SICAV

Global Aggregate Bond Fund

Risk-aware investing, exploiting inefficiencies in global bond markets.

ISIN LU1532504211 Bloomberg TRGABIH:LX

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

3.54%
$477.4m

1YR Return
(View Total Returns)

Manager Tenure

7.29%
3yrs

Information Ratio
(3 Years)

Tracking Error
(3 Years)

-0.16
4.15%

Inception Date 16-Dec-2016

Performance figures calculated in EUR

Other Literature

31-Jul-2020 - Arif Husain, Head of International Fixed Income,
Unprecedented monetary support could keep core yields anchored for the foreseeable future, while improving global growth could provide opportunities in credit, peripheral Europe and emerging market currencies. However, risks remain in the shape of ongoing U.S.-China tensions, the uncertainty over the forthcoming U.S. presidential election, and the possibility of a fresh coronavirus wave. With this in mind, we are maintaining our flexibility in the portfolio to allow us to adapt swiftly in different market environments.
Arif Husain
Arif Husain, Co-Portfolio Manager

Arif Husain is head of International Fixed Income at T. Rowe Price. He is lead portfolio manager for the Dynamic Global Bond Strategies. Mr. Husain is also co-portfolio manager for the firm's International Bond, Global Aggregate Bond and Institutional International Bond Strategies. He is a vice president of T. Rowe Price Group, Inc. and T. Rowe Price International Ltd.

Click for Manager Outlook
 

Strategy

Manager's Outlook

After a tumultuous start to 2020, the support of central banks and governments helped risk markets, such as equity and credit, to rally strongly in the second quarter as liquidity concerns were eased. At the same time, growing expectations for a rebound in economic activity as lockdown measures were lifted provided further support for risk sentiment. Given how far the rally has gone, we believe financial markets have now entered into a wait-and-see mode as they await a new catalyst for market direction.

With the economic recovery underway, looking for credit opportunities will likely remain a major source of returns for investors. Given the extent of the rally already, however, it is possible that the market may struggle to continue delivering the same pace of returns. Moreover, it is important not to equate liquidity with solvency, and the roll-off of some support programs over the summer could lead to defaults increasing in the months ahead. With this in mind, we continue to be selective in our purchases through our fundamental research platform, as well as maintain defensive hedges should the rally reverse.

Overall, we hold a constructive outlook. While we see pockets of opportunity emerging through the recovery, such as in select credit positions and in peripheral Europe, we are cognizant of residual risks that lie ahead. As well as the threat of a second coronavirus wave weighing on an economic recovery, other headwinds are present, too, such as escalating U.S.-China tensions and the upcoming U.S. presidential election. As a result, we have reinstated some of our defensive positioning to maintain portfolio flexibility.

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.

Investment Approach

  • To generate a consistent performance over benchmark by exploiting inefficiencies in the full universe of the global fixed income and currency markets:
    • Focus on successful alpha generation.
    • Importance of effective risk management.
  • Target average tracking error: Between 150 basis points and 300 basis points per annum.
  • Alpha generation classified under three main performance activities:
    • Currency Management: 35% Expected contribution to value added
    • Country/Duration Management: 35% Expected contribution to value added
    • Sector Allocation/Security Selection: 30% Expected contribution to value added
    • Sub investment Grade Allocation: 20% Expected contribution to value added
    • Sector/Security Selection: 10% Expected contribution to value added

Portfolio Construction

  • Currency limit: maximum +/- 40% relative to benchmark
  • Weighted duration limit: maximum +/- 3 years relative to benchmark
  • Sub-investment grade: maximum 20%
  • Above investment grade: not restricted (includes corporates and emerging markets)
  • Portfolio holdings: between 400 and 600 issuers
  • Average credit quality: A- or better

Performance (Class Ib | EUR)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Fund % 7.29% 3.54% N/A 3.15%
Indicative Benchmark % 4.24% 2.80% N/A 2.74%
Excess Return % 3.05% 0.74% N/A 0.41%

