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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.

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SICAV

Continental European Equity Fund

Style-agnostic, quality-driven European equity investment.

ISIN LU1225514311 Bloomberg TRPEXQU:LX

3YR Return Annualised
(View Total Returns)

Total Assets
(EUR)

15.91%
€106.7m

1YR Return
(View Total Returns)

Manager Tenure

32.35%
<1yr

Information Ratio
(5 Years)

Tracking Error
(5 Years)

0.49
7.43%

Inception Date 04-May-2015

Performance figures calculated in USD

31-Aug-2021 - Tobias Mueller, Portfolio Manager ,
Investor appetite for European assets has been rekindled this year by growing hopes of an economic recovery based on the speedy rollout of effective coronavirus vaccines. However, the strong market move upwards has pushed overall valuations to less attractive levels, especially when concerns about the fundamental economic outlook remain. Consumer spending appears to be normalising, company inventories have largely been rebuilt and there is evidence the impact of massive stimulus may now be waning.
Tobias Mueller, CFA
Tobias Mueller, CFA, Portfolio Manager

Tobias Mueller is a regional portfolio manager for the European Select Strategy, effective October 2018, and for the Europe Equity and Europe ex-UK Equity Strategies, effective October 2020. He is a vice president of T. Rowe Price International Ltd.

Click for Manager Outlook
 

Strategy

Manager's Outlook

The coronavirus pandemic is having a dramatic impact on societies and economies in Europe, triggering far-reaching changes in activity and policy. After a sharp slowdown in economic activity, the development of effective vaccines and the gradual reopening of economies now offer the hope of a recovery from deep recession later this year.

A recovery will, to some extent, depend on the evolution of the disease and the efficacy and distribution of vaccines to treat it. In addition, the level of continuing policy support, the state of corporate and consumer confidence, and the degree of disruption caused by newly agreed post-Brexit trading arrangements are likely to determine the longer-term trajectory of activity.

Massive central bank action and governmental fiscal measures continue to support economies, facilitated by the acceptance that policymakers should use fiscal policy as a tool to engineer a recovery. European Union integration has also advanced with the agreement to coordinate policy response, which is a departure from the monetary orthodoxy that dominated in earlier crises.

The pandemic is serving as a catalyst for change as well, accelerating trends that were emerging before the crisis, particularly the shift from the offline to the online world and the further heightening of awareness around sustainability and green issues.

In these uncertain times, it is important to be prepared for market dislocations triggered by events. Opportunities may emerge to buy companies at attractive valuations that have become stronger due to the coronavirus crisis and to sell those that are likely to be fundamentally weakened. Among these opportunities, in our view, are high-quality companies, which have lagged markedly since the market rotation sparked by the introduction of vaccines last year.

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 companies in Europe (excluding the UK).

Investment Approach

  • Fundamental research is critical to successfully identify and assess long-term investment opportunities. We look for companies with high returns on capital and capable of providing sustainable earnings across the market cycle.
  • Style agnostic, focus on quality. By avoiding style constraints, we can invest in quality companies and maintain a balanced portfolio through market cycles.
  • Disciplined approach to valuation. We aim to buy businesses at a clear discount to their intrinsic value.
  • Risk management is essential and is assisted by diversification, quantitative analysis, and automatic stabilizers built in to our investment process.
  • 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 40-70 stocks
  • Individual position size up to 4.0% relative to the indicative benchmark
  • Sector ranges: typically +/- 10% relative to the indicative benchmark
  • Country ranges: typically +/- 10% relative to the indicative benchmark
  • Expected Tracking Error: typically 3.0% to 6.0%
  • Information Ratio objective: >0.5
  • Cash target range: fully invested, typically less than 5.0%
  • Turnover range: 40%-100%

Performance (Class Qh | USD)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Since Manager Inception
Fund % 32.35% 15.91% 14.89% 10.48% 31.51%
Indicative Benchmark % 34.30% 11.93% 11.28% 7.55% 31.87%
Excess Return % -1.95% 3.98% 3.61% 2.93% -0.36%

Inception Date 04-May-2015

Manager Inception Date 01-Oct-2020

Indicative Benchmark: FTSE Developed Europe ex UK 100% Hedged to USD Net Tax Index

