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SICAV

Global Value Equity Fund

Targeting attractively valued global companies with prospects for improving earnings growth.

ISIN LU0859255472 Bloomberg TRPGVEI:LX

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

2.38%
$43.8m

1YR Return
(View Total Returns)

Manager Tenure

-0.68%
7yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

-0.79
3.22%

Inception Date 28-Nov-2012

Performance figures calculated in USD

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29-Feb-2020 - Sebastien Mallet, Portfolio Manager,
The current equity environment is characterised by tremendous uncertainty regarding the likely human and economic impact of the coronavirus pandemic. While cognisant of the risks, we are finding instances where fundamentally sound, well-run businesses face unwarranted investor scepticism. Given our robust research platform and collective experience, we are confident in our ability to find these unique opportunities before their potential for substantial prosperity becomes obvious to other investors.
Sebastien Mallet
Sebastien Mallet, Portfolio Manager

Sebastien Mallet is a portfolio manager in the Equity Division at T. Rowe Price, managing the Institutional Global Value Strategy. Mr. Mallet is a vice president of T. Rowe Price Group, Inc. and T. Rowe Price International Ltd.

Click for Manager Outlook
 

Strategy

Manager's Outlook

Value stocks have shown some signs of coming back into favor in recent months. The key question is how the economic cycle will develop from here, and what does that mean for value investors such as ourselves. Widening valuation spreads create some attractive opportunities for value investors in the short term. The sustainability of the trend toward value stocks that we have seen in recent months remains to be seen, but it certainly provides some evidence that headwinds to a world where value outperforms growth are dissipating and that valuations are regaining importance.

The underlying economic picture remains reasonable in the U.S., fueled by higher government spending, strong private consumption, and an ever-tightening labor market where unemployment is at record lows. While this should continue to underpin corporate earnings, there are also headwinds. Tensions with the Middle East and extended uncertainty around trade relations with China continue to weigh on business confidence and activity, while broader concerns about lower global growth also cloud the outlook.

Developed Europe is enjoying a small growth revival, driven by solid household spending as unemployment falls and wages rise. In the medium term, growth is likely to be stable but slower amid a less favorable external environment. However, should global trade and geopolitical tensions calm, and energy prices remain reasonable, prospects could improve significantly, and we find good value by being selective. In the UK, the major downside risk is Brexit, and growth now hinges on its outcome. While the UK is set to leave the European Union in the coming weeks, subsequent trade deal negotiations will be key.

In Asia, the Bank of Japan continues its ultra-loose monetary policy. Combined with tight labor markets, this creates a conducive backdrop for equities. As for other major economies, trade tensions and a weak global backdrop remain a risk to Japan's outlook, especially given the importance of its export sector. Crucially for investors such as ourselves, corporate governance is improving with companies becoming more shareholder friendly, and we continue to identify stocks with compelling valuations befitting of our value perspective.

Despite some risks, we see enough upside to retain a gently positive outlook for global equity markets and continue to concentrate on the bottom-up view, with a focus on selecting companies with strong free cash flow generation not yet fully appreciated by the market and with the scope to increase shareholder returns. We are finding many pockets of controversy where fundamentally sound, well-run businesses face unwarranted investor skepticism. Given our robust research platform and collective experience, we are confident in our ability to find these unique opportunities before their potential for substantial prosperity becomes obvious to other investors.

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 widely diversified portfolio of undervalued stocks of companies anywhere in the world, including emerging markets.

Investment Approach

  • Diversified portfolio investing in companies located throughout the globe.
  • Emphasize attractively valued companies with prospects for improving earnings growth.
  • Employ rigorous and comprehensive research to identify and assess investment opportunities.
  • Allocate country and sector positions through consideration of:
    • Attractiveness of individual investments
    • Macroeconomic environment

Portfolio Construction

  • Typically 80-100 stock portfolio
  • Individual positions typically range from 0.30% to 3.00% — average position size of 1.00%
  • Country and sector weights generally range +/- 15% deviation from the benchmark
  • Maximum of 10% in emerging markets
  • Reserves range from 0% to 10%

Performance (Class I)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Since Manager Inception
Annualised
Fund % -0.68% 2.38% 3.34% 8.14% 8.14%
Indicative Benchmark % 4.63% 7.24% 5.88% 9.18% 9.18%
Excess Return % -5.31% -4.86% -2.54% -1.04% -1.04%

Inception Date 28-Nov-2012

Manager Inception Date 28-Nov-2012

Indicative Benchmark: MSCI World Index Net

Data as of  29-Feb-2020

Performance figures calculated in USD

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Fund % 25.12% 8.41% 6.44% 10.32%
Indicative Benchmark % 27.67% 12.57% 8.74% 10.86%
Excess Return % -2.55% -4.16% -2.30% -0.54%