Inception Date 16-Dec-2016

Indicative Benchmark: Bloomberg Barclays Global Aggregate Bond EUR Hedged Index

Data as of  31-Jul-2020

Performance figures calculated in USD

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Fund % 6.26% 3.01% N/A 2.81%
Indicative Benchmark % 3.80% 2.52% N/A 2.53%
Excess Return % 2.46% 0.49% N/A 0.28%

Inception Date 16-Dec-2016

Indicative Benchmark: Bloomberg Barclays Global Aggregate Bond EUR Hedged Index

Data as of  30-Jun-2020

Performance figures calculated in USD

Recent Performance

  Month to DateData as of 12-Aug-2020 Quarter to DateData as of 12-Aug-2020 Year to DateData as of 12-Aug-2020 1 MonthData as of 31-Jul-2020 3 MonthsData as of 31-Jul-2020
Fund % -0.45% 1.00% 7.63% 1.45% 3.13%
Indicative Benchmark % -0.39% 0.57% 3.69% 0.97% 1.63%
Excess Return % -0.06% 0.43% 3.94% 0.48% 1.50%

Inception Date 16-Dec-2016

Indicative Benchmark: Bloomberg Barclays Global Aggregate Bond EUR Hedged Index

Indicative Benchmark: Bloomberg Barclays Global Aggregate Bond EUR 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.

31-Jul-2020 - Arif Husain, Head of International Fixed Income,
Core government bond yields declined and curves mostly flattened in July. This was driven in part by growing fears over a second wave of coronavirus infections fuelling demand for high-quality government bonds. In terms of country/duration positioning, an overweight duration stance to U.S. Treasuries contributed positively to relative returns, as rising coronavirus infections, regional lockdowns and disappointing jobs data spurred a rally in U.S. government debt. Our Hungarian duration underweight hurt, however. In currencies, our overweight position in the euro added significantly to relative returns. The euro gained ground as European Union (EU) leaders agreed to a EUR 750 billion coronavirus recovery package. In contrast, the weak U.S. dollar environment caused our underweight exposures to a number of emerging market currencies to pull back from relative gains. Within sector allocation and security selection, our choices in European government-related and corporate bonds added to relative gains, with the reaffirmation of European Central Bank and EU support helping spreads tighten.

Holdings

Issuers

Top
Issuers
10
Top 10 Issuers 47.26% Was (30-Jun-2020) 40.95%
Other View Top 10 Issuers

Monthly data as of 31-Jul-2020

Holdings

Total
Holdings
562
Largest Holding Japan Government Five Year Bond 5.67% Was (31-Mar-2020) 13.60%
Top 10 Holdings 23.59%
Other View Full Holdings Quarterly data as of 30-Jun-2020

Quality Rating View quality analysis

  Largest Overweight Largest Underweight
Quality Rating Below Investment Grade AA
By % 9.59% -8.83%
Fund 9.96% 5.92%
Indicative Benchmark 0.38% 14.76%

Average Credit Quality

A+

Monthly Data as of 31-Jul-2020
Indicative Benchmark:  Bloomberg Barclays Global Aggregate Bond 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 Cash Equivalents 1-3 Years
By % 5.74% -6.56%
Fund 5.74% 15.95%
Indicative Benchmark 0.00% 22.51%

Weighted Average Maturity

8.84 Years

Monthly Data as of 31-Jul-2020
Indicative Benchmark:  Bloomberg Barclays Global Aggregate Bond Index

Duration View duration analysis

  Largest Overweight Largest Underweight
Duration 5-7 Years 1-3 Years
By % 7.98% -9.48%
Fund 21.02% 16.99%
Indicative Benchmark 13.05% 26.47%

Weighted Average Duration

8.47 Years

Monthly Data as of 31-Jul-2020
Indicative Benchmark:  Bloomberg Barclays Global Aggregate Bond Index

31-Dec-2018 - Arif Husain, Head of International Fixed Income,

The portfolio's overall duration was increased over the quarter driven in part by adding to high-quality countries, such as the U.S. and Australia. We also reduced the underweight duration position in the eurozone and moved the UK up to neutral. The changes reflected our expectations that slowing global growth, geopolitics, and trade tensions could fuel a flight into high-quality government bonds.

