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European Smaller Companies Equity Fund

Seeking to identify tomorrow’s winning European growth companies.

ISIN LU1028171921 Bloomberg TRESCQG: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 31-Jan-2014

Performance figures calculated in GBP

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29-Feb-2020 - Ben Griffiths, Portfolio Manager,
Our relatively benign outlook for further modest market gains in 2020 has been thrown into reverse by the rapid spread of coronavirus and the collapse in oil prices. The situation remains fluid, with considerable uncertainty as to how the pandemic and associated economic environment will develop as Italy probably slips into a temporary recession. The fund has continued to make strong relative progress, and some interesting opportunities have begun to emerge amid the market weakness.
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. 

Click for Manager Outlook


Manager's Outlook

Despite a year of strong returns for almost all asset classes in 2019, in our view the policy and market environments indicate that further gains could lie ahead.

Continued low interest rates and inflation expectations, likely modest economic growth, albeit late-cycle, and central banks that are on "on guard" should be supportive.

In the real world, European economies are subdued, and some have been flirting with recession, but there has been some recovery from last year's summer doldrums and expectations remain restrained.

In the UK, there is a degree of optimism about a post-election market bounce from depressed levels, partially aided by some fiscal expansion.

Some resolution of trade concerns should lessen the pressures in export-facing sectors of the European economy, especially in Germany, which would have a marked knock-on positive effect elsewhere.

Clearly, the reverse scenarios must also be considered, but it feels best not to stand in the way of policy-makers for now.

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 Q | GBP)

Annualised Performance

  1 YR 3 YR
5 YR
Since Inception
Since Manager Inception
Fund % 1.61% 5.20% 10.52% 9.15% 8.57%
Indicative Benchmark % 5.89% 4.77% 8.68% 8.49% 8.42%
Excess Return % -4.28% 0.43% 1.84% 0.66% 0.15%

Inception Date 31-Jan-2014

Manager Inception Date 31-Dec-2015

Indicative Benchmark: MSCI Europe Small Cap Index Net

Data as of  29-Feb-2020

  1 YR 3 YR
5 YR
Since Inception
Fund % 11.28% 8.99% 12.17% 10.51%
Indicative Benchmark % 24.08% 9.33% 12.36% 10.33%
Excess Return % -12.80% -0.34% -0.19% 0.18%

Inception Date 31-Jan-2014

Indicative Benchmark: MSCI Europe Small Cap Index Net

Data as of  31-Dec-2019

Performance figures calculated in GBP

Recent Performance

  Month to DateData as of 27-Mar-2020 Quarter to DateData as of 27-Mar-2020 Year to DateData as of 27-Mar-2020 1 MonthData as of 29-Feb-2020 3 MonthsData as of 29-Feb-2020
Fund % -17.10% -21.87% -21.87% -5.44% -3.35%
Indicative Benchmark % -20.89% -27.44% -27.44% -5.94% -4.96%
Excess Return % 3.79% 5.57% 5.57% 0.50% 1.61%

Inception Date 31-Jan-2014

Indicative Benchmark: MSCI Europe Small Cap Index Net

Indicative Benchmark: MSCI Europe Small Cap Index Net

Performance figures calculated in GBP

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.

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. 

29-Feb-2020 - Ben Griffiths, Portfolio Manager,
The MSCI Europe Small Cap Index climbed to a record in February before suffering a correction on concerns that the worsening coronavirus outbreak would tip the global economy into a recession. At the portfolio level, the top-contributing sectors were information technology (IT), health care and consumer discretionary, mainly owing to our choice of securities. Our overweight in health care was also beneficial. Conversely, utilities underperformed modestly due to our zero allocation. Communication services also dragged on returns, owing to negative effects from stock picking and our overweight allocation. In IT, Keywords Studios, an international company based in Ireland that provides technical services to the rapidly growing global video games industry, rebounded at the start of the month as a strong trading update prompted investors to refocus on favourable fundamentals. The company is well placed to cope with increasing demand for content generation and deliver material growth. Conversely, in communication services, our overweight allocation to Frontier Developments, a video game developer that sells straight to the consumer, delivered a loss and weighed on returns. Despite positive first-half results, the shares fell when the company highlighted that a weaker dollar against the UK pound might reduce revenue and operating profit.


