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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

European Smaller Companies Equity Fund

Seeking to identify tomorrow’s winning European growth companies.

ISIN LU0382931417 Bloomberg TPESCEI:LX

3YR Return Annualised
(View Total Returns)

Total Assets
(EUR)

13.76%
€199.6m

1YR Return
(View Total Returns)

Manager Tenure

41.98%
5yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

0.59
7.07%

Inception Date 26-Nov-2008

Performance figures calculated in EUR

31-Aug-2021 - Ben Griffiths, Portfolio Manager,
The strong economic rebound spurred by the lifting of lockdowns appears to be faltering as the Delta variant of the coronavirus surges and further disrupts supply chains, distribution and production. The risk is that this pressure may combine with the rolling back of fiscal support by governments and a reduction in stimulus by central banks as inflation picks up, raising the unwelcome prospect of a surge in unemployment.
Benjamin Griffiths
Benjamin Griffiths, Portfolio Manager

Ben Griffiths is the lead portfolio manager for the International Small-Cap Equity Strategy and the Europe Smaller Companies Equity Strategy in the International Equity Division. Ben is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price International Ltd.

Click for Manager Outlook
 

Strategy

Manager's Outlook

We remain in a period of huge uncertainty; never have so many countries across the globe simultaneously and intentionally suppressed economic activity and then tried to restart it. At present, the latest vaccine developments and rollouts via international health care systems provide some hope for an end to the pandemic, although some countries have reintroduced lockdown measures to combat a third wave.

Previous crises have offered us opportunities to buy great companies at reasonable valuations. With massive government stimulus measures combined with large amounts of liquidity, the current situation has meant that it has been harder to find these opportunities. Valuations in the European small-cap universe have risen appreciably in the market rally since the March correction. Further market risks are appearing with the reopening of economies, such as inflation and supply chain constraints and bottlenecks, although they may be transitory.

As economies rebound, there will be periods when more cyclical businesses perform better. Instead, we remain invested in the disruptive, online, and health care names that have been benefiting from the response to the pandemic. We believe that many of these companies have received a structural rather than a transitory boost, and our investment team is spending time trying to identify areas that will win over the coming years.

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 smaller publicly traded European companies.

Investment Approach

  • Invests in European small- and mid-cap companies capable of sustaining above-average, long-term earnings growth and selling at reasonable prices.
  • Benchmark-unconstrained approach exploits diverse opportunities in developed Europe, peripheral, and European Union (EU) accession countries.
  • Exposure to companies at different stages in the growth cycle offers the potential for more consistent performance across market cycles.
  • Long-term investment horizon emphasizes bottom-up stock selection as the primary source of excess return.
  • Dedicated London-based research team seeks companies with:~~Attractive industry structure.^^~~Compelling business models.^^~~Strong growth prospects.^^~~Solid management teams.^^~~Reasonable valuations.^^
  • 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 70-100 stock portfolio
  • Diversification at the security, country, region, and sector levels offers the potential for attractive risk-adjusted returns
  • Bias toward high-quality stocks provides the potential for downside risk protection
  • Risk parameters
    • Emerging Europe exposure: maximum 10%
    • Typical position size: 0.50% to 5.00%
    • Low turnover expected
    • Expected tracking error: 3% to 7%

Performance (Class I)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Since Manager Inception
Annualised
Fund % 41.98% 13.76% 16.41% 16.91% 13.47%
Indicative Benchmark % 43.61% 11.74% 12.23% 13.97% 10.04%
Excess Return % -1.63% 2.02% 4.18% 2.94% 3.43%

Inception Date 26-Nov-2008

Manager Inception Date 31-Dec-2015

Indicative Benchmark: MSCI Europe Small Cap Index Net

Data as of 31-Aug-2021

Performance figures calculated in EUR

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Fund % 44.83% 10.53% 16.10% 14.24%
Indicative Benchmark % 43.05% 9.44% 12.20% 11.56%
Excess Return % 1.78% 1.09% 3.90% 2.68%

Inception Date 26-Nov-2008

Indicative Benchmark: MSCI Europe Small Cap Index Net

Data as of 30-Jun-2021

Performance figures calculated in EUR

Recent Performance

  Month to DateData as of 24-Sep-2021 Quarter to DateData as of 24-Sep-2021 Year to DateData as of 24-Sep-2021 1 MonthData as of 31-Aug-2021 3 MonthsData as of 31-Aug-2021
Fund % -1.86% 6.82% 20.88% 4.89% 11.35%
Indicative Benchmark % -1.75% 5.41% 21.70% 3.47% 6.70%
Excess Return % -0.11% 1.41% -0.82% 1.42% 4.65%

Inception Date 26-Nov-2008

Indicative Benchmark: MSCI Europe Small Cap Index Net

Indicative Benchmark: MSCI Europe Small Cap Index Net

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.

Index returns shown with reinvestment of dividends after the deduction of withholding taxes. 