Country/duration positioning

  • Within developed markets, we began increasing the overweight duration position in the U.S. around mid-October. This was driven by expectations for growth to moderate and the Federal Reserve to slow the pace of interest rate hikes in 2019. Overall, our bias for a flattening of the Treasury yield curve stayed in place as inflation remained well behaved. In the eurozone, we added to Germany in the 7- to 10-year part of the curve and moved Italy back to neutral as budget concerns eased. The overall underweight duration position was reduced as economic growth continued to slow. Over the medium-term, we believe eurozone government bonds are potentially vulnerable as the markets have yet to price in the European Central Bank taking a key step toward monetary policy normalization at the end of 2018 when its quantitative easing program finished.
  • Among other developed market moves, we opened a new overweight duration position in Australia on anticipation that the central bank will keep interest rates unchanged for the foreseeable future, a factor we believe should be supportive for bonds. Meanwhile, in the UK, we closed the underweight duration position in mid-November on uncertainty surrounding the country's exit from the European Union. Toward the end of the period, we opened a new underweight duration position in Canada as we felt that the market was being too pessimistic on the outlook for interest rate hikes.
  • Our allocation to local emerging market bonds remained low during the quarter. In terms of moves, we reduced overweight positions in Mexico and Thailand and took profit on the off-benchmark position in Brazil. We also added modestly to our off-benchmark exposure in domestic Romania on anticipation that inflation pressures could recede. Throughout, we maintained overweight positions in Chile, and off-benchmark exposures in India and South Africa. To balance some of the risks, we maintain a negative bias in Eastern Europe through underweight duration positions expressed in Hungary and Poland.

Currency selection

  • On the currency front, we shifted to an underweight position in the U.S. dollar toward the end of the quarter. This was driven in part by adding to the overweight position in the Swiss franc and opening a new overweight position in the Swedish krona after the central bank raised interest rates for the first time since 2011 in December. Overall, we felt that with U.S. growth slowing and the Fed potentially delivering fewer hikes in 2019, the dollar could be vulnerable to a correction. In other moves, underweight positions in the euro and Australian dollar were closed. Throughout, we maintained an overweight position in the Japanese yen and underweight allocations to the Singapore dollar and Taiwanese dollar.
  • In emerging markets, we added tentatively to a select number of currencies. This included the Mexican peso, the Argentine peso, the South African rand, and the Malaysian ringgit. These complemented existing exposures in the Romania leu and the Colombian peso. The overweight position in the Czech koruna was closed.

Sector allocation and security selection

  • We maintain an allocation to hard currency emerging market sovereign debt as the income stream remains attractive. We also hold modest exposure to European high yield bonds.
  • To reduce portfolio risk, we continue to hold defensive positions in credit markets. The majority of this is expressed through short credit default swap positions in a U.S. investment-grade bond index. In emerging markets, except for Mexico, we closed the credit default swap positions at an individual country level in Turkey, South Africa, and Indonesia.

Sectors

Total
Sectors
6
Largest Sector Government 55.53% Was (30-Jun-2020) 52.16%
Other View complete Sector Diversification

Monthly Data as of 31-Jul-2020

Indicative Benchmark: Bloomberg Barclays Global Aggregate Bond Index

Largest Overweight

Cash Equivalents
By5.73%
Fund 5.73%
Indicative Benchmark 0.00%

Largest Underweight

Agency/Supranationals
By-8.41%
Fund 1.07%
Indicative Benchmark 9.48%

Monthly Data as of 31-Jul-2020

31-Jul-2020 - Arif Husain, Head of International Fixed Income,
We maintain low credit risk beta in the portfolio by using credit derivative instruments to act as insurance. We continue, however, to hold a modest overweight position in European high yield and have maintained an overweight exposure to hard-currency sovereign debt, both of which should represent value given the strength of the global recovery.

