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SICAV

Emerging Markets Bond Fund

Active investment in mainly sovereign emerging-market bonds.

ISIN LU0207127753 Bloomberg TRPGEBI:LX

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

-2.78%
$300.1m

1YR Return
(View Total Returns)

Manager Tenure

-13.58%
15yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

0.01
2.31%

Inception Date 31-Dec-2004

Performance figures calculated in USD

Other Literature

29-Feb-2020 - Michael Conelius, Portfolio Manager,
Slowing global growth remains a headwind, although accommodative monetary policy globally and the significant stock of negative-yielding debt in developed markets have been supportive for emerging markets debt. Despite exposure to the global risk environment, we remain cautiously optimistic on the asset class as it offers one of the highest-yielding opportunities in the fixed income market and has been increasingly durable through market corrections.
Michael J.  Conelius
Michael J. Conelius, Portfolio Manager

Michael Conelius is a portfolio manager in the Fixed Income Division at T. Rowe Price. Mr. Conelius is lead manager of T. Rowe Price's Emerging Markets Bond Strategy. He is a vice president of T. Rowe Price Group, Inc., T. Rowe Price Associates, Inc., and T. Rowe Price International Ltd.

Click for Manager Outlook
 

Strategy

Manager's Outlook

While uneven global growth and the U.S.-China trade war remained headwinds throughout 2019, accommodative monetary policy globally and the significant stock of negative-yielding debt in developed markets were highly supportive for emerging markets (EM) debt.

Despite exposure to the global risk environment, we remain cautiously optimistic on the asset class as it offers one of the highest-yielding opportunities in the fixed income market and has proven increasingly durable through market corrections. After a strong rally in 2019, spreads remain at reasonable levels relative to history. This income provides a substantial buffer to exogenous volatility and offers materially better carry than comparable developed markets bonds. Also, a more dovish Fed has given emerging markets room for easier monetary policy and may support nondollar currencies.

Economic fundamentals remain broadly supportive across emerging markets. In the near term, we think exogenous macro risks along with several idiosyncratic factors within EM will likely be the key drivers, including the U.S. elections; global growth; China (trade war and domestic fiscal stimulus); and the policy path in South Africa, Turkey, Argentina, and other higher-beta emerging markets.

We are positioned relatively conservatively, focusing on idiosyncratic opportunities with positive reform momentum, such as Brazil and Ukraine, as well as markets that are underpriced relative to their fundamental risks, such as South Africa and Mexico. While we maintain our structural underweight to low-beta countries, we have added to several defensive countries, such as Indonesia, Russia, and the Gulf States.

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 emerging market issuers.

Investment Approach

  • Focus primarily on sovereign debt.
  • Integrate proprietary credit research and relative value analysis.
  • Establish independent credit rating at the country and corporate issuer level.
  • Add value through active country allocation and individual security selection decisions.
  • Limit risk through diversification.
  • Employ long-term investment horizon.

Portfolio Construction

  • Diversified portfolio structure: typically 200-300 securities
  • Duration bands: managed within +/- 1 year of the benchmark
  • Average credit quality: BB
  • Country exposure will range between 0% and 10%
  • Expected tracking error: 200-400 bps

Performance (Class I)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Since Manager Inception
Annualised
Fund % -13.58% -2.78% 1.84% 3.69% 5.19%
Indicative Benchmark % -6.84% 0.42% 2.82% 4.94% 6.14%
Excess Return % -6.74% -3.20% -0.98% -1.25% -0.95%

Inception Date 31-Dec-2004

Manager Inception Date 31-Dec-2004

Indicative Benchmark: J.P. Morgan Emerging Markets Bond Index Global Diversified

Data as of  31-Mar-2020

Performance figures calculated in USD

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Fund % -13.58% -2.78% 1.84% 3.69%
Indicative Benchmark % -6.84% 0.42% 2.82% 4.94%
Excess Return % -6.74% -3.20% -0.98% -1.25%

Inception Date 31-Dec-2004

Indicative Benchmark: J.P. Morgan Emerging Markets Bond Index Global Diversified

Data as of  31-Mar-2020

Performance figures calculated in USD

Recent Performance

  Month to DateData as of 08-Apr-2020 Quarter to DateData as of 08-Apr-2020 Year to DateData as of 08-Apr-2020 1 MonthData as of 31-Mar-2020 3 MonthsData as of 31-Mar-2020
Fund % -0.37% -0.37% -18.43% -18.56% -18.13%
Indicative Benchmark % 0.09% 0.09% -13.30% -13.85% -13.38%
Excess Return % -0.46% -0.46% -5.13% -4.71% -4.75%

Inception Date 31-Dec-2004

Indicative Benchmark: J.P. Morgan Emerging Markets Bond Index Global Diversified

Indicative Benchmark: J.P. Morgan Emerging Markets Bond Index Global Diversified

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.

