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SICAV

US Equity Fund

Formerly US Large-Cap Equity Fund

Style agnostic investing in larger US companies.

ISIN LU1438969518 Bloomberg TRUSLAE:LX

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

11.61%
$714.7m

1YR Return
(View Total Returns)

Manager Tenure

26.66%
3yrs

Information Ratio
(3 Years)

Tracking Error
(3 Years)

-0.31
4.13%

Inception Date 30-Jun-2016

Performance figures calculated in EUR

Other Literature

31-Jan-2020 - Jeff Rottinghaus, Portfolio Manager ,
U.S. economic data remain largely positive as consumers continue to benefit from record low unemployment and rising wages. However, we remain relatively cautious as we are mindful that unresolved global trade issues and the upcoming U.S. presidential election could cause headlines that adversely affect markets. That said, an accommodative U.S. Federal Reserve, along with easing monetary policy around the globe, should be supportive to the asset class as we begin 2020.
Jeff Rottinghaus
Jeff Rottinghaus, Portfolio Manager

Jeff Rottinghaus is a portfolio manager in the U.S. Equity Division of T. Rowe Price. He is president of the US Large-Cap Core Equity and Growth & Income Strategies and chairman of the strategies' Investment Advisory Committees. In addition, he is a vice president and an Investment Advisory Committee member of the Dividend Growth and Capital Appreciation Strategies. Mr. Rottinghaus is a vice president of T. Rowe Price Group, Inc.

Click for Manager Outlook
 

Strategy

Manager's Outlook

U.S. stocks advanced in the fourth quarter, with major indexes reaching all-time highs by the end of a strong year for equities in 2019. Investors responded positively to the Federal Reserve's accommodative monetary policy moves, while news of "phase one" U.S.-China trade talks also boosted equities. Although many details of a publicized agreement remain unclear, markets welcomed the development as a step toward a resolution.

While U.S. economic data remain largely positive as consumers continue to benefit from record low unemployment and rising wages, we remain relatively cautious as we are mindful of unresolved global trade issues and the upcoming U.S. presidential election, both of which could cause headlines that impact market movement. However, an accommodative Federal Reserve, along with easing monetary policy around the globe, should be supportive to markets as we begin 2020. Should volatile market conditions arise, we believe it could create compelling buying opportunities for high-quality companies.

Within the portfolio, we expect stock selection will be the primary driver of longer-term outperformance. We believe careful fundamental research will be necessary to find opportunities, and we will continue to search for investment opportunities in select areas of the market, utilizing our bottom-up stock selection approach. As always, we rely on our global research team of industry specialists to uncover fundamentally sound companies and remain committed to providing quality risk-adjusted returns over the long term.

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 from large capitalization companies in the United States.

Investment Approach

  • Carefully constructed portfolio of the portfolio manager’s highest conviction investment ideas supported by our deep pool of U.S. equity analysts.
  • Core style targeting attractive opportunities across the investable universe irrespective of growth or value style.
  • Investment process that:
    • leverages the stock selection capabilities of our global research team;
    • emphasizes fundamental bottom-up stock selection;
    • is combined with an in-depth valuation assessment;
    • has rigorous portfolio construction.
  • Active risk management process integrated throughout our analysis.
  • Focused Large-Cap approach with stock selection the primary source of value added.
  • High conviction portfolio takes meaningful bets based on rigorous proprietary research.

Portfolio Construction

  • 50 or fewer securities.
  • Invest in high conviction ideas over a two-year time horizon.
  • Typical position size range: +/- 4% relative to the benchmark.
  • Sector weights: Generally limited to +/- 10% relative to the benchmark.
  • Expected tracking error: targeting 400 basis points.
  • Expected active share: targeting 70% or greater.

Performance (Class A | EUR)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Fund % 26.66% 11.61% N/A 12.96%
Indicative Benchmark % 25.24% 12.90% N/A 14.38%
Excess Return % 1.42% -1.29% N/A -1.42%

Inception Date 30-Jun-2016

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

Data as of  31-Jan-2020

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Fund % 30.37% 10.28% N/A 12.23%
Indicative Benchmark % 33.10% 12.23% N/A 14.37%
Excess Return % -2.73% -1.95% N/A -2.14%

Inception Date 30-Jun-2016

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

Data as of  31-Dec-2019

Performance figures calculated in EUR

Recent Performance

  Month to DateData as of 24-Feb-2020 Quarter to DateData as of 24-Feb-2020 Year to DateData as of 24-Feb-2020 1 MonthData as of 31-Jan-2020 3 MonthsData as of 31-Jan-2020
Fund % 1.10% 4.54% 4.54% 3.40% 9.08%
Indicative Benchmark % 2.20% 3.44% 3.44% 1.21% 7.27%
Excess Return % -1.10% 1.10% 1.10% 2.19% 1.81%

Inception Date 30-Jun-2016

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

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

Performance figures calculated in EUR

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 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.