Data as of 31-Aug-2021

Performance figures calculated in USD

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Fund % 33.11% 15.34% 15.14% 9.99%
Indicative Benchmark % 23.74% 11.16% 11.47% 6.98%
Excess Return % 9.37% 4.18% 3.67% 3.01%

Inception Date 04-May-2015

Indicative Benchmark: FTSE Developed Europe ex UK 100% Hedged to USD Net Tax Index

Data as of 30-Jun-2021

Performance figures calculated in USD

Recent Performance

  Month to DateData as of 20-Sep-2021 Quarter to DateData as of 20-Sep-2021 Year to DateData as of 20-Sep-2021 1 MonthData as of 31-Aug-2021 3 MonthsData as of 31-Aug-2021
Fund % -2.66% 1.73% 18.47% 2.07% 7.68%
Indicative Benchmark % -2.70% 1.80% 21.60% 2.85% 9.84%
Excess Return % 0.04% -0.07% -3.13% -0.78% -2.16%

Inception Date 04-May-2015

Indicative Benchmark: FTSE Developed Europe ex UK 100% Hedged to USD Net Tax Index

Indicative Benchmark: FTSE Developed Europe ex UK 100% Hedged to USD Net Tax 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.

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.

31-Aug-2021 - Tobias Mueller, Portfolio Manager ,
The FTSE All-World Developed Europe ex UK Index rose for a seventh consecutive month in August on strong corporate earnings and hopes that central banks’ accommodative policies and coronavirus vaccination programmes would continue to support an economic recovery. At the portfolio level, the main contributor to relative performance was stock selection in financials. Our choice of securities in consumer discretionary and health care also helped, as did our underweight position in consumer staples. In financials, our top-performing holding was Finnish holding company Sampo, which owns a non-life business, a domestic life insurer and a stake in Nordea Bank. The shares were boosted by stronger-than-predicted second-quarter results, with positive momentum across all business segments. The capital position also improved with the sale of some Nordea shares. Conversely, our underweight position in information technology (IT) and stock picking in industrials and business services and communication services were modest drags on relative returns. Amadeus IT, a leading provider of global distribution systems and IT solutions for the travel industry, slipped further after weak first-half results posted at the end of July and some brokers downgraded earnings expectations for this year and 2022.

Holdings

Total
Holdings
58
Largest Holding ASML Holding 4.48% Was (31-Mar-2021) 4.36%
Other View Full Holdings Quarterly data as of  30-Jun-2021
Top 10 Holdings 29.85% View Top 10 Holdings Monthly data as of  31-Aug-2021

Largest Top Contributor^

ASML Holding
% of fund 4.46%

Largest Top Detractor^

Siemens
% of fund 2.98%

^Absolute, percentages based on the difference between the total net assets of the two largest holdings of the fund.

Quarterly Data as of 30-Jun-2021

Top Purchase

Mayr Melnhof Karton (N)
0.96%
Was (31-Mar-2021) 0%

Top Sale

Munich Re (E)
0.00%
Was (31-Mar-2021) 2%

Quarterly Data as of 30-Jun-2021

30-Jun-2021 - Tobias Mueller, Portfolio Manager ,

Continued Focus on Quality

We have identified four key themes where we can find numerous stocks on the right side of change: energy transition, sustainability, offline to online, and biologics. There may also be idiosyncratic reasons to buy a stock where "change" is more internally driven.

We look for quality businesses that benefit from change where we have an insight on the key drivers for the stock, and we continue to seek to exploit a heightened opportunity set to acquire even better companies at even more attractive valuations. The quarter presented us with an opportunity to invest in a new high-quality name, while we eliminated three names.

Our largest sector bets remain industrials and business services and consumer discretionary, while we remain underweight consumer staples and energy.

Financials

We adjusted our financials holdings, booking profits and recycling funds into new opportunities. We prefer businesses that can produce strong returns on a sustainable basis, weathering the impact of low interest rates and regulatory rules that weigh on earnings in the sector.

Our largest overweight in the sector is capital markets, where London Stock Exchange, which runs exchanges, indices, and trading platforms, is our main position. We have a neutral allocation to banks and a modest underweight in insurance.