Countries

Total
Countries
55
Largest Country United States 34.92% Was (30-Jun-2020) 31.80%
Other View complete Country Diversification

Monthly Data as of 31-Jul-2020

Indicative Benchmark: Bloomberg Barclays Global Aggregate Bond Index

Largest Overweight

Indonesia
By1.89%
Fund 2.44%
Indicative Benchmark 0.55%

Largest Underweight

France
By-4.64%
Fund 1.22%
Indicative Benchmark 5.85%

Monthly Data as of 31-Jul-2020

31-Jul-2020 - Arif Husain, Head of International Fixed Income,
The portfolio remained overweight duration in July. In developed markets, we maintained an overweight to the U.S., with the U.S. Federal Reserve’s ongoing dovishness likely to keep short-to-medium-term yields anchored for the foreseeable future. Elsewhere, we added to our Italian duration overweight, which we believe will be supported by the EU coronavirus package agreement. In the UK, we increased our steepening bias on the expectation that enormous fiscal packages could lift yields. In emerging markets, meanwhile, we increased our off-benchmark position in India.

Currency

Total
Currencies
28
Largest Currency U.S. dollar 37.35% Was (30-Jun-2020) 43.84%
Other View complete Currency Diversification

Monthly Data as of 31-Jul-2020

Indicative Benchmark : Bloomberg Barclays Global Aggregate Bond Index

Largest Overweight

euro
By 3.20%
Fund 27.57%
Indicative Benchmark 24.37%

Largest Underweight

U.S. dollar
By -5.45%
Fund 37.35%
Indicative Benchmark 42.80%

Monthly Data as of 31-Jul-2020

31-Jul-2020 - Arif Husain, Head of International Fixed Income,
We significantly increased our underweight to the U.S. dollar during the month. Rising coronavirus cases in the U.S. as well as underwhelming jobs data and reintroduced local lockdown measures, could point to a period of prolonged dollar weakness as the rest of the world recovers, in our view. Correspondingly, we opened positions in a number of currencies we feel could benefit from a weak dollar environment, including the Canadian dollar, Czech koruna and Swedish krona. We also added to our Japanese yen overweight position and closed our Polish zloty underweight.

Team (As of 05-Aug-2020)

Arif Husain

Arif Husain is head of International Fixed Income at T. Rowe Price. He is lead portfolio manager for the Dynamic Global Bond Strategies. Mr. Husain is also co-portfolio manager for the firm's International Bond, Global Aggregate Bond and Institutional International Bond Strategies. He is a vice president of T. Rowe Price Group, Inc. and T. Rowe Price International Ltd.

Mr. Husain has 24 years of investment experience, six of which have been with T. Rowe Price. Prior to joining the firm in 2013, he spent 14 years as director of both European Fixed Income and Euro Portfolio Management at AllianceBernstein. He was also a member of the global fixed income and absolute return portfolio management teams. Mr. Husain previously worked as assistant director of European Derivatives Trading at Greenwich NatWest and also traded interest rate swaps at Bank of America National Trust & Savings Association.

Mr. Husain received a B.Sc. (hons.) in banking and international finance from the City University, London Business School. He also has earned the Chartered Financial Analyst designation.

  • Fund manager
    since
    2016
  • Years at
    T. Rowe Price
    6
  • Years investment
    experience
    24
Quentin S. Fitzsimmons

Quentin Fitzsimmons is a senior portfolio manager in the Fixed Income Division of T. Rowe Price and a member of the global fixed income investment team. He is co-portfolio manager for the Global Aggregate Bond Strategy. He is actively involved in the discussion around country and duration positioning, currency management and sector allocation, with a particular expertise in interest rate management.