Inception Date 28-Nov-2012

Indicative Benchmark: MSCI World Index Net

Data as of  31-Dec-2019

Performance figures calculated in USD

Recent Performance

  Month to DateData as of 31-Mar-2020 Quarter to DateData as of 31-Mar-2020 Year to DateData as of 31-Mar-2020 1 MonthData as of 29-Feb-2020 3 MonthsData as of 29-Feb-2020
Fund % -14.85% -25.16% -25.16% -11.13% -9.63%
Indicative Benchmark % -13.23% -21.05% -21.05% -8.45% -6.28%
Excess Return % -1.62% -4.11% -4.11% -2.68% -3.35%

Inception Date 28-Nov-2012

Indicative Benchmark: MSCI World Index Net

Indicative Benchmark: MSCI World Index Net

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.

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 - Sebastien Mallet, Portfolio Manager,
Global equity markets corrected sharply in February, as concerns relating to the coronavirus gathered pace. Fears that efforts to stop the virus becoming a global pandemic had failed and that COVID-19 could have a significant impact on global economic activity, outweighed any positive sentiment generated from strong economic data out of the U.S. and encouraging corporate earnings. Against the negative backdrop, there was a flight to less risky assets, including U.S. Treasuries and gold, while oil sold off. At the portfolio level, our stock selection within the industrials and business services and consumer staples sectors were the biggest drags on relative performance. In particular, our holdings in several airline and aerospace companies weighed on relative returns, as investors considered the potential effects of the ongoing Boeing 737 MAX situation and coronavirus on their businesses. By contrast, our choice of securities within the information technology, energy, and financials sectors was beneficial to performance over the month.

Holdings

Total
Holdings
94
Largest Holding JPMorgan Chase 3.22% Was (30-Sep-2019) 2.98%
Other View Full Holdings Quarterly data as of 31-Dec-2019
Top 10 Holdings 22.37% View Top 10 Holdings Monthly data as of 29-Feb-2020

Largest Top Contributor^

JPMorgan Chase
By 0.81%
% of fund 3.22%

Largest Top Detractor^

American International Group
By -0.50%
% of fund 1.70%

^Absolute

Quarterly Data as of 31-Dec-2019

Top Purchase

Verizon Communications (N)
1.74%
Was (30-Sep-2019) 0.00%

Top Sale

Cisco Systems (E)
0.00%
Was (30-Sep-2019) 1.51%

Quarterly Data as of 31-Dec-2019

31-Dec-2019 - Sebastien Mallet, Portfolio Manager,

Our major overweight sector positions at the end of December were financials and utilities. The largest underweight sector positions included consumer discretionary, communication services, IT, and consumer staples.

Over the course of the fourth quarter, we raised the portfolio's exposure to health care by adding to a biopharmaceutical company and identified a new opportunity in a U.S. railroad company. Dividend yields in U.S. utilities are becoming less compelling, and over the quarter we eliminated our position in a public utility holding company and used the proceeds to buy a large wireless operator that offers a more attractive dividend yield. Having entered the quarter with a broadly neutral stance in energy, we have moved overweight as a result of a new holding, ConocoPhillips. In cases where we felt valuations were looking stretched, following the strong runup in share prices over the quarter, we took the opportunity to book profits.

Health Care

We identified a compelling new opportunity within the health care space, building a position in biopharmaceutical company AbbVie, which is one of the largest in the world. The company's two lead franchises are in immunology and inflammation (Humira) and oncology. Management appears to be taking a more realistic approach to dealing with the erosion of the U.S. Humira business. A recent acquisition should help with this by diversifying the company's revenue base.

Communication Services

Within the communication services sector, we reinvested in Verizon Communications, the largest U.S. wireless operator. The stock has low market expectations and an attractive valuation relative to the market. While recent quarterly results have been mixed, the company offers a solid dividend yield.

Financials

We sold out of the global reinsurer Muenchener Rueckver (Munich Re), which offers both life and non-life reinsurance and also includes a sizable primary insurance business. The company has performed strongly in recent months, outperforming the European insurance sector. While we believe this remains a quality business with a strong management team, the valuation is beginning to look stretched versus history. We exercised our valuation discipline, taking profits and selling out of the stock.

Energy

We initiated a position in ConocoPhillips, the American multinational energy corporation, which we believe offers an attractive risk/reward profile. Concerns around M&A activity, federal acreage, and Qatar LNG are possibly overdone, in our view, and therefore contributed to an attractive entry point. The management team has demonstrated discipline and an ability to execute. The company has high-quality assets, low debt, and a high free cash flow yield. As a result, the portfolio had a small overweight to the energy sector as of the end of December.