31-Jan-2020 - Jeff Rottinghaus, Portfolio Manager ,
U.S. stocks were mixed in January, as fears at the end of the month over the economic impact of the coronavirus erased earlier gains. Within the portfolio, utilities had the largest positive impact due to an overweight allocation and stock selection. Shares of vertically integrated utility holding company NextEra Energy and wastewater services company American Water Works performed well as investors sought high-yielding investments as the rapid spread of a coronavirus sent global stocks lower toward the end of the month. Security selection within financials added further. Global electronic futures and over-the-counter market exchange operator Intercontinental Exchange continued to benefit from growth in its subscription-based data and listings business. We believe Intercontinental Exchange is a well-run exchange with scarce data assets and the potential to capture cost synergies from recent acquisitions. Conversely, the information technology sector dragged the most due to both stock selection and an underweight allocation. Shares of Amphenol, a supplier of sensors and connectors to a broad diversity of end markets, declined as the company faced challenging organic growth in most of its businesses. We believe Amphenol is well positioned to benefit from autonomous and electric trends in autos and the Internet of Things.

Holdings

Total
Holdings
65
Largest Holding Microsoft 4.59% Was (30-Sep-2019) 4.37%
Other View Full Holdings Quarterly data as of 31-Dec-2019
Top 10 Holdings 29.22% View Top 10 Holdings Monthly data as of 31-Jan-2020

Largest Top Contributor^

Microsoft
By 0.86%
% of fund 4.58%

Largest Top Detractor^

Boeing
By -0.08%
% of fund 1.71%

^Absolute

Quarterly Data as of 31-Dec-2019

Top Purchase

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

Top Sale

Exelon (E)
0.00%
Was (30-Sep-2019) 1.32%

Quarterly Data as of 31-Dec-2019

31-Dec-2019 - Jeff Rottinghaus, Portfolio Manager ,

Within the portfolio, our positioning is mainly driven by fundamental, stock-specific views. During the quarter, we took advantage of select buying opportunities, as we identified high-quality companies trading at compelling valuations. We also sold shares of certain holdings following their strong performance. We will continue to look for high-quality companies that have opportunities to increase their market share or have barriers to entry around their business that will allow them to grow organically in a variety of market environments.

Industrials and Business Services

Within the industrials and business services sector, where many names are cyclically tied to either infrastructure or capital spending, we seek to invest in companies with exposure to diverse end markets that feature solid business models and strong cash flow generation. Our largest sector positions are Boeing, GE, and Waste Connections.

  • We initiated a position in global parcel delivery firm UPS. We believe that lofty investor expectations overshadowed a solid quarter in which UPS grew its domestic package shipping volumes and profitability despite a volatile macro environment. We like management's continued efforts to revamp the company's pricing structure, which we expect to manifest in improved margins going forward.
  • We eliminated our position in Kansas City Southern, a freight railroad that primarily runs north-south through 10 Midwestern and Southern states and central Mexico, on recent strength. The company has benefited from Mexico energy reform and increased operating leverage from precision scheduled railroading (PSR).

Information Technology

The information technology sector represents our largest absolute weighting. Within the sector, we favor companies with durable business models that address large and growing markets, such as increasing demand for business technology solutions. Within the sector, our largest exposure is to the IT services industry, including Visa, Fiserv, and Fidelity National Information. We also hold sizable positions in Microsoft, Apple, and Salesforce.com.

  • We initiated a position in semiconductor manufacturer Texas Instruments as it is a high-quality business that benefits from a consolidated industry structure, early-stage product demand cycles, and the possibility of a recovery in global capital expenditures. We believe Texas Instruments is well positioned to benefit from longer-term trends, such as the increased prevalence of factory automation, smart devices, and autonomous vehicles.

Health Care

The health care sector continues to play a significant role in the portfolio, as we believe certain industries offer compelling, relatively stable growth potential that can perform well in multiple economic scenarios. It also has a strong secular tailwind from an aging population. We favor companies that offer relatively stable growth potential and/or that are well positioned to take advantage of long-term trends such as highly innovative product offerings. Our largest industry weight is in health care equipment and supplies, including Medtronic and Danaher. We also maintain a sizable position in pharmaceuticals, including Johnson & Johnson and Pfizer.