29-Feb-2020 - Michael Conelius, Portfolio Manager,
Emerging markets debt produced negative returns in February. Investor demand for yield drove gains in emerging markets early in the month. Risk appetite, however, fell sharply later in the month as the coronavirus unexpectedly spread outside of China where it originated. Within the portfolio, security selection within Brazil hindered relative performance. Our positions in higher-yielding corporates underperformed amid market volatility. Similarly, security selection within Mexico was negative. For example, our position in state-owned oil company Petroleos Mexicanos underperformed as oil prices fell. Conversely, our out-of-benchmark allocation to Venezuela added to relative performance on light volumes, as the country’s bonds seldom trade. Our underweight allocation to Lebanon also supported relative results. Bond prices fell further as odds of a near-term default increased amid domestic political pressure to seek a restructuring.

Holdings

Issuers

Top
Issuers
10
Top 10 Issuers 30.40% Was (29-Feb-2020) 34.50%
Other View Top 10 Issuers

Monthly data as of 31-Mar-2020

Holdings

Total
Holdings
263
Largest Holding Petrobras Global Finance BV 4.04% Was (30-Sep-2019) 3.90%
Top 10 Holdings 21.17%
Other View Full Holdings Quarterly data as of 31-Mar-2020

Quality Rating View quality analysis

  Largest Overweight Largest Underweight
Quality Rating Reserves A
By % 15.78% -16.99%
Fund 15.78% 2.21%
Indicative Benchmark 0.00% 19.20%

Average Credit Quality

BB-

Monthly Data as of 31-Mar-2020
Indicative Benchmark:  J.P. Morgan Emerging Markets Bond Index Global Diversified

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 10+ Years
By % 16.37% -8.07%
Fund 16.37% 27.56%
Indicative Benchmark 0.00% 35.63%

Weighted Average Maturity

12.12 Years

Monthly Data as of 31-Mar-2020
Indicative Benchmark:  J.P. Morgan Emerging Markets Bond Index Global Diversified

Duration View duration analysis

  Largest Overweight Largest Underweight
Duration Cash Equivalents 1-3 Years
By % 15.78% -11.22%
Fund 15.78% 6.60%
Indicative Benchmark 0.00% 17.82%

Weighted Average Duration

6.30 Years

Monthly Data as of 31-Mar-2020
Indicative Benchmark:  J.P. Morgan Emerging Markets Bond Index Global Diversified

31-Dec-2019 - Michael Conelius, Portfolio Manager,

We are overweight countries pursuing reform agendas that target long-term growth:

Brazil

Brazil remains our largest overweight. We added to our overweight throughout the quarter, with a preference for bonds from quasi-sovereign oil company Petrobras as the company continues to improve its credit profile. We are also invested in sovereign debt as well as corporate debt from several issuers in the consumer-oriented sectors that benefit from domestic economic recovery.

Ukraine

Ukraine is a meaningful overweight in the portfolio. Recent elections led to a majority for President Volodymyr Zelensky's party, creating a strong mandate for reform and commitment to the IMF program. Inflation has been falling, and growth has ticked up.

South Africa

We maintain a sizable overweight in South Africa, but we reduced our exposure over the quarter due to slowing growth and reform momentum. The country has been pursuing a reform program with the potential to lift economic growth from a very low base. Our holdings favor quasi-sovereign utility company Eskom, which offers attractive relative value over the sovereign.

We remain underweight countries that offer limited risk-adjusted return potential:

Qatar, Saudi Arabia, the United Arab Emirates, and Kuwait

Qatar, Saudi Arabia, United Arab Emirates, and Kuwait are recent additions to the benchmark, and our positioning has not kept up with their gradual inclusions. We added to National Bank of Kuwait and Emirati corporate Emirates Bank, however, as they provide an incremental yield advantage over the sovereign. Our underweight to these higher-quality, low-yielding sovereigns is consistent with our structural underweight to such countries.