Utilities

Utilities remains our second-largest relative overweight position within the portfolio, but over the course of the review period, we trimmed some of our exposure. We eliminated our position in public utility holding company Eversource Energy. The company operates through three segments: electric distribution, electric transmission, and natural gas distribution. While the company is well managed and well positioned for secular trends in the New England energy policy, the share price reached a level that we found expensive. We sold out in order to add to stocks with stronger risk/reward profiles.

IT

The portfolio has a significant underweight to the IT sector, and over the course of the review period, we further reduced our exposure, eliminating our holdings in Cisco Systems and TE Connectivity.

  • Cisco Systems: Cisco designs, manufactures, and sells networking hardware and software and provides related services. It is well positioned due to the end markets to which it is exposed, a strong management team, a solid track record of capital allocation, and the longer-term opportunity for margin expansion. However, the investment case has become less differentiated given the increased macro uncertainty. Despite the company's stated strategy of moving to a more software-as-a-service subscription-based model, and therefore a less cyclical business, recent financial results suggest this move has not been as successful as we, or Cisco, had hoped.
  • TE Connectivity: We took profits on this supplier of connectors and sensors. Over the quarter, the company reported earnings that beat consensus estimates. While the company is a market leader with potential to grow connector sales and increase their share of the automotive sensor market, the valuation began to look stretched.

Sectors

Total
Sectors
11
Largest Sector Financials 22.05% Was (31-Jan-2020) 21.43%
Other View complete Sector Diversification

Monthly Data as of 29-Feb-2020

Indicative Benchmark: MSCI World Index

Top Contributor^

Financials
Net Contribution 0.45%
Sector
0.03%
Selection 0.42%

Top Detractor^

Utilities
Net Contribution -0.35%
Sector
-0.38%
Selection
0.03%

^Relative

Quarterly Data as of 31-Dec-2019

Largest Overweight

Financials
By6.93%
Fund 22.05%
Indicative Benchmark 15.12%

Largest Underweight

Information Technology
By-6.16%
Fund 12.15%
Indicative Benchmark 18.31%

Monthly Data as of 29-Feb-2020

29-Feb-2020 - Sebastien Mallet, Portfolio Manager,
During February we made a number of changes to the fund’s holdings within the health care space. For example, we initiated a position in a large global pharmaceutical player. Its shares had sold off sharply on concerns about its recently approved age-related macular degeneration drug. We believe the sell-off was overdone and that the stock had fallen to an attractive valuation. Although we have lowered our sales estimates for the drug in question, we are still forecasting above consensus corporate earnings and continue to view the company as a durable growth story.

Regions

Total
Regions
4
Largest Region North America 61.37% Was (31-Jan-2020) 62.18%
Other View complete Region Diversification

Monthly Data as of 29-Feb-2020

Indicative Benchmark: MSCI World Index

Top Contributor^

Developed Europe
Net Contribution 0.79%
Region
-0.00%
Selection 0.79%

Top Detractor^

United States
Net Contribution -0.89%
Region
-0.04%
Selection
-0.85%

^Relative

Quarterly Data as of 31-Dec-2019

Largest Overweight

Pacific Ex Japan
By2.96%
Fund 6.90%
Indicative Benchmark 3.94%

Largest Underweight

North America
By-5.81%
Fund 61.37%
Indicative Benchmark 67.18%

Monthly Data as of 29-Feb-2020

Countries

Total
Countries
20
Largest Country United States 56.94% Was (31-Jan-2020) 57.26%
Other View complete Country Diversification

Monthly Data as of 29-Feb-2020

Indicative Benchmark: MSCI World Index

Top Contributor

N/A

Top Detractor

N/A

Largest Overweight

China
By4.08%
Fund 4.10%
Indicative Benchmark 0.02%

Largest Underweight

United States
By-6.81%
Fund 56.94%
Indicative Benchmark 63.75%

Monthly Data as of 29-Feb-2020

Team (As of 31-Mar-2020)

Sebastien Mallet

Sebastien Mallet is a portfolio manager in the Equity Division at T. Rowe Price, managing the Institutional Global Value Strategy. Mr. Mallet is a vice president of T. Rowe Price Group, Inc. and T. Rowe Price International Ltd.

Mr. Mallet has 19 years of investment experience, 14 of which have been at T. Rowe Price. Prior to joining the firm in 2005, he was a telecom banker at Credit Suisse First Boston in the Tokyo and London offices. Mr. Mallet started his career as a financial analyst with France Telecom, based in Guangzhou, China, and Madrid, Spain.

Mr. Mallet earned an M.A., with honours, in finance from the University of Paris and an M.B.A. from the London Business School.

  • Fund manager
    since
    2012
  • Years at
    T. Rowe Price
    14
  • Years investment
    experience
    18

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 $15,000 $100 $100 5.00% 160 basis points 1.77%
Class I $2,500,000 $100,000 $0 0.00% 75 basis points 0.85%

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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