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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.

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SICAV

European Smaller Companies Equity Fund

Seeking to identify tomorrow’s winning European growth companies.

ISIN LU1028171921 Bloomberg TRESCQG:LX

3YR Return Annualised
(View Total Returns)

Total Assets
(EUR)

9.31%
€194.1m

1YR Return
(View Total Returns)

Manager Tenure

36.29%
5yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

0.56
7.05%

Inception Date 31-Jan-2014

Performance figures calculated in GBP

30-Jun-2021 - Ben Griffiths, Portfolio Manager,
We remain in a period of huge uncertainty-never have so many countries simultaneously and intentionally suppressed economic activity and then tried to restart it. At present, vaccine developments and rollouts offer hope for an end to the pandemic, although some countries have reintroduced lockdown measures. As economies rebound, cyclical businesses perform better at times. Instead, we remain invested in the disruptive, online, and health care names benefiting from the response to the pandemic.
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.

 

Strategy

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 Q | GBP)

Annualised Performance

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Since Manager Inception
Annualised
Fund % 36.29% 9.31% 16.87% 14.00% 15.27%
Indicative Benchmark % 35.10% 8.36% 12.93% 11.15% 12.04%
Excess Return % 1.19% 0.95% 3.94% 2.85% 3.23%

Inception Date 31-Jan-2014

Manager Inception Date 31-Dec-2015

Indicative Benchmark: MSCI Europe Small Cap Index Net

Data as of 30-Jun-2021

Performance figures calculated in GBP

  1 YR 3 YR
Annualised
5 YR
Annualised
Since Inception
Annualised
Fund % 36.29% 9.31% 16.87% 14.00%
Indicative Benchmark % 35.10% 8.36% 12.93% 11.15%
Excess Return % 1.19% 0.95% 3.94% 2.85%

Inception Date 31-Jan-2014

Indicative Benchmark: MSCI Europe Small Cap Index Net

Data as of 30-Jun-2021

Performance figures calculated in GBP

Recent Performance

  Month to DateData as of 26-Jul-2021 Quarter to DateData as of 26-Jul-2021 Year to DateData as of 26-Jul-2021 1 MonthData as of 30-Jun-2021 3 MonthsData as of 30-Jun-2021
Fund % 2.77% 2.77% 11.01% 1.89% 6.07%
Indicative Benchmark % 2.66% 2.66% 13.68% -0.73% 6.11%
Excess Return % 0.11% 0.11% -2.67% 2.62% -0.04%

Inception Date 31-Jan-2014

Indicative Benchmark: MSCI Europe Small Cap Index Net

Indicative Benchmark: MSCI Europe Small Cap Index Net

Performance figures calculated in GBP

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. 

30-Jun-2021 - Ben Griffiths, Portfolio Manager,
The MSCI Europe Small Cap Index ended slightly weaker in June on worries that stimulus might be withdrawn sooner than expected because of inflationary pressures and the spread of a super-infectious variant of the coronavirus might threaten a recovery. At the portfolio level, stock picking in financials, consumer discretionary, communication services and health care made the strongest contributions to relative performance. Draper Esprit, a pan-European venture capital fund that invests in disruptive technology companies at the early stages of growth, performed best in financials. The company said net asset value of its holdings increased 34% year on year, higher than the initial estimate in the April trading update. The company also said it had raised a further GBP 111 million for investments, putting it on track to reach its annual target of GBP150 million. On the negative side, our choice of securities in industrial and business services was the biggest drag on returns. Carel Industries, a provider of control technology and humidification for air conditioning and refrigeration, slipped on profit taking after its share price raced up to an all-time high in May on a combination of economic optimism as countries began to reopen their economies and strong ESG-related demand.