Largest Holding Ascential 2.12% Was (30-Sep-2019) 1.62%
Other View Full Holdings Quarterly data as of 31-Dec-2019
Top 10 Holdings 18.98% View Top 10 Holdings Monthly data as of 29-Feb-2020

Largest Top Contributor^

Codemasters Group Holdings
By 0.05%
% of fund 1.66%

Largest Top Detractor^

By -0.14%
% of fund 1.35%


Quarterly Data as of 31-Dec-2019

Top Purchase

Bawag (N)
Was (30-Sep-2019) 0.00%

Top Sale

Grandvision (E)
Was (30-Sep-2019) 1.27%

Quarterly Data as of 31-Dec-2019

31-Dec-2019 - Ben Griffiths, Portfolio Manager,

Tilting Toward Cyclicals, UK, Larger Small-Caps

Our approach remains to look for 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 added a bit more cyclicality into the portfolio, particularly within the industrials space, with new names (such as Weir), as well as reinforcing 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 in this area. But we believe it is appropriate to be less tolerant now of those smaller names where our conviction has waned, and, accordingly, we are in the process of implementing this. We still expect the portfolio to be at the smaller end than the benchmark (as shown by the investment-weighted median market cap), but to a lesser degree than previously; also, more new purchases have been toward the upper end as opposed to the lower end of the market capitalization range of EUR ?100 million to ?5 billion.

  • We invested in new names that increased our overweight in health care and reduced our underweight in real estate.
  • We reduced our exposure to the consumer discretionary and information technology sectors.
  • We also altered our holdings in industrials and business services by reducing our underweight allocation and maintained our underweight in financials.
  • Our largest overweight exposures are to communication services, health care, and information technology, which is in keeping with our growth style.
  • We also maintained a large allocation to the consumer discretionary sector.
  • Our largest underweights were real estate and industrials and business services.

Information Technology

The largest position adjustment this quarter was in information technology (IT). We further reduced our sizable overweight�by exiting our holding in Sophos, a provider of cloud-enabled end-user and network security solutions, taking profits after a successful bid by U.S. private-equity firm Thomas Bravo.

IT is still 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.

Wirecard, an online payment processing provider, and Keywords Studios, a leading outsourcer of video and digital games, are our largest holdings in IT services, although we have reduced our position in Wirecard. 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.

Consumer Discretionary

We slimmed our overweight allocation to the consumer discretionary sector for a stock-specific reason, exiting Dutch optical company Grandvision. As part of our portfolio evaluation process, we have also focused on weeding out small businesses that have failed to scale up and meet our growth expectations.

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 eliminated Grandvision, which provides optical products and services via a retail network, taking profits following a successful bid by EssilorLuxottica, the world's leading eyewear company.


We altered the mix of our holdings in financials. We pared our underweight to banks, which generally have been stunted by deleveraging, litigation issues, and increased regulation, but we deepened our underweight exposure to insurance. We sold our off-benchmark holding in DFV Deutsche Familienversicherung, an innovative online insurance company in Germany that specializes in health, property, and casualty insurance at cheaper rates than the established companies.

We reduced our underweight in banks, with the addition of Bawag, Austria's fourth-biggest bank, to our lenders. We also hold 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. The insurance industry is our largest underweight. Here we still own the shares of Sabre Insurance, a UK-based provider of auto insurance.

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 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 opened a position in Bawag. Following a successfully executed turnaround, Bawag is the only Austrian bank able to generate mid-teens returns in one of the most competitive markets in the EU. The bank is cost-efficient, generates high levels of capital, and is now expanding in Germany through retail acquisitions.
  • We sold our shares in JTC, a UK-listed provider of fund, corporate, and private wealth services to institutional and private clients. The shares have struggled to overcome Brexit headwinds, so we sold our holding when they rose on Boris Johnson's decisive general election triumph.
  • We eliminated our holding in Dfv Deutsche Familienversicherung, an innovative online insurance company in Germany, booking profits after the share price surged on the announcement that it would be setting up the first nationwide employer-financed supplementary care insurance product, a move that could significantly boost earnings.

Health Care

We increased our overweight exposure to the health care sector, which is still a key long-term bet, by adding Germany-based Evotec, Europe's largest clinical contract research organization.

Our largest industry allocations are life sciences tools and services, biotechnology, and health care providers and services. We raised our allocation to the first with our investment in Evotec. Our largest position is Eurofins Scientific, a leading global provider of bioanalytical laboratory testing services. We increased our overweight in biotechnology with the investment in Zealand Pharma, a Denmark-based biopharmaceutical company, in the previous quarter. We also hold Galapagos, a Belgium-based clinical-stage biotechnology company, and Abcam, a Danish biotech company engaged in producing and marketing research-grade antibodies. In the health care providers and services industry, we own Amplifon, an Italian company that distributes, adjusts, and personalizes hearing aids, and Ambea, a Sweden-based company that provides support, training, and staffing within health and social care.