Effective 1 July 2018, 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 - Ben Griffiths, Portfolio Manager,
The MSCI Europe Small Cap Index rose in August on strong corporate earnings and hopes that continued central bank measures would support an economic recovery. Small-cap equities beat mid-cap and large-caps. At the portfolio level, the top-performing contributors were information technology (IT), industrials and business services and health care, mainly due to stock selection. Our overweight in IT was also supportive. Aixtron, a leading Germany-based provider of deposition equipment to the compound semiconductor industry, and Sensirion Holdings, a maker of temperature and humidity sensors, performed the best in IT. Aixtron continued its impressive advance, building on a surge in the share price in June when it raised revenue, earnings and order guidance. It raised its order guidance for 2021 once again on strong broad-based demand that it sees continuing in the second half of the year. Conversely, our largest absolute and relative detractor was Laboratorios Farmaceuticos Rovi, a Spanish pharmaceutical company. The shares fell sharply after it announced that some doses of Moderna’s coronavirus vaccine in Japan, made by Rovi, had some particle contamination. Our zero-weight exposure to energy was a mild drag on relative performance.

Holdings

Total
Holdings
107
Largest Holding Amplifon 2.56% Was (31-Mar-2021) 2.19%
Other View Full Holdings Quarterly data as of  30-Jun-2021
Top 10 Holdings 21.36% View Top 10 Holdings Monthly data as of  31-Aug-2021

Largest Top Contributor^

Amplifon
% of fund 2.55%

Largest Top Detractor^

Shop Apotheke Europe
% of fund 1.95%

^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

Montana Aerospace (N)
1.20%
Was (31-Mar-2021) 0%

Top Sale

Intermediate Capital
2.26%
Was (31-Mar-2021) 2.24%

Quarterly Data as of 30-Jun-2021

30-Jun-2021 - Ben Griffiths, Portfolio Manager,

Our Focus Remains on Quality, Cyclicals

We identified and initiated positions in several new and compelling opportunities and added to high-quality names that have, in general, underperformed. We also trimmed names where valuations are expensive or in which we have lost conviction, to make space for new ideas. We added six new names and eliminated four from the portfolio.

The strategy's profile continues to reflect our focus on durable growth companies with a sustainable competitive advantage. We maintained a bias toward health care and information technology. We also have overweight positions in consumer discretionary and communication services. We remained underweight in industrials and business services, real estate, and consumer staples. Since the fourth quarter of 2020, we have been rotating the portfolio to more cyclical names, which could benefit from the reopening of economies.

Industrials and Business Services

We reduced our large underweight in industrials and business services as we have added some more cyclicality to the portfolio. We have found few innovative durable growth companies in the sector, which is the biggest weight in the benchmark.

Our largest overweight is the professional services industry, where our main investment is Alpha Financial Markets Consulting, a leading consultant to the asset management, wealth management, and insurance industries. Another overweight is the building products industry, where Carel Industries, a provider of control technology and humidification for air conditioning and refrigeration, is our biggest position. Carel is also the largest holding in the sector.

  • We participated in the initial public offering of Montana Aerospace, a supplier of structural components to the aerospace industry. We believe the company can generate good margins while offering shorter lead times, lower costs, and simplification to customers. The stock also provides exposure to the cyclical recovery in the aerospace industry.

Financials

We adjusted our financials holdings, exiting a name in which we lost conviction and recycling funds into a company that is disrupting the direct insurance industry in Spain. 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 main sector overweight is in capital markets, where Draper Esprit, a pan-European venture capital fund that invests in disruptive technology companies at the early stages of growth, is our top holding.

  • We exited Hiscox, a specialist non-life insurer, preferring Spanish retail insurer Linea Directa Aseguradora. In our view, management and underwriting missteps have weighed on Hiscox, while the company also faces increasing competition in the U.S.
  • We participated in the initial public offering of Linea Directa Aseguradora, a Spanish retail insurer that was spun off from Bankinter. The company is the best-in-class Spanish motor insurer and the only direct insurer in the country, which gives it a competitive edge against peers in both underwriting and costs. It is now expanding into home insurance. We believe it can deliver an impressive return on equity and outgrow the Spanish market. The management team has an excellent record, and the balance sheet is debt-free.

Information Technology

Information technology (IT) is one of the portfolio's top bets, which is consistent with our growth approach. We trimmed some names that have performed strongly since vaccination breakthroughs were announced in November last year.

Our largest industry exposure now is to the semiconductors and semiconductor equipment, where our biggest position is Aixtron, a leading Germany-based provider of deposition equipment to the compound semiconductor industry. Here we continue to favor companies with innovative and resilient business models that are supported by solid bases of recurring revenues or driven by structural trends. The electronic equipment, components, and instruments industry is our next biggest allocation. Our biggest position is Strix, a designer and developer of kettle safety controls.

  • We reduced our allocation to Aixtron, while maintaining a large overweight position. The company is winning large orders and is a beneficiary of a switch from silicon-based devices to compound semiconductors.
  • We trimmed our holding in Amadeus IT, a leading provider of global distribution systems and IT solutions for the travel industry. The company has performed resiliently during the coronavirus pandemic and we believe it is best placed to be the dominant player in the industry. However, it may struggle in the months ahead as the resurgence of the coronavirus raises the prospect of delays in reopening economies.