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 21.49% View Top 10 Holdings Monthly data as of  30-Jun-2021

Largest Top Contributor^

Amplifon
By 0.20%
% of fund 2.55%

Largest Top Detractor^

Shop Apotheke Europe
By -0.19%
% of fund 1.95%

^Absolute

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

31-Mar-2021 - Ben Griffiths, Portfolio Manager,

Focus on Quality, Cyclicals; Recycled Funds Into New Ideas

The quarter presented us with opportunities to add high-quality names that have generally underperformed. We invested in 11 new names (five of which were initial public offerings) and eliminated four. We increased our cyclical exposure, adding four new names in consumer discretionary and two in industrials and business services. We also trimmed names where valuations are expensive, such as in health care, as well as those where we lost conviction in order to make space for new ideas.

The strategy's profile continues to reflect our focus on durable growth companies with a sustainable competitive advantage. We have maintained a bias toward health care and information technology. We also have overweight positions in consumer discretionary and communication services. We remain underweight in industrials and business services and real estate.

  • We raised our overweight in consumer discretionary, participating in the initial public offerings of MYT Netherlands Parent BV and Dr. Martens; we added Auction Technology and Valora Holding.
  • We increased our overweight in information technology, initiating a position in Esker and adding to various high-conviction names.
  • We reduced our industrials and business services underweight, adding Fluidra and National Express and exiting Tyman.
  • We further reduced our overweight in communication services, exiting Codemasters Group Holdings, while adding Auto1.
  • We further trimmed our overweight in health care, exiting Elekta; we recycled some funds into Dechra Pharmaceuticals.

Consumer Discretionary

We increased our overweight allocation to the consumer discretionary sector, one of our largest exposures. We participated in the initial public offerings of MYT Netherlands Parent BV, a leading luxury e-commerce retailer, and Dr. Martens, a UK footwear and clothing brand. We added Auction Technology, the leading online platform for auctions, and Valora Holding, a convenience and kiosk retailer and food service operator in Germany, Austria, and Switzerland with a strong presence in transportation hubs.

Our largest industry bets are internet and direct marketing, where we hold Shop Apotheke Europe, an online retailer of pharmaceutical products, and ASOS, a leading global online fashion retailer; and leisure products, where our investments include Mips, a maker of helmets for reducing rotational forces on the brain caused by impacts to the head, and Thule, a Sweden-based company that develops and manufactures sport, outdoor, and cargo products.

  • MYT Netherlands Parent BV is an e-commerce retailer that curates products for more than 200 of the world's top luxury brands. In our view, the company is well positioned to take market share in the online luxury segment, which is forecast to grow strongly as department stores shrink and turn to online partners to grow. The company already has long established relationships with key luxury brands and has access to enough inventory to support its 25% annual topline growth.
  • We invested in Dr. Martens because we believe management could double revenues over the next five years by expanding in North America, China, Japan, and Europe; increasing e-commerce sales; and reducing third-party distribution.

Information Technology

We increased our overweight in information technology, another large bet in the portfolio, which is consistent with our growth approach. We initiated a position in Esker, a leading digital process automation cloud-based software developer. We also added to various names in which we have high conviction, including Carel Industries, a provider of control technology and humidification for air conditioning and refrigeration, and Aixtron, a leading Germany-based provider of deposition equipment to the compound semiconductor industry.

Our largest industry exposure now is to the electronic equipment, components, and instruments industry. Our biggest position is Carel Industries, a provider of control technology and humidification for air conditioning and refrigeration. We also overweight semiconductors and semiconductor equipment, where our biggest position is Aixtron. 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.

  • Software developer Esker is growing strongly, thanks to increased demand for cloud-based products as companies embrace digitization. The company is well managed and has a strong balance sheet due to high cash flow generation. We expect Esker to generate robust topline growth, broaden its customer base and product functionality, and expand its partner network.
  • We exited WANdisco, a big data technology company and specialist in distributed computing, which has failed to meet our growth expectations.

Industrials and Business Services

We reduced our large underweight in industrials and business services with the aim of adding some more cyclicality to the portfolio. We opened positions in Spain-based Fluidra, a leading builder of swimming pools and provider of pool equipment, and National Express, an international transport company that operates bus, coach, and rail services. We exited Tyman, a manufacturer and supplier of components to the door and window industries.

We are overweight the professional services industry, where our main investments are Intertrust, a Netherlands-based company that provides trust and corporate services to corporations, funds, financial institutions, and private individuals, and Headhunter, a leading Russian recruitment business.