Within health care equipment and supplies, we are optimistic about innovative companies with strong competitive positioning and leading technology in niche markets. We are invested in Ambu, a Denmark-based provider of diagnostic and life-support devices for hospitals and rescue services globally, which is the largest holding in the portfolio.

  • We opened a position in Evotec, whose contract research organization business (Execute) could, in our view, achieve market-beating growth over the next five years. The business is benefiting from a continuing trend toward outsourced drug discovery and development, which is still in its early stages. The company published healthy third-quarter results showing full order books, pointing to another year of strong revenue growth, and raised earnings guidance.

Industrials and Business Services

We altered our holdings in industrials and business services, reducing our underweight position in the sector. We bought the shares of Weir Group, a global manufacturer of industrial pumps and fracking equipment, and sold out of GIMA TT, an Italy-based manufacturer of tobacco packaging machinery, when it was taken over by parent Industria Macchine Automatiche.

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.

We reduced our underweight in the machinery industry with the addition of Weir Group. Our investments include va-Q-tec, which designs and manufacture 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 opened a position in Weir Group, a high-quality company�that is driven by its aftermarket services. The stock is undervalued, in our view, because the market is underestimating the earnings resilience of the mining-related business, which stands to expand as the industry begins to recover. The oil and gas business is likely to expand as well as more pipeline capacity is required by rising production.

Real Estate

We raised our overweight allocation to real estate, a useful defensive sector in these volatile markets, finding attractive high-quality names.

  • We opened a position in Derwent London, a UK-based real estate investment trust that manages, trades, and refurbishes offices in central London. The stock has rerated over the past year, but the risk/reward remains attractive because the emphatic election outcome is supportive of an acceleration in market rent growth for London offices. We expect the company could continue posting strong results over the medium term and may raise guidance.
  • We started an investment in Kojamo, a Finnish private residential real estate company. The stock offers attractive risk/reward in the sector due to above-average market rental growth momentum and an attractive valuation that does not reflect the rental growth potential of the portfolio.


Largest Sector Health Care 20.23% Was (31-Jan-2020) 19.55%
Other View complete Sector Diversification

Monthly Data as of 29-Feb-2020

Indicative Benchmark: MSCI Europe Small Cap Index

Top Contributor^

Communication Services
Net Contribution 0.62%
Selection 0.85%

Top Detractor^

Information Technology
Net Contribution -1.30%


Quarterly Data as of 31-Dec-2019

Largest Overweight

Health Care
Fund 20.23%
Indicative Benchmark 9.46%

Largest Underweight

Industrials & Business Services
Fund 12.45%
Indicative Benchmark 21.78%

Monthly Data as of 29-Feb-2020

29-Feb-2020 - Ben Griffiths, Portfolio Manager,
We continued to evaluate our holdings to see if they are meeting our development goals, particularly those at the smaller end of the benchmark. We exited Inwido, a leading Nordic window manufacturer, taking profits with a view to reinvesting funds in more interesting opportunities. We sold our holdings in Piovan, an Italy-based company that is a leader in the plastics auxiliary automation systems, and Xaar, a UK-listed supplier of digital and industrial inkjet print heads, after disappointing performance. We initiated in a UK property website, taking advantage of share price weakness. The company is benefitting from a transition of property advertising from print to online.


Largest Country United Kingdom 38.48% Was (31-Jan-2020) 38.78%
Other View complete Country Diversification

Monthly Data as of 29-Feb-2020

Indicative Benchmark: MSCI Europe Small Cap Index

Top Contributor^

Net Contribution 0.26%
Selection 0.26%

Top Detractor^

Net Contribution -0.28%


Quarterly Data as of 31-Dec-2019

Largest Overweight

United Kingdom
Fund 38.48%
Indicative Benchmark 30.88%

Largest Underweight

Fund 5.46%
Indicative Benchmark 9.38%

Monthly Data as of 29-Feb-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 27-Mar-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 €15,000 €100 €100 5.00% 160 basis points 1.73%
Class I €2,500,000 €100,000 €0 0.00% 95 basis points 1.04%
Class Q €15,000 €100 €100 0.00% 95 basis points 1.11%

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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