  • We exited Munich Re, a global reinsurer, after disappointing performance. We switched instead to Prudential,�which we believe will benefit from expansion in Asia, where new business is growing strongly. A capital raise has strengthened the balance sheet, and the company is sharpening its focus by demerging Jackson, its U.S. insurance arm.
  • We also eliminated our holding in Erste Group Bank, one of the largest lenders in Austria and Central Europe, taking profits after a strong run. We can see better risk/reward trade-offs in Prudential, a leading life insurer in South East Asia; Swedbank, a leading Sweden-based lender; and Dutch bank ING.

Industrials and Business Services

We favored industrials and business services in the first quarter as we added to cyclicality in the portfolio to capitalize on the nascent economic recovery. We found a number of undervalued high-quality companies with, in our view, strong growth potential in the commercial and business parts of this diverse sector. Since then, we reduced our cyclical exposure, taking some profits on strong performers.

Our largest industry exposures in relative terms are to machinery and aerospace and defense. In the former, our largest investment is Valmet, a Finland-based provider of services and equipment to the paper, board, and pulp industry. In the latter industry, Airbus is our main holding.

  • We trimmed strong performers such as Valmet; Norma, a leading specialist in engineering joining technology; Rockwool International, a manufacturer of stone wool for insulation and other applications; and Assa Abloy, a global leader in security lock products and solutions.

Health Care

We increased our underweight bet in health care, taking profits in some names and exiting another. Generally, we are interested in the sector, where new, innovative industries are emerging, and investment is increasing to fill gaps in provision exposed by the coronavirus pandemic.

We have positive allocations to health care equipment and supplies and to life sciences tools and services. We are underweight in pharmaceuticals, where our largest position is Sanofi, which specializes in immunology, vaccines, and rare diseases. In recent years, pharmaceuticals have experienced declining returns on research and development and have found it increasingly hard to develop assets.

  • We pared our holdings in Roche Holding and Sanofi after strong performance, and we exited Morphosys a German biotechnology company. We have lost conviction in the thesis that the clinical profile of Monjuvi, a treatment for lymphatic cancer, will translate into commercial strength owing to waning confidence in management and keener-than-anticipated competition.

Materials

We moved to an overweight allocation to materials. We have added high-quality names that we believe are on the right side of change, as clients switch to paper-based packaging away from plastic. Pulp prices are also increasing, which restores pricing power to our holdings as demand strengthens for their products.�

Our largest industry exposure is to containers and packaging, where we own Verallia, Europe's biggest maker of glass containers. We are also overweight chemicals, where our main holding is Symrise,�a supplier of flavorings and fragrances to food, beverage, cosmetic, and personal care producers; and forest products, where we own Stora Enso,�a Sweden-based integrated paper, board, and wood products producer.

  • We initiated a position in Mayr-Melnof Karton, a paper and packaging company that is Europe's largest producer of cartonboard used in consumer packaging. In our view, the company's consistent record of earnings and profit growth over the past 20 years is not reflected in its valuation. The company may also improve its growth exposure by using surplus cash to consolidate the market, which is benefiting from the replacement of plastic packaging.��

Sectors

Total
Sectors
10
Largest Sector Industrials & Business Services 20.05% Was (31-Jul-2021) 20.55%
Other View complete Sector Diversification

Monthly Data as of 31-Aug-2021

Indicative Benchmark: FTSE Developed Europe ex United Kingdom Index

Top Contributor^

Communication Services
Net Contribution 0.37%
Sector
0.00%
Selection 0.37%

Top Detractor^

Information Technology
Net Contribution -0.42%
Sector
-0.02%
Selection
-0.39%

^Relative

Quarterly Data as of 30-Jun-2021

Largest Overweight

Consumer Discretionary
By3.84%
Fund 16.17%
Indicative Benchmark 12.33%

Largest Underweight

Consumer Staples
By-4.66%
Fund 5.39%
Indicative Benchmark 10.05%

Monthly Data as of 31-Aug-2021

31-Aug-2021 - Tobias Mueller, Portfolio Manager ,
Positioning activity was light in August, when market liquidity tends to be thin. We pared the largest sector positions in the portfolio, consumer discretionary and industrials and business services, for stock specific reasons. In the former, we added to our holding in an eye ware company whose earnings, we believe, will grow strongly as economies reopen. In the latter, we further reduced our position in an engineering company that makes seals and joining products. The shares have had a strong run and may struggle in slower growth conditions.