The Philippines

We remain underweight the Philippines as its external debt provides generally uninspiring relative value due to its lower yields.

Russia

Despite a conservative fiscal policy, solid credit metrics, and support from recovering oil prices, we remain cautious on the country due to the persisting risk of additional sanctions. However, as these risks abated somewhat during the quarter, we added to Russian holdings.

Sectors

Total
Sectors
4
Largest Sector Sovereign 49.88% Was (29-Feb-2020) 61.45%
Other View complete Sector Diversification

Monthly Data as of 31-Mar-2020

Indicative Benchmark: J.P. Morgan Emerging Markets Bond Index Global Diversified

Largest Overweight

Corporate
By22.32%
Fund 22.32%
Indicative Benchmark 0.00%

Largest Underweight

Sovereign
By-32.82%
Fund 49.88%
Indicative Benchmark 82.70%

Monthly Data as of 31-Mar-2020

29-Feb-2020 - Michael Conelius, Portfolio Manager,
In the near term, we think global macroeconomic risks along with several idiosyncratic factors within emerging markets will likely be the key drivers. We are overweight select quasi-sovereign companies, including Petrobras, that will likely benefit from reforms and offer attractive carry pickup versus the sovereign. We have also added to our corporate exposure on more attractive relative value, focusing on consumer-oriented companies in higher-quality markets.

Countries

Total
Countries
50
Largest Country Brazil 13.30% Was (29-Feb-2020) 14.20%
Other View complete Country Diversification

Monthly Data as of 31-Mar-2020

Indicative Benchmark: J.P. Morgan Emerging Markets Bond Index Global Diversified

Largest Overweight

Brazil
By10.08%
Fund 13.30%
Indicative Benchmark 3.22%

Largest Underweight

Philippines
By-3.03%
Fund 0.34%
Indicative Benchmark 3.37%

Monthly Data as of 31-Mar-2020

29-Feb-2020 - Michael Conelius, Portfolio Manager,
We are positioned relatively conservatively, focusing on idiosyncratic opportunities with positive reform momentum, such as Brazil and Ukraine, as well as markets that are underpriced relative to their fundamental risks, such as Mexico and Vietnam. While we maintain our structural underweight to low-beta countries, we have added to several defensive countries, such as Israel, Russia, and Saudi Arabia.

Currency

Total
Currencies
6
Largest Currency U.S. dollar 99.73% Was (29-Feb-2020) 99.84%
Other View complete Currency Diversification

Monthly Data as of 31-Mar-2020

Indicative Benchmark : J.P. Morgan Emerging Markets Bond Index Global Diversified

Largest Overweight

Brazilian real
By 0.24%
Fund 0.24%
Indicative Benchmark 0.00%

Largest Underweight

U.S. dollar
By -0.27%
Fund 99.73%
Indicative Benchmark 100.00%

Monthly Data as of 31-Mar-2020

31-Oct-2015 - Michael Conelius, Portfolio Manager,
Given our expectations for continued U.S. dollar strength, we maintained a low and defensive level of non-benchmark currency exposure.

Team (As of 31-Mar-2020)

Michael J.  Conelius

Michael Conelius is a portfolio manager in the Fixed Income Division at T. Rowe Price. Mr. Conelius is lead manager of T. Rowe Price's Emerging Markets Bond Strategy. He is a vice president of T. Rowe Price Group, Inc., T. Rowe Price Associates, Inc., and T. Rowe Price International Ltd.

Mr. Conelius has 31 years of investment experience, all of them at T. Rowe Price. Prior to joining the firm in 1988, he was a consultant for Booz Allen Hamilton.

Mr. Conelius earned a B.S. in finance from Towson University and an M.S. in finance from Loyola University Maryland. Mr. Conelius has also earned the Chartered Financial Analyst designation.

  • Fund manager
    since
    2004
  • Years at
    T. Rowe Price
    31
  • Years investment
    experience
    31

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 UK Tax Reporting Status
Class A $15,000 $100 $100 5.00% 125 basis points 1.42% No
Class I $2,500,000 $100,000 $0 0.00% 65 basis points 0.75% No
Class Q $15,000 $100 $100 0.00% 65 basis points 0.82% No
Class Sd $10,000,000 $0 $0 0.00% 0 basis points 0.10% No

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. 

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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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