Health Care

The health care sector is a key long-term bet that contains some of the portfolio's largest relative and absolute positions. We reduced some holdings whose valuation, in our view, is expensive, or which have suffered setbacks that may push back the successful achievement of the longer-term thesis.

Our largest industry allocations are health care providers and services, where we own shares in Amplifon, an Italian hearing aids company; life sciences tools and services, where our largest position is Eurofins Scientific, a leading global provider of bioanalytical laboratory testing services; and pharmaceuticals, where Spain-based Laboratorios Farmaceuticos Rovi is our main holding.

  • We reduced the size of our position in Amplifon. The shares have bounced sharply from the correction in March last year and they are now looking expensive.
  • We trimmed our holding in Ambu, a Denmark-based provider of diagnostic and life-supporting devices, after the company said it would delay the rollout of the duodenoscope. This stumble pushes out the fulfilment of our longer-term thesis that the company will gain significant market share with its single-use endoscopes and duodenoscopes.

Consumer Discretionary

The consumer discretionary sector is one of our largest exposures. The lifting of restrictions and a rapid vaccine rollout are releasing strong pent-up consumer spending, which is being deployed particularly in the hotels, restaurant and leisure, internet and direct marketing, leisure products, and retail industries. We continue to find initial public offering opportunities in the sector, which is marked by disruption and the move from offline to online.

Our largest industry bets are internet and direct marketing, where we hold Shop Apotheke Europe, an online retailer of pharmaceutical products, and leisure products, where our main investment is Mips, a maker of helmets for reducing rotational forces on the brain caused by impacts to the head.

  • We participated in the market launch of Victoria Plumbing, the UK's dominant online company in the bathroom market, attracted by a clear growth path and management's entrepreneurial drive. We believe the company, which has built up a significant scale advantage, could further expand its share of the market and deliver mid-teens growth over the medium term.

Sectors

Total
Sectors
9
Largest Sector Consumer Discretionary 18.24% Was (31-Jul-2021) 18.21%
Other View complete Sector Diversification

Monthly Data as of 31-Aug-2021

Indicative Benchmark: MSCI Europe Small Cap Index

Top Contributor^

Health Care
Net Contribution 0.54%
Sector
0.50%
Selection 0.04%

Top Detractor^

Consumer Discretionary
Net Contribution -1.19%
Sector
-0.24%
Selection
-0.95%

^Relative

Quarterly Data as of 30-Jun-2021

Largest Overweight

Health Care
By9.15%
Fund 18.01%
Indicative Benchmark 8.87%

Largest Underweight

Industrials & Business Services
By-8.54%
Fund 17.39%
Indicative Benchmark 25.93%

Monthly Data as of 31-Aug-2021

31-Aug-2021 - Ben Griffiths, Portfolio Manager,
We made very few changes to our positioning activity in August, a time of shallow market liquidity. We increased our exposure to IT, the portfolio’s largest allocation, adding to a holding that provides IT solutions to the travel industry on share-price weakness. We believe the company could become the market leader in this business segment. We also deepened our underweight position in materials, selling out of Huhtamaki, a Finland-based company engaged in the consumer and specialty packaging business, on share price strength. The shares have recoupled their sharp losses since March last year and have reached a record level.

Countries

Total
Countries
15
Largest Country United Kingdom 41.75% Was (31-Jul-2021) 42.02%
Other View complete Country Diversification

Monthly Data as of 31-Aug-2021

Indicative Benchmark: MSCI Europe Small Cap Index

Top Contributor^

Spain
Net Contribution 0.59%
Country
-0.09%
Selection 0.68%

Top Detractor^

Denmark
Net Contribution -0.50%
Country
-0.01%
Selection
-0.49%

^Relative

Quarterly Data as of 30-Jun-2021

Largest Overweight

United Kingdom
By10.30%
Fund 41.75%
Indicative Benchmark 31.45%

Largest Underweight

Sweden
By-7.15%
Fund 6.88%
Indicative Benchmark 14.03%

Monthly Data as of 31-Aug-2021

30-Sep-2018 - Ben Griffiths, Portfolio Manager,
By paring back our position in the aforementioned online payments processor, we reduced our exposure to Germany. Our country positions otherwise did not change materially during the month.

Team (As of 10-Sep-2021)

Benjamin Griffiths

Ben Griffiths is the lead portfolio manager for the International Small-Cap Equity Strategy and the Europe Smaller Companies Equity Strategy in the International Equity Division. Ben is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price International Ltd. 

Ben’s investment experience began in 1999, and he has been with T. Rowe Price since 2006, beginning as a research analyst in the Equity Division. Prior to this, Ben was employed by Baillie Gifford as an investment manager. 

Ben earned a diploma in investment analysis from the University of Stirling and an M.Eng. in engineering science from Oxford University. Ben also has earned the Chartered Financial Analyst® designation.

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

  • Fund manager
    since
    2016
  • Years at
    T. Rowe Price
    15
  • Years investment
    experience
    22
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 A €1,000 €100 €100 5.00% 160 basis points 1.77% No
Class I €2,500,000 €100,000 €0 0.00% 95 basis points 1.05% No
Class Q €1,000 €100 €100 0.00% 95 basis points 1.12% 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.