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GIPS® Information

T. Rowe Price ("TRP") claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. T. Rowe Price has been independently verified for the twenty four-year period ended June 30, 2020, by KPMG LLP. The verification report is available upon request. A firm that claims compliance with the GIPS standards must establish policies and procedures for complying with all the applicable requirements of the GIPS standards. Verification provides assurance on whether the firm’s policies and procedures related to composite and pooled fund maintenance, as well as the calculation, presentation, and distribution of performance, have been designed in compliance with the GIPS standards and have been implemented on a firm-wide basis. Verification does not provide assurance on the accuracy of any specific performance report.

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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SICAV

Global Real Estate Securities Fund

Equity investment alert to the changing supply and demand dynamics of the global property market.

ISIN LU0382932225 Bloomberg TRGRESI:LX

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

12.21%
$11.6m

1YR Return
(View Total Returns)

Manager Tenure

45.43%
2yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

0.23
3.84%

Inception Date 27-Oct-2008

Performance figures calculated in USD

31-Oct-2021 - Jai Kapadia, Portfolio Manager ,
We remain optimistic about the potential in real estate stocks. We expect that increasing consumer activity and an improving employment picture will drive higher demand in many property types. Although valuations have generally recovered, we remain constructive on the earnings potential for several market segments driven by recovering rents and falling supply.
Jai Kapadia
Jai Kapadia, Portfolio Manager

Jai Kapadia is a sector portfolio manager in the International Equity Division. He manages the Global Real Estate Equity Strategy.

Click for Manager Outlook
 

Strategy

Manager's Outlook

Despite the strong year-to-date performance, we remain optimistic about the upside potential in real estate stocks given the return of pricing power in various sub-sectors. Over the coming quarters, we expect that the rollout of coronavirus vaccines will result in increasing consumer confidence and an improving employment picture. This will drive higher demand in many property types across commercial and residential real estate, while supply has been constrained by falling construction starts across many regions and property types. Additionally, we expect to see a continued divergence in performance between high-quality Grade A real estate versus Grade B locations. Our well-located real estate investments are poised to benefit from these trends.

While valuations based on net asset value and dividend yield spreads have generally recovered to historical levels, we remain constructive on the earnings potential for several property types in 2022 and 2023 driven by recovering rents and falling supply. Rents in real estate sub-sectors such as industrial, apartments, and self-storage, and even room rates in hotels, are likely to remain solid over the next 12 to 18 months.

As bottom-up stock pickers, we are also excited about the opportunities in front of us. We expect life to begin to get back to some semblance of normal. This explains our overweight positions in coastal apartments and hotels. We expect young people to return to cities, driving demand for apartment living; university campuses will reopen, driving demand for student housing; and consumers will feel more confident booking leisure and business travel, driving hotel demand. Office workers will begin to return to offices in a more significant way, reinvigorating urban environments, and senior citizens will be able to move into senior housing with more confidence. We are also seeing a recent pickup in retail leasing demand, which should benefit shopping mall landlords.

We remain focused on identifying and investing in those companies that should thrive in a recovery and avoiding those companies that we believe will need to raise capital or otherwise limit shareholder returns going forward. Our focus on owning well-located, high-quality real estate, as well as companies leveraged to the recovery as economies reopen, should guide us well through this period.

Investment Objective

To increase the value of its shares in the long term through both growth in the value of, and income from, its investments. The fund invests mainly in a diversified portfolio of securities issued by real-estate related companies. The companies may be anywhere in the world, including emerging markets.

Investment Approach

  • Employ fundamental research with a bottom-up approach.
  • Assess the capability, strategy, and management of the business.
  • Evaluate the asset base potential.
  • Understand the supply and demand dynamics by property and market.
  • Analyze balance sheet strength and flexibility.
  • Integrate a risk-adjusted perspective throughout our analysis.
  • Establish whether we would want to own a business for the long term.
  • Leverage the deep knowledge base at T. Rowe Price, including dedicated analysts in North America, Europe, and Asia.
  • Environmental, social and governance ("ESG") factors with particular focus on those considered most likely to have a material impact on the performance of the holdings or potential holdings in the funds’ portfolio are assessed. These ESG factors, which are incorporated into the investment process alongside financials, valuation, macro-economics and other factors, are components of the investment decision. Consequently, ESG factors are not the sole driver of an investment decision but are instead one of several important inputs considered during investment analysis.