Countries

Total
Countries
11
Largest Country Germany 17.03% Was (31-Jul-2021) 17.22%
Other View complete Country Diversification

Monthly Data as of 31-Aug-2021

Indicative Benchmark: FTSE Developed Europe ex United Kingdom Index

Top Contributor^

Germany
Net Contribution 0.42%
Country
0.02%
Selection 0.40%

Top Detractor^

Switzerland
Net Contribution -0.54%
Country
-0.12%
Selection
-0.42%

^Relative

Quarterly Data as of 30-Jun-2021

Largest Overweight

Italy
By5.06%
Fund 10.00%
Indicative Benchmark 4.95%

Largest Underweight

France
By-8.57%
Fund 13.23%
Indicative Benchmark 21.79%

Monthly Data as of 31-Aug-2021

30-Sep-2019 - Dean Tenerelli, Portfolio Manager ,
We deepened our underweight allocation in consumer staples, the largest in the portfolio, by selling Essity Aktiebolag, a global hygiene products company, taking profits after a strong run. In our view, the margin-improvement thesis has largely played out and is factored into the share price. Raw material prices have also started to decline, and the company could find it more challenging to maintain price increases. Consequently, the shares may struggle to rise much further. In contrast, we increased our overweight exposure to industrial and business services, health care and real estate.

Team (As of 10-Sep-2021)

Tobias Mueller, CFA

Tobias Mueller is a regional portfolio manager for the European Select Strategy, effective October 2018, and for the Europe Equity and Europe ex-UK Equity Strategies, effective October 2020. He is a vice president of T. Rowe Price International Ltd.

Tobias’s investment experience began in 2006, and he has been with T. Rowe Price since 2011, beginning in the medical technology and exchange sectors as a research analyst in the Equity Division. Prior to this, Tobias completed an internship at the firm in 2010 and was employed by Lehman Brothers in the Principal Finance Group in London, where he focused on distressed fixed income assets.

Tobias earned an M.B.A. from the University of Chicago, Booth School of Business and is a graduate of business administration from the University of Applied Sciences in Munich, Germany. He also has earned the Chartered Financial Analyst® designation.

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

  • Fund manager
    since
    2020
  • Years at
    T. Rowe Price
    10
  • Years investment
    experience
    15
Andrew Clifton

Andrew Clifton is a portfolio specialist in the Equity Division. He is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price International Ltd.

Andrew’s investment experience began in 1990, and he has been with T. Rowe Price since 2010, beginning in the Investment Specialist Group. Prior to this, Andrew was employed by UBS as an executive director at Global Asset Management. Andrew also was a vice president at Merrill Lynch.

Andrew earned a B.Sc. in economics from the London School of Economics and an M.Sc. in econometrics from the University of Southampton.

  • Years at
    T. Rowe Price
    11
  • Years investment
    experience
    32

Fee Schedule

Share Class Minimum Initial Investment and Holding Amount (EUR) Minimum Subsequent Investment (EUR) Minimum Redemption Amount (EUR) Sales Charge (up to) Investment Management Fee (up to) Ongoing Charges UK Tax Reporting Status
Class I €2,500,000 €100,000 €0 0.00% 65 basis points 0.75% Yes
Class Q €1,000 €100 €100 0.00% 65 basis points 0.82% Yes

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

T. Rowe Price Funds SICAV and its sub-funds are domiciled in Luxembourg and therefore considered offshore funds for UK tax purposes. Selected share classes of T. Rowe Price Funds SICAV have been designated “Reporting Funds” by HM Revenue & Customs (HMRC) under the guidelines of the UK Offshore Funds Regulation. These share classes report all relevant tax information to HMRC on an annual basis. Details on the information reported are outlined in the SICAV Shareholder Tax Reporting document that is available in the Fund Range Docs drop-down. Investors in “Reporting Fund” share classes who are considered United Kingdom residents for tax purposes will have any accrued gains treated as a capital gain rather than income upon sale or other disposal of their shares.