  • The merger with Zodiac in July 2018 has transformed the earnings and growth potential of Fluidra, which has already seen sizable benefits from cost and especially revenue synergies. In our view, the ability to cross-sell a wider product set should help the company grow faster than the market. There are signs that Fluidra is already gaining market share in North America since the merger.

Communication Services

We further reduced our overweight in communication services, exiting Codemasters Group Holdings, a UK-based video game developer and publisher, after it was bought by a U.S. company. We also opened a position in Berlin-based Auto1, the leading online used car wholesaler in Europe.

Our largest industry bet is interactive media and services, with positions in Scout24 Holding, an online classified advertising company that operates mainly in Germany; Auto1; and Rightmove, a leading UK real estate portal.

  • Auto1 is well positioned to take advantage of the shift online in used car buying and leverage its existing infrastructure and expertise to build Europe's leading business-to-consumer used car dealer.

Health Care

We further trimmed our overweight exposure to the health care sector, a key long-term bet that contains some of the portfolio's largest relative and absolute positions. We sold our position in Elekta, a Sweden-listed medical technology company, and reduced our holding in Ambu, a Denmark-based provider of diagnostic and life-supporting devices, taking profits after strong performance. We recycled some funds into Dechra Pharmaceuticals, an animal health company that has become attractively valued during the market rotation into lower-quality cyclical stocks.

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 we own Eurofins Scientific, a leading global provider of bioanalytical laboratory testing services, which is our largest holding; and pharmaceuticals, where Spain-based Laboratorios Farmaceuticos Rovi is our main holding.

  • We believe Dechra Pharmaceuticals will continue to deliver double-digit earnings growth and gain market share due to its exposure to companion animal products, the fastest-growing end market within animal health; its positions in niche therapeutic areas,�which are defensible against�big pharmaceutical companies; and its solid distribution channels and relationships with veterinary practices.

Sectors

Total
Sectors
9
Largest Sector Consumer Discretionary 19.16% Was (31-May-2021) 18.97%
Other View complete Sector Diversification

Monthly Data as of 30-Jun-2021

Indicative Benchmark: MSCI Europe Small Cap Index

Top Contributor^

Health Care
Net Contribution 0.55%
Sector
0.50%
Selection 0.04%

Top Detractor^

Consumer Discretionary
Net Contribution -1.20%
Sector
-0.24%
Selection
-0.96%

^Relative

Quarterly Data as of 30-Jun-2021

Largest Overweight

Health Care
By9.22%
Fund 18.07%
Indicative Benchmark 8.85%

Largest Underweight

Industrials & Business Services
By-8.05%
Fund 17.74%
Indicative Benchmark 25.78%

Monthly Data as of 30-Jun-2021

30-Jun-2021 - Ben Griffiths, Portfolio Manager,
Our approach remains to look for those small growth companies that can be much larger in five to 10 years’ time, and so our structural overweight allocations to sectors such as health care, information technology, and the new economy tech-related areas within communication services and consumer discretionary will remain. We participated in several initial public offerings. adding new names with strong growth potential in the consumer discretionary, communication services and health care sectors. We reduced our overweight exposure to financials, exiting specialist non-life insurer Hiscox after management and underwriting missteps

Countries

Total
Countries
15
Largest Country United Kingdom 40.37% Was (31-May-2021) 40.92%
Other View complete Country Diversification

Monthly Data as of 30-Jun-2021

Indicative Benchmark: MSCI Europe Small Cap Index

Top Contributor^

Spain
Net Contribution 0.60%
Country
-0.09%
Selection 0.69%

Top Detractor^

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

^Relative

Quarterly Data as of 30-Jun-2021

Largest Overweight

United Kingdom
By8.86%
Fund 40.37%
Indicative Benchmark 31.51%

Largest Underweight

Sweden
By-6.41%
Fund 7.00%
Indicative Benchmark 13.41%

Monthly Data as of 30-Jun-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 27-Jul-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
    14
  • Years investment
    experience
    21
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
    10
  • Years investment
    experience
    31

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.