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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)

6.01%
$545.5m

1YR Return
(View Total Returns)

Manager Tenure

11.19%
14yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

-0.21
2.12%

Inception Date 31-Dec-2004

Performance figures calculated in USD

Other Literature

30-Jun-2019 - Michael Conelius, Portfolio Manager,
After a strong rebound in the first quarter, uncertainty has weighed on markets more recently driving up volatility. We remain cautiously optimistic about the emerging markets (EM) bond asset class as it offers one of the highest yielding opportunities in the fixed income market and has been increasingly durable through market corrections. Despite a strong rally, spreads remain at attractive levels relative to history with yields now three times those of Treasuries. EM fundamentals remain broadly supportive.
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.

 

Strategy

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 % 11.19% 6.01% 4.85% 7.75% 6.82%
Indicative Benchmark % 12.45% 5.47% 5.30% 7.78% 7.28%
Excess Return % -1.26% 0.54% -0.45% -0.03% -0.46%

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  30-Jun-2019

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Fund % 11.19% 6.01% 4.85% 7.75%
Indicative Benchmark % 12.45% 5.47% 5.30% 7.78%
Excess Return % -1.26% 0.54% -0.45% -0.03%

Inception Date 31-Dec-2004

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

Data as of  30-Jun-2019

Performance figures calculated in USD

Recent Performance

  Month to DateData as of 15-Jul-2019 Quarter to DateData as of 15-Jul-2019 Year to DateData as of 15-Jul-2019 1 MonthData as of 30-Jun-2019 3 MonthsData as of 30-Jun-2019
Fund % 0.04% 0.04% 11.86% 3.75% 4.00%
Indicative Benchmark % 0.44% 0.44% 11.80% 3.40% 4.08%
Excess Return % -0.40% -0.40% 0.06% 0.35% -0.08%

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.

30-Jun-2019 - Michael Conelius, Portfolio Manager,
EM debt generated strong returns in June. Despite ongoing concerns about potential weakness in global growth stemming from trade disputes and increased geopolitical tensions, investors sought higher-yielding assets as core bond yields generally declined. Within the portfolio, our overweight allocation to Venezuela held back relative performance. Lack of political momentum following the initial enthusiasm for opposition leader Juan Guiado weighed on the country. Our out-of-benchmark position in the Bahamas was also a slight drag on relative returns as the more defensive sovereign lagged advances in the broader market amid investors’ increased appetite for risk. Conversely, our overweight to Argentina contributed to relative performance, as the country’s bonds partially recovered amid a slowdown in inflation and an improving political outlook. Our overweight allocation to Ukraine, which benefitted after recently elected president Volodymyr Zelensky signalled his intentions to continue working with the IMF, also added to relative results.

Holdings

Issuers

Top
Issuers
10
Top 10 Issuers 38.08% Was (31-May-2019) 39.35%
Other View Top 10 Issuers

Monthly data as of 30-Jun-2019

Holdings

Total
Holdings
254
Largest Holding Petrobras Global Finance BV 3.55% Was (31-Mar-2019) 4.05%
Top 10 Holdings 20.59%
Other View Full Holdings Quarterly data as of 30-Jun-2019

Quality Rating View quality analysis

  Largest Overweight Largest Underweight
Quality Rating B A
By % 10.95% -13.71%
Fund 40.72% 3.01%
Indicative Benchmark 29.77% 16.71%

Average Credit Quality

BB-

Monthly Data as of 30-Jun-2019
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 7-10 Years 10+ Years
By % 6.31% -15.29%
Fund 27.34% 18.16%
Indicative Benchmark 21.03% 33.45%

Weighted Average Maturity

9.70 Years

Monthly Data as of 30-Jun-2019
Indicative Benchmark:  J.P. Morgan Emerging Markets Bond Index Global Diversified

Duration View duration analysis

  Largest Overweight Largest Underweight
Duration 5-7 Years Over 10 Years
By % 8.81% -7.35%
Fund 33.37% 18.50%
Indicative Benchmark 24.56% 25.85%

Weighted Average Duration

6.46 Years

Monthly Data as of 30-Jun-2019
Indicative Benchmark:  J.P. Morgan Emerging Markets Bond Index Global Diversified

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

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

Brazil

We added to Brazil, making it our largest overweight. We maintained 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. In addition to quasi-sovereign debt, the fund holds sovereign bonds, both dollar-denominated and partially hedged local currency sovereign bonds. We also invest in debt from several corporate issuers in the consumer-oriented sectors that benefit from domestic economic recovery.

