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SICAV

Emerging Markets Corporate Bond Fund

Accessing diversified emerging market corporate debt.

ISIN LU0596126465 Bloomberg TRPEMCI:LX

3YR Return Annualised
(View Total Returns)

Total Assets
(USD)

6.33%
$132.2m

1YR Return
(View Total Returns)

Manager Tenure

11.34%
3yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

0.03
1.24%

Inception Date 18-May-2011

Performance figures calculated in USD

Other Literature

30-Jun-2019 - Samy Muaddi, Portfolio Manager,
Concerns about slowing global growth, questionable monetary policy, trade wars, and geopolitical uncertainty, among other factors, have made markets jittery. Despite these exogenous macro risks, we believe the long-term outlook for emerging markets corporate debt remains broadly supportive, underpinned by healthy balance sheets, stable underlying economic growth, and rising middle class wealth. As a result, the emerging market corporate default rate is at its five-year low.
Samy Muaddi
Samy Muaddi, Portfolio Manager

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

 

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 corporate bonds from emerging market issuers.

Investment Approach

  • Focus primarily on corporate debt issued by companies domiciled within emerging market countries.
  • Integrate proprietary credit research and relative value analysis.
  • Establish independent credit rating for each company and country.
  • Add value primarily through individual security selection decisions.
  • Limit risk through diversification.
  • Employ long-term investment horizon combined with low portfolio turnover.
  • Utilize collaboration across macroeconomic, equity and corporate debt teams to take a comprehensive view of corporate debt securities.
  • Diversification cannot assure a profit or protect against loss in a declining market.

Portfolio Construction

  • Diversified portfolio structure: typically 100-150 securities
  • Duration bands: managed within +/- 1 year of the benchmark
  • Expected average credit quality: BB
  • Maximum corporate issuer exposure of 3%
  • Country exposure will range between +/- 20% of index
  • Corporate sector exposure will range between +/- 20% of index
  • Expected tracking error will range between 250 - 450 bps

Performance (Class I)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Since Manager Inception
Annualised
Fund % 11.34% 6.33% 4.89% 5.47% 7.70%
Indicative Benchmark % 10.21% 5.54% 4.84% 5.31% 6.65%
Excess Return % 1.13% 0.79% 0.05% 0.16% 1.05%

Inception Date 18-May-2011

Manager Inception Date 30-Sep-2015

Indicative Benchmark: J.P. Morgan Corporate Emerging Market Bond Index Broad Diversified

Data as of  30-Jun-2019

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Fund % 11.34% 6.33% 4.89% 5.47%
Indicative Benchmark % 10.21% 5.54% 4.84% 5.31%
Excess Return % 1.13% 0.79% 0.05% 0.16%

Inception Date 18-May-2011

Indicative Benchmark: J.P. Morgan Corporate Emerging Market Bond Index Broad Diversified

Data as of  30-Jun-2019

Performance figures calculated in USD

Recent Performance

  Month to DateData as of 16-Jul-2019 Quarter to DateData as of 16-Jul-2019 Year to DateData as of 16-Jul-2019 1 MonthData as of 30-Jun-2019 3 MonthsData as of 30-Jun-2019
Fund % 0.71% 0.71% 9.92% 2.26% 3.56%
Indicative Benchmark % 0.40% 0.40% 9.27% 2.20% 3.50%
Excess Return % 0.31% 0.31% 0.65% 0.06% 0.06%

Inception Date 18-May-2011

Indicative Benchmark: J.P. Morgan Corporate Emerging Market Bond Index Broad Diversified

Indicative Benchmark: J.P. Morgan Corporate Emerging Market Bond Index Broad 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 - Samy Muaddi, Portfolio Manager,
EM corporate debt produced solid gains 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 base yields generally declined. Within the portfolio, the financial sector aided relative performance due to our underweight allocation and effective security selection. The relatively defensive sector lagged the performance of the broader market amid increased risk appetite. For example, our selection of higher-yielding Turkish banks Akbank and Garanti outperformed as Turkish assets partially recovered from recent weakness. Our out-of-benchmark allocation to select sovereign bonds supported relative performance further. Argentina, Egypt, and South African sovereigns advanced amid expectations of more accommodative central banks and stronger growth. Conversely, our selection of higher-quality issuers within the metals and mining sector underperformed as riskier assets, notably First Quantum, rallied. Security selection within the consumer sector was also a modest drag on results.

Holdings

Issuers

Top
Issuers
10
Top 10 Issuers 15.39% Was (31-May-2019) 15.06%
Other View Top 10 Issuers

Monthly data as of 30-Jun-2019

Holdings

Total
Holdings
160
Largest Holding Globo Comunicacao E Participacoes 1.51% Was (31-Mar-2019) 1.49%
Top 10 Holdings 12.70%
Other View Full Holdings Quarterly data as of 30-Jun-2019

Quality Rating View quality analysis

  Largest Overweight Largest Underweight
Quality Rating BB A
By % 12.92% -12.72%
Fund 34.39% 6.62%
Indicative Benchmark 21.47% 19.34%

Average Credit Quality

BB

Monthly Data as of 30-Jun-2019
Indicative Benchmark:  J.P. Morgan Corporate Emerging Market Bond Index Broad 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 % 11.12% -8.11%
Fund 29.46% 6.77%
Indicative Benchmark 18.33% 14.87%