Mr. Fitzsimmons has 28 years of investment experience, four of which have been with T. Rowe Price. Prior to joining the firm in 2015, Mr. Fitzsimmons was head of liquidity portfolio investment management, Treasury markets, for the Royal Bank of Scotland Group, where he managed the liquid fixed income "tier one" capital on its balance sheet on an absolute return basis. Previously, he also worked as head of rates and as executive director of fixed income for Threadneedle Investments, where he ran global fixed income portfolios from 2002 to 2012. Prior to Threadneedle he held various fixed income portfolio management and research roles with F&C Investments, the Equitable Life Assurance Society and Sun Life Assurance Company of Canada.

Mr. Fitzsimmons earned a B.Sc. in economics and economic history from the University of Bristol.

  • Fund manager
    since
    2016
  • Years at
    T. Rowe Price
    4
  • Years investment
    experience
    28
Stephane Fertat

Stephane Fertat is a portfolio specialist in the Fixed Income Division. He supports all global/international fixed income strategies. He also represents the portfolio management team in meetings and conferences, presenting strategies and market outlooks. Stephane has broad knowledge of fixed income, currency, credit, and derivative instruments, which allows him to assist in the development of customized fixed income solutions. He also has helped launch a number of new strategies. Stephane is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price International Ltd.

Stephane’s investment experience began in 1998, and he has been with T. Rowe Price since 2007, beginning in the Fixed Income Division. Prior to this, Stephane was employed by Fischer Francis Trees and Watts as a European fixed income fund manager, later moving into a product manager role. Stephane also was employed by Southern Europe as a director of client service and business development. 

Stephane earned a master’s degree in finance from Ecole Superieure de Commerce de Paris. Stephane also has earned the Chartered Financial Analyst® designation.

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

  • Years at
    T. Rowe Price
    13
  • Years investment
    experience
    23
Christopher Dillon, CFA

Chris Dillon is an investment specialist in the Multi-Asset Division. He is also a vice president of T. Rowe Price Group, Inc., and T. Rowe Price Associates, Inc.

Chris’s investment experience began in 1993, and he has been with T. Rowe Price since 2006, beginning in the Fixed Income Division. Prior to this, Chris was employed by PNC Advisors as an investment advisory research consultant. He also directed fixed income management research with Smith Barney Consulting Group.

Chris earned a B.A., cum laude, in history/economics from the University of Delaware and an M.B.A. from Wilmington University. He also has earned the Chartered Financial Analyst® designation.

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

  • Years at
    T. Rowe Price
    14
  • Years investment
    experience
    23

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% 75 basis points 0.92%
Class I $2,500,000 $100,000 $0 0.00% 45 basis points 0.55%
Class Q $1,000 $100 $100 0.00% 45 basis points 0.62%
Class Sd $10,000,000 $0 $0 0.00% 0 basis points 0.10%

Please note that the Ongoing Charges figure is inclusive of the Investment Management Fee and is charged per annum.

Download

Latest Date Range
Audience for the document: Share Class: Language of the document:
Download Cancel

Download

Share Class: Language of the document:
Download Cancel
Sign in to manage subscriptions for products, insights and email updates.
Continue with sign in?
To complete sign in and be redirected to your registered country, please select continue. Select cancel to remain on the current site.
Continue Cancel
Once registered, you'll be able to start subscribing.

By clicking the Continue button, I acknowledge that I have read and accepted the Privacy Notice

Continue Back

Change Details

If you need to change your email address please contact us.
Subscriptions
OK
You are ready to start subscribing.
Get started by going to our products or insights section to follow what you're interested in.

Products Insights

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

Other Literature

You have successfully subscribed.

Notify me by email when
regular data and commentary is available
exceptional commentary is available
new articles become available

Thank you for your continued interest