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SICAV

US Blue Chip Equity Fund

Seeking superior returns from high quality US companies.

ISIN LU1382644679 Bloomberg TRPUBIE:LX

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

17.74%
$1.0b

1YR Return
(View Total Returns)

Manager Tenure

20.87%
4yrs

Information Ratio
(3 Years)

Tracking Error
(3 Years)

0.96
8.09%

Inception Date 16-Mar-2016

Performance figures calculated in EUR

Other Literature

30-Apr-2020 - Larry J. Puglia, Portfolio Manager,
While we certainly do not want to underestimate the near‑term impact of the coronavirus pandemic, history shows that extreme market events like this tend to offer opportunities for investors that have a long‑term orientation. We are likely to see more volatility in the coming months until we have more certainty around the economic impact of the pandemic, but this should not alter the long‑term fundamental thesis of many of the companies we own.
Larry Puglia
Larry Puglia, Lead Portfolio Manager

Larry J. Puglia is a portfolio manager in the U.S. Equity Division of T. Rowe Price. He is president of the Investment Advisory Committee of the US Large-Cap Core Growth Equity Strategy. He has been managing the US Large-Cap Core Growth Equity Strategy since 1993 and has had lead responsibility for all institutional accounts and other investment products within the strategy since 1997. Mr. Puglia is a vice president of T. Rowe Price Group, Inc.

Click for Manager Outlook
 

Strategy

Manager's Outlook

While we certainly do not want to underestimate the near term impact from the coronavirus outbreak, history shows that events like this tend to offer opportunities for investors that have a long term orientation. We are likely to see more volatility in the coming weeks and months until we get more certainty around the outbreak's economic impact, but it should not alter the long term fundamental thesis of many of the companies we own.

We believe that, in time, the crisis conditions will ease, and markets will recover. However, investors should think now about how economic and market behavior might be altered once we move beyond the worst of the crisis. While we believe economic conditions will improve as the health crisis recedes and a feeling of normalcy returns, we think some changes will prove permanent. The pandemic will almost certainly affect the calculus of the U.S. elections later this year, for example, and certain companies and industries will be fundamentally altered.

As always, we maintain a disciplined adherence to our rigorous process, which is rooted in bottom-up, fundamental research. In addition to uncovering underappreciated idiosyncratic stories, this approach also helps prepare us to take advantage of the market's tendency to overshoot on both the downside and the upside. Potential market overreactions often provide opportunities to trim positions into strength and add to our highest-conviction ideas on weakness.

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 large and medium sized “blue chip” companies in the United States.

Investment Approach

  • Identify high-quality companies with leading market positions in fertile growth fields. Integrate fundamental research — emphasize sustainable growth, not momentum growth.
  • Focus on high-quality earnings, strong free cash flow growth, shareholder-oriented management, and rational competitive environments.
  • Avoid overpaying for growth, while broadly diversifying portfolios, to manage portfolio risk.

Portfolio Construction

  • Typically 100-140 stock portfolio
  • Active position sizes typically range +/- 3.00% relative to S&P 500 Index
  • Sector weights vary from 0.5X to 2.0X for primary sectors relative to S&P 500 Index

Performance (Class I | EUR)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Fund % 20.87% 17.74% N/A 18.60%
Indicative Benchmark % 12.37% 9.98% N/A 11.59%
Excess Return % 8.50% 7.76% N/A 7.01%

Inception Date 16-Mar-2016

Indicative Benchmark: S&P 500 Net 30% Withholding Tax

Data as of  31-May-2020

Performance figures calculated in USD

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Fund % 0.06% 11.38% N/A 14.23%
Indicative Benchmark % -5.37% 3.59% N/A 7.95%
Excess Return % 5.43% 7.79% N/A 6.28%

Inception Date 16-Mar-2016

Indicative Benchmark: S&P 500 Net 30% Withholding Tax

Data as of  31-Mar-2020

Performance figures calculated in USD

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 % 3.75% 3.75% 13.52% 3.12% 11.53%
Indicative Benchmark % 1.00% 1.00% -2.46% 3.09% 2.14%
Excess Return % 2.75% 2.75% 15.98% 0.03% 9.39%