Weighted Average Maturity

6.83 Years

Monthly Data as of 30-Jun-2019
Indicative Benchmark:  J.P. Morgan Corporate Emerging Market Bond Index Broad Diversified

Duration View duration analysis

  Largest Overweight Largest Underweight
Duration 5-7 Years 1-3 Years
By % 8.18% -5.55%
Fund 28.51% 17.54%
Indicative Benchmark 20.33% 23.09%

Weighted Average Duration

5.14 Years

Monthly Data as of 30-Jun-2019
Indicative Benchmark:  J.P. Morgan Corporate Emerging Market Bond Index Broad Diversified

31-Mar-2019 - Samy Muaddi, Portfolio Manager,

Domestic Demand Could Drive Opportunities for Growth

The portfolio is overweight the technology, media, and telecommunications sector but modestly decreased holdings in the defensive sector. We eliminated holdings of Digicel amid deteriorating fundamentals.

We trimmed our overweight to the real estate sector, though it remains the largest overweight. We initiated a new position in high-yielding Chinese property developer Evergrande amid a stable outlook for the Chinese property sector. We also added to our holdings of Country Garden.

We maintained the portfolio's overweight allocation to the industrial sector. We added to quasi-sovereign Israel Chemical on improved relative value.

Underweight Lower-Yielding and Less-Attractive Risk-Adjusted Relative Value Sectors

The financials sector remains the largest underweight, and we further reduced financial holdings during the quarter. After an extended period of positive performance, we eliminated holdings of Itau and Banco Macro.

The oil and gas sector is a meaningful underweight, and we reduced our allocation to the sector by eliminating Petroleos Mexicanos early in the quarter amid policy uncertainty in Mexico. The portfolio remains focused on quasi-sovereigns such as Abu Dhabi National Energy and Petrobras.

Though we maintained our underweight allocation to the metals and mining sector, we added to holdings. We added to Vedanta and Tata Steel as investor sentiment toward India improved ahead of elections.

Credit Quality Considerations

From a secular perspective, we continue to favor BBB to B credits. These segments generally offer opportunities to identify companies with improving fundamentals that are rating upgrade candidates or provide a stable and attractive risk-adjusted yield.

A portion of our increased positions in BB rated names was built tactically via dislocations following the sharp sell-off of Turkish assets in March 2019, such as Turk Sise Ve Cam and Turk Telekom. We continue to generally avoid distressed issuers in the CCC and below segment given their increased volatility and history of poor risk-adjusted returns.

Sectors

Total
Sectors
14
Largest Sector TMT 20.10% Was (31-May-2019) 19.13%
Other View complete Sector Diversification

Monthly Data as of 30-Jun-2019

Indicative Benchmark: J.P. Morgan Corporate Emerging Market Bond Index Broad Diversified

Largest Overweight

TMT
By8.36%
Fund 20.10%
Indicative Benchmark 11.74%

Largest Underweight

Financial
By-16.65%
Fund 12.89%
Indicative Benchmark 29.55%

Monthly Data as of 30-Jun-2019

30-Jun-2019 - Samy Muaddi, Portfolio Manager,
We focus on companies that we believe are well-positioned to benefit from domestic economic growth, such as those in real estate and consumer-related sectors. In contrast, the portfolio continues to place less emphasis on financials, given rich valuations in some areas and poor transparency. We have also established underweight allocations to extractive sectors, such as the oil and gas sector.

Countries

Total
Countries
36
Largest Country China 15.94% Was (31-May-2019) 14.82%
Other View complete Country Diversification

Monthly Data as of 30-Jun-2019

Indicative Benchmark: J.P. Morgan Corporate Emerging Market Bond Index Broad Diversified

Largest Overweight

China
By7.96%
Fund 15.94%
Indicative Benchmark 7.99%

Largest Underweight

South Korea
By-4.25%
Fund 0.00%
Indicative Benchmark 4.25%

Monthly Data as of 30-Jun-2019

31-Dec-2016 - Samy Muaddi, Portfolio Manager,
Countries with strong reform agendas including Brazil, Argentina, and Indonesia, remain a key focus of the strategy. On the other hand, we have trimmed our exposure to Mexico, largely through longer-maturity industrials, given the uncertainties around the potential renegotiation of North American free trade agreements

Currency

Total
Currencies
3
Largest Currency U.S. dollar 100.00% Was (31-May-2019) 100.00%
Other View complete Currency Diversification

Monthly Data as of 30-Jun-2019

Indicative Benchmark : J.P. Morgan Corporate Emerging Market Bond Index Broad Diversified

Largest Overweight

Canadian dollar
By 0.00%
Fund 0.00%
Indicative Benchmark 0.00%

Largest Underweight

U.S. dollar
By -0.00%
Fund 100.00%
Indicative Benchmark 100.00%

Monthly Data as of 30-Jun-2019

Team (As of 01-Jul-2019)

Samy Muaddi

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

Mr. Muaddi has 13 years of investment experience, all of which have been at T. Rowe Price. He joined the firm in 2006.

Mr. Muaddi earned a B.A., summa cum laude, in economics from the University of Maryland. He also has earned the Chartered Financial Analyst designation.

  • Fund manager
    since
    2015
  • Years at
    T. Rowe Price
    13
  • Years investment
    experience
    13

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% 135 basis points 1.52% No
Class I $2,500,000 $100,000 $0 0.00% 70 basis points 0.80% No
Class Q $15,000 $100 $100 0.00% 70 basis points 0.87% 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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