Portfolio Construction

  • Typically 40-80 securities
  • Invest in highest conviction ideas
  • Diversified by property type and geography, with at least 40% invested outside the U.S.
  • Sector weights are the result of bottom-up security selection
  • Country weightings +/- 10% of the benchmark
  • Individual position sizes range from +/- 5% of the benchmark
  • Continually monitor investments to ensure:
    • Execution and results are tracking our expectations
    • Strategy intact and investment thesis unfolding as expected

Recent Performance

  Month to DateData as of 03-Dec-2021 Quarter to DateData as of 03-Dec-2021 Year to DateData as of 03-Dec-2021 1 MonthData as of 31-Oct-2021 3 MonthsData as of 31-Oct-2021
Fund % -0.25% 2.88% 23.10% 4.97% 1.95%
Indicative Benchmark % 0.54% 4.16% 19.22% 5.98% 1.14%
Excess Return % -0.79% -1.28% 3.88% -1.01% 0.81%

Inception Date 27-Oct-2008

Indicative Benchmark: FTSE EPRA Nareit Developed Index Net TRI

Performance figures calculated in USD

Industry

Total
Industries
11
Largest Industry Apartment Residential 22.51% Was (30-Sep-2021) 22.31%
Other View complete Industry Diversification

Monthly Data as of 31-Oct-2021

Indicative Benchmark: FTSE EPRA Nareit Developed Index

Top Contributor^

Lodging/Leisure
Net Contribution 0.51%
Industry
-0.10%
Selection 0.61%

Top Detractor^

Data Centers
Net Contribution -0.18%
Industry
0.10%
Selection
-0.28%

^Relative

Quarterly Data as of 30-Sep-2021

Largest Overweight

Lodging/Leisure
By5.48%
Fund 9.36%
Indicative Benchmark 3.88%

Largest Underweight

Diversified
By-7.57%
Fund 7.24%
Indicative Benchmark 14.81%

Monthly Data as of 31-Oct-2021

Regions

Total
Regions
4
Largest Region North America 63.38% Was (30-Sep-2021) 62.70%
Other View complete Region Diversification

Monthly Data as of 31-Oct-2021

Indicative Benchmark: FTSE EPRA Nareit Developed Index

Largest Overweight

North America
By0.83%
Fund 63.38%
Indicative Benchmark 62.54%

Largest Underweight

Middle East & Africa
By-0.23%
Fund 0.00%
Indicative Benchmark 0.23%

Monthly Data as of 31-Oct-2021

Countries

Total
Countries
16
Largest Country United States 59.64% Was (30-Sep-2021) 59.29%
Other View complete Country Diversification

Monthly Data as of 31-Oct-2021

Indicative Benchmark: FTSE EPRA Nareit Developed Index

Largest Overweight

China
By1.61%
Fund 1.61%
Indicative Benchmark 0.00%

Largest Underweight

Germany
By-1.73%
Fund 1.76%
Indicative Benchmark 3.49%

Monthly Data as of 31-Oct-2021

31-Oct-2021 - Jai Kapadia, Portfolio Manager ,
The U.S. remains the dominant country allocation within the portfolio. Real estate stocks in Japan, the UK, and Hong Kong also represent significant positions. In the U.S., we initiated a position in a company that owns a large portfolio of open-air shopping centers. The company has used the disruption from the pandemic to improve its asset quality through opportunistic acquisitions and is now the largest retail REIT by property count. We also started a position in a high-quality Belgium-based healthcare real estate company that appears well positioned to benefit from the favorable demographic trends in the sector.

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% 160 basis points 1.77%
Class I $2,500,000 $100,000 $0 0.00% 75 basis points 0.85%
Class Q $1,000 $100 $100 0.00% 75 basis points 0.92%

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