Inception Date 16-Mar-2016

Indicative Benchmark: S&P 500 Net 30% Withholding Tax

Indicative Benchmark: S&P 500 Net 30% Withholding Tax

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-Apr-2020 - Larry J. Puglia, Portfolio Manager,
U.S. equities bounced off bear-market lows in April and marked their best monthly returns since 1987, as investors anticipated a partial reopening of the global economy. Within the portfolio, favourable stock selection in the communication services sector contributed the most to relative results. For example, shares of Alphabet advanced after the company announced quarterly earnings, which showed higher-than-expected revenues for the period. The number of students and educators using Google’s “Classroom” service doubled from March, with a massive increase in demand for laptops running Google’s operating system. In addition, a significant surge in revenue from YouTube had a positive impact on results. With Google’s internet search business stabilising in April, it showed the initial signs of recovery. Although we acknowledge the expected adverse impact of the coronavirus outbreak on advertising budgets, we feel the company is set up for long-term success given its healthy balance sheet, unique growth profile, and unparalleled user base. Effective stock selection in the information technology sector and a beneficial underweight in consumer staples also helped. Conversely, our underweight position in energy worked against us. Energy shares were extremely volatile yet closed the month as the top-performing sector in the index; year-to-date losses, however, remain significant.

Holdings

Total
Holdings
123
Largest Holding Amazon.com 9.50% Was (31-Dec-2019) 8.83%
Other View Full Holdings Quarterly data as of 31-Mar-2020
Top 10 Holdings 46.93% View Top 10 Holdings Monthly data as of 31-May-2020

Largest Top Contributor^

Amazon.com
By 6.65%
% of fund 9.43%

Largest Top Detractor^

Alphabet
By -0.65%
% of fund 6.81%

^Absolute

Quarterly Data as of 31-Mar-2020

Top Purchase

Netflix
2.47%
Was (31-Dec-2019) 1.47%

Top Sale

Boeing
0.44%
Was (31-Dec-2019) 2.31%

Quarterly Data as of 31-Mar-2020

31-Mar-2020 - Larry J. Puglia, Portfolio Manager,

While still difficult to forecast, we think severe economic disruptions are likely to have a material impact on both first- and second-quarter corporate earnings in the U.S., with longer term impacts dependent on the timing and effectiveness of coronavirus containment efforts.

As long-term-oriented investors, we feel the current market environment provides an opportunity for our investment approach to shine. We continue to lean heavily on our analyst platform for unique insights as we look to take advantage of dislocations and identify the companies that are best positioned to manage through the crisis and emerge even stronger.

Information Technology

Within the information technology sector, we focus on innovative business models that can take advantage of transformational change. We favor companies with durable businesses that address large and growing markets, including electronic payment processing and public cloud computing services.

  • Shares of Synopsys, a leading electronic design automation (EDA) company, finished lower but outperformed the market. The resilient fundamentals of Synopsys and other EDA names proved attractive to investors in search of stability amid broader equity-market volatility. We bought shares as we believe that the company is poised to reap the benefits of scale as EDA becomes an increasingly vital component of the semiconductor industry. We are also drawn to the company's attractive risk/reward profile.
  • We sold shares of FleetCor Technologies throughout the quarter. Shares were first pressured by decelerating topline growth in the company's corporate payments business and then fell further as coronavirus-related concerns weighed on travel volumes. Although we moderated the portfolio's position size, we still think FleetCor is well positioned to expand its leadership in business-to-business payments, with the advantage of being able to leverage its virtual card and cross-border-payments platforms to improve monetization and drive durable earnings growth.

Consumer Discretionary

We remain optimistic about stock-specific opportunities within the consumer discretionary sector. We favor businesses benefiting from the secular shift of consumer spending to online products and services. We believe industries such as physical retail and traditional media are secularly challenged; therefore, we plan to continue emphasizing companies within the sector that we think are on the right side of change and disruption.

  • We added shares of Lululemon, a leading designer, distributor, and retailer of healthy lifestyle-inspired athletic apparel. Despite near-term disruptions from the coronavirus outbreak, we expect Lululemon to emerge as one of the premier athleisure brands globally, thanks to its brand strength, leading online penetration, and vertically integrated omnichannel model.
  • Aptiv is an automotive supplier in the electrical/electronic architecture and electronics and safety industries. We reduced the portfolio's position in the company as the coronavirus outbreak has diminished the global demand for automobiles.

