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Going Beyond the Numbers

Pursuing High Yields in Emerging Markets

Diverse perspectives fuel informed bond investing.

Samy Muaddi, Portfolio Manager, Emerging Markets Corporate Bond Strategy

For Samy Muaddi, an investment professional at T. Rowe Price, identifying the best investment ideas in emerging markets requires a global group of analysts whose experiences and backgrounds help to inform their fundamental analysis. He calls this combination cognitive diversity. To find the best ideas to include in his emerging markets corporate bond strategy, Samy draws on a team of more than 60 T. Rowe Price professionals from 23 nationalities, who speak 27 languages. “When you’re investing in emerging markets, you’re not just investing in a business. You’re trying to understand complex challenges of commerce, society, culture, and politics,” he says. A team featuring cognitive diversity can put into proper context the relevance of an earning’s miss, an economic sanction, a tax or trade policy, or a military coup. “You can’t just visit a country for three days and draw an investment conclusion based on an American-only point of view,” he adds. As a Palestinian-American, Samy is passionate about the struggles of developing countries and trying to figure out why they succeed or fail. While data-driven research is critical, he and his team take nearly 200 research trips a year to gain local knowledge that can create a competitive edge. They have traveled 150 miles off the coast of Brazil to an oil-pumping dock for deepwater drilling, visited a copper mine in Zambia 100 feet below the surface, and researched real estate properties in China. “In the 13 years that I’ve been here, I have traveled to more than 70 countries.”

Opening Quote When you’re investing in emerging markets, you’re not just investing in a business. You’re trying to understand complex challenges of commerce, society, culture, and politics. Closing Quote

Going Beyond the Numbers Reveals the Full Story

At T. Rowe Price, our investment approach is to go beyond the numbers when evaluating which companies offer the best future investment potential. By meeting with executives, employees, and customers, we can ask the right questions to get a deeper understanding of where a company stands and where it could go in the future. This rigorous research strategy is integral to Samy’s investment process.

Diverse Perspective in the Field Helps to Build Insight

On a recent trip to Brazil, Samy sought to understand why the country’s government reforms, which perplexed foreign business and economic leaders, were unpopular with disenfranchised Brazilians. He hired a local translator to escort him and his team through a favela, a low-income shantytown shoe-horned between the high hills of Rio de Janeiro, where he talked to residents about economic opportunity. They told him previous governments did little to address the entrenched legacy of inequality and that their participation in the formal economy was practically nil. “It was really eye-opening,” he says. “You can’t invest in a foreign country without understanding the implications. What typically goes wrong in emerging markets is that you make an investment and then the politics change. This is something that happens often through the election cycle.”

Getting Ahead of Change

Samy and his team understand that emerging markets countries are heavily dependent on capital and that choosing the right companies with strong long-term potential is crucial. They are keeping a watchful eye on hundreds of companies to get ahead of change for investors. Combining fundamental analysis with on-site research seen through a variety of perspectives allows Samy to make better informed investment decisions and avoid the trap of groupthink. “That’s how you create value from opportunity. And that’s why I go beyond the numbers.”

Important Information
This material is being furnished for general informational purposes only. The material does not constitute or undertake to give advice of any nature, including fiduciary investment advice, and prospective investors are recommended to seek independent legal, financial and tax advice before making any investment decision. T. Rowe Price group of companies including T. Rowe Price Associates, Inc. and/or its affiliates receive revenue from T. Rowe Price investment products and services. Past performance is not a reliable indicator of future performance. 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.

The material does not constitute a distribution, an offer, an invitation, a personal or general recommendation or solicitation to sell or buy any securities in any jurisdiction or to conduct any particular investment activity. The material has not been reviewed by any regulatory authority in any jurisdiction.

Information and opinions presented have been obtained or derived from sources believed to be reliable and current; however, we cannot guarantee the sources' accuracy or completeness. There is no guarantee that any forecasts made will come to pass. The views contained herein are as of September 2018 and are subject to change without notice; these views may differ from those of other T. Rowe Price group companies and/or associates. Under no circumstances should the material, in whole or in part, be copied or redistributed without consent from T. Rowe Price.

The material is not intended for use by persons in jurisdictions which prohibit or restrict the distribution of the material and in certain countries the material is provided upon specific request.

It is not intended for distribution to retail investors in any jurisdiction.

USA—Issued in the USA by T. Rowe Price Associates, Inc., 100 East Pratt Street, Baltimore, MD, 21202, which is regulated by the U.S. Securities and Exchange Commission. For Institutional Investors only.

T. ROWE PRICE, INVEST WITH CONFIDENCE, and the bighorn sheep design are, collectively and/or apart, trademarks of T. Rowe Price Group, Inc. © 2018 T. Rowe Price. All rights reserved.

201810-614797

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