South Africa

Though the fund remains overweight South Africa, we trimmed holdings following strong performance and now positions are biased toward quasi-sovereign utility company Eskom. While reform momentum could slow approaching elections in May 2019, we are optimistic about a pro-reform election outcome. The country's assets offer attractive relative value.

Turkey

Turkey remains a meaningful overweight; however, positioning changed intra-quarter. Exposure to Turkey was trimmed earlier in the quarter when valuations had become less justifiable for the underlying risks. Then following the sharp sell-off in March, we tactically added into dislocations.

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

Russia

We further reduced allocation to Russia, due to increased risk of additional sanctions. While the country's credit profile is largely solid, supported by its conservative fiscal policy, and oil prices, these had largely been priced in.

Philippines

The Philippines is also a notable underweight, primarily due to the unattractive relative value of its external sovereign debt. The country is supported by strong local ownership and consistent fiscal discipline.

Peru, Uruguay, and Chile

We have underweight allocations to Peru, Uruguay, and Chile as these higher-rated sovereigns offer low yields, and we sought better value elsewhere.

Sectors

Total
Sectors
5
Largest Sector Sovereign 62.21% Was (31-May-2019) 59.26%
Other View complete Sector Diversification

Monthly Data as of 30-Jun-2019

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

Largest Overweight

Corporate
By16.17%
Fund 16.17%
Indicative Benchmark 0.00%

Largest Underweight

Sovereign
By-20.53%
Fund 62.21%
Indicative Benchmark 82.74%

Monthly Data as of 30-Jun-2019

30-Jun-2019 - Michael Conelius, Portfolio Manager,
Fundamentals remain broadly supportive. This includes stable underlying economic growth, more disciplined government spending, largely balanced current accounts, and rational economic policy in most major markets. However, developed markets-led risks could cause continued volatility and challenge liquidity, leaving us somewhat cautious on corporates and select frontier markets. We are overweight select quasi-sovereign companies, which should benefit from reforms and offer attractive carry pickup versus the sovereign, including Eskom and Petrobras.

Countries

Total
Countries
54
Largest Country Brazil 9.80% Was (31-May-2019) 10.14%
Other View complete Country Diversification

Monthly Data as of 30-Jun-2019

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

Largest Overweight

Brazil
By6.79%
Fund 9.80%
Indicative Benchmark 3.01%

Largest Underweight

Russia
By-3.19%
Fund 0.00%
Indicative Benchmark 3.19%

Monthly Data as of 30-Jun-2019

30-Jun-2019 - Michael Conelius, Portfolio Manager,
We are positioned somewhat conservatively, focussing on idiosyncratic opportunities with positive reform momentum, such as Brazil and South Africa, as well as markets that are underpriced relative to their fundamental risks, such as Argentina and Ukraine. We maintained our structural underweight to low-beta countries, such as China, the Philippines, and Chile. We continued to reduce our overweight exposure to Turkey.

Currency

Total
Currencies
13
Largest Currency U.S. dollar 97.82% Was (31-May-2019) 98.58%
Other View complete Currency Diversification

Monthly Data as of 30-Jun-2019

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

Largest Overweight

Egyptian pound
By 0.48%
Fund 0.48%
Indicative Benchmark 0.00%

Largest Underweight

U.S. dollar
By -2.18%
Fund 97.82%
Indicative Benchmark 100.00%

Monthly Data as of 30-Jun-2019

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 01-Jul-2019)

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 Minimum Subsequent Investment Minimum Redemption Amount 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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