Health Care

Our allocation to the health care sector is composed of select therapeutics and medical device companies that we believe have limited exposure to potential regulatory pressures. We are also emphasizing managed care companies positioned to benefit from industry consolidation as well as the increasing focus on providing cost-effective solutions.

  • Despite solid fundamentals, shares of Cigna underperformed due to concerns that the coronavirus outbreak would elevate its expenses. We added shares opportunistically as we think any potential cost increases will be at least partially offset by patients postponing elective procedures.
  • Becton, Dickinson & Company is the largest manufacturer of single-use medical needles, syringes, and blood collection devices. Shares fell on news that the company issued a voluntary recall of its Alaris infusion pumps. As a result, we trimmed our position in favor of other investment opportunities.

Sectors

Total
Sectors
11
Largest Sector Information Technology 36.87% Was (30-Apr-2020) 35.81%
Other View complete Sector Diversification

Monthly Data as of 31-May-2020

Indicative Benchmark: S&P 500 Index

Top Contributor^

Consumer Discretionary
Net Contribution 2.12%
Sector
-0.03%
Selection 2.15%

Top Detractor^

Consumer Staples
Net Contribution -0.59%
Sector
-0.58%
Selection
-0.01%

^Relative

Quarterly Data as of 31-Mar-2020

Largest Overweight

Information Technology
By10.67%
Fund 36.87%
Indicative Benchmark 26.21%

Largest Underweight

Consumer Staples
By-7.14%
Fund 0.08%
Indicative Benchmark 7.21%

Monthly Data as of 31-May-2020

30-Apr-2020 - Larry J. Puglia, Portfolio Manager,
While still difficult to forecast, we think that the severe economic disruption caused by the coronavirus pandemic is likely to have a material near-term impact on U.S. corporate earnings—with longer term impacts dependent on the timing and effectiveness of coronavirus containment efforts. As long-term-oriented investors, we feel the current market environment provides an opportunity for our investment approach to shine. We continue to rely heavily on our analyst platform for unique insights as we look to take advantage of dislocations and identify the companies that are best positioned to manage through the crisis and emerge even stronger.

Team (As of 02-Jul-2020)

Larry Puglia

Larry J. Puglia is a portfolio manager in the U.S. Equity Division of T. Rowe Price. He is president of the Investment Advisory Committee of the US Large-Cap Core Growth Equity Strategy. He has been managing the US Large-Cap Core Growth Equity Strategy since 1993 and has had lead responsibility for all institutional accounts and other investment products within the strategy since 1997. Mr. Puglia is a vice president of T. Rowe Price Group, Inc.

Mr. Puglia has 30 years of investment experience, 29 of which have been with T. Rowe Price. He joined the firm in 1990 as an investment analyst specializing in financial services stocks. His coverage included banking, consumer finance, brokerage, investment management, and diversified financial companies. Mr. Puglia also served as an investment analyst covering the pharmaceutical industry. He began his career at Peat Marwick Main & Co. in 1982, ultimately serving as a senior manager.

Mr. Puglia earned a B.B.A., summa cum laude, in accounting from the University of Notre Dame and an M.B.A. in finance from the University of Virginia, Darden School of Business, where he was named a Shermet Scholar. He has earned the Chartered Financial Analyst designation and is a certified public accountant.

  • Fund manager
    since
    2016
  • Years at
    T. Rowe Price
    29
  • Years investment
    experience
    30
Craig Watson

Craig Watson is a portfolio specialist in the Equity Division of T. Rowe Price. He is a member of the U.S. Large-Cap Growth team working closely with institutional clients, consultants, and prospects. Mr. Watson is a vice president of T. Rowe Price Group, Inc.

Mr. Watson has 24 years of investment experience. Prior to joining the firm in 2007, he was senior vice president of global equity sales for HSBC Securities. Mr. Watson also was employed by UBS as director of institutional equity sales.

Mr. Watson earned a B.S., magna cum laude, in accounting from Hampton University and an M.B.A. from The Wharton School, University of Pennsylvania. He also has earned the certified public accountant accreditation.

  • Years at
    T. Rowe Price
    12
  • 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% 150 basis points 1.59%
Class I $2,500,000 $100,000 $0 0.00% 65 basis points 0.69%
Class J $10,000,000 $0 $0 0.00% 0 basis points 0.03%
Class Q $1,000 $100 $100 0.00% 65 basis points 0.75%

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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