  • We increased our position in Johnson & Johnson. Though opioid and talc litigation remain an overhang for Johnson & Johnson, there appears to be a better path toward resolution. We believe the liability priced in from these lawsuits appears to be excessive resulting in an improved risk/reward. Additionally, there is room for multiple expansion should further defensive rotation toward the sector occur.
  • We eliminated Becton, Dickinson, and Company, the largest manufacturer of single-use medical needles, syringes, and blood collection devices. The company has produced strong performance in recent months, due in part to synergies from its 2017 acquisition of CR Bard, and we reallocate funds to names with greater upside potential.

Financials

Financials remains one of our larger absolute sector weights, as we continue to seek to invest in high-quality companies that are well-capitalized, have strong industry positions, and have diversified revenue streams. Our largest industry weights are in insurance, including Willis Towers Watson and Marsh & McLennan, and in banks, including JPMorgan Chase and PNC Financial Services Group.

  • We added to our position in global property and casualty insurance broker Willis Tower Watson as we think the company will continue to benefit from strong organic growth, margin expansion, and an increase in free cash flow. We favor its highly recurring revenue model and strong management team.
  • We eliminated our position in regional bank KeyCorp due to concerns over recent commercial fraud frequency and the company's slowing loan growth. We also believe Keycorp offers limited downside protection relative to its peers.

Sectors

Total
Sectors
11
Largest Sector Information Technology 20.96% Was (31-Dec-2019) 20.42%
Other View complete Sector Diversification

Monthly Data as of 31-Jan-2020

Indicative Benchmark: S&P 500 Index

Top Contributor^

Energy
Net Contribution 0.42%
Sector
0.08%
Selection 0.34%

Top Detractor^

Health Care
Net Contribution -0.31%
Sector
0.09%
Selection
-0.40%

^Relative

Quarterly Data as of 31-Dec-2019

Largest Overweight

Utilities
By2.30%
Fund 5.85%
Indicative Benchmark 3.55%

Largest Underweight

Information Technology
By-3.23%
Fund 20.96%
Indicative Benchmark 24.19%

Monthly Data as of 31-Jan-2020

31-Jan-2020 - Jeff Rottinghaus, Portfolio Manager ,
The health care sector continues to play a significant role in the portfolio, as we believe certain industries offer compelling, relatively stable growth potential that can perform well in multiple economic scenarios. It also has a strong secular tailwind from an aging population. We favour companies that offer relatively stable growth potential and/or that are well positioned to take advantage of long-term trends such as highly innovative product offerings. Our largest industry weight is in health care equipment and supplies, including Medtronic and Danaher. We also maintain a sizable position in pharmaceuticals, including Johnson & Johnson and Pfizer.

Team (As of 06-Feb-2020)

Jeff Rottinghaus

Jeff Rottinghaus is a portfolio manager in the U.S. Equity Division of T. Rowe Price. He is president of the US Large-Cap Core Equity and Growth & Income Strategies and chairman of the strategies' Investment Advisory Committees. In addition, he is a vice president and an Investment Advisory Committee member of the Dividend Growth and Capital Appreciation Strategies. Mr. Rottinghaus is a vice president of T. Rowe Price Group, Inc.

Mr. Rottinghaus has 18 years of investment experience, all of which have been with T. Rowe Price. Prior to joining the firm in 2001, he was a financial consultant with Ernst & Young. Mr. Rottinghaus is a former part owner of software consulting firm Kelly-Levey & Associates.

Mr. Rottinghaus earned a B.S. in business administration from Bowling Green State University and an M.B.A. in finance from The Wharton School, University of Pennsylvania. He also is a certified public accountant.

  • Fund manager
    since
    2016
  • Years at
    T. Rowe Price
    18
  • Years investment
    experience
    19
Eric Papesh

Eric Papesh is a portfolio specialist in the U.S. Equity Division of T. Rowe Price. He is based in London and serves as a proxy for equity portfolio managers with institutional clients, consultants and prospects. Mr. Papesh supports T. Rowe Price's US Smaller Companies Equity and US Large-Cap Equity Strategies offered in the Europe, Middle East and Africa (EMEA) and Asia-Pacific (APAC) regions. He is a vice president of T. Rowe Price Group, Inc. and T. Rowe Price International Ltd.

Mr. Papesh has 22 years of financial services experience, two of which have been with T. Rowe Price. Before joining the firm in 2014, he was a senior research analyst with Russell Investments, where he focused on US equity investment strategies.

Mr. Papesh earned a B.A. in business administration and an M.B.A. from the University of Washington. He has also earned the Chartered Financial Analyst designation.

  • Years at
    T. Rowe Price
    5
  • Years investment
    experience
    25

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% 150 basis points 1.67%
Class I $2,500,000 $100,000 $0 0.00% 65 basis points 0.72%
Class Q $15,000 $100 $100 0.00% 65 basis points 0.82%

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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