in engineering science from Oxford University. Ben also has earned the Chartered Financial Analyst® designation.

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

  • Fund manager
  • Years at
    T. Rowe Price
  • Years investment
Andrew Clifton

Andrew Clifton is a portfolio specialist in the Equity Division at T. Rowe Price. He is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price International Ltd.

Mr. Clifton has over 30 years of investment experience, nine of which have been at T. Rowe Price. Prior to joining the firm in 2010, he was an executive director at UBS Global Asset Management. Prior to that, he was a vice president at Merrill Lynch.

Mr. Clifton earned a B.Sc. in economics from the London School of Economics and an M.Sc. in econometrics from the University of Southampton.

  • Years at
    T. Rowe Price
  • Years investment

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% 160 basis points 1.77%
Class I €2,500,000 €100,000 €0 0.00% 95 basis points 1.05%
Class Q €1,000 €100 €100 0.00% 95 basis points 1.12%

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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