Global Focused Growth Equity Fund

Capital at risk. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy.

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Overview

Manager's Outlook

Since the beginning of 2022, the global investment landscape has absorbed slowing growth, geopolitical risks, tightening monetary policy, elevated inflation, and a significant growth-to-value rotation. During the second quarter, the market accelerated the probability of a market recession and punished any company that missed expectations or was perceived to be at risk from weakening demand or higher input costs. Valuations across broad parts of the market corrected to pre-COVID levels or lower, wiping away all pandemic-level exuberance. The global market began adopting the view of increased importance of capital returns and cash flow-based valuations.

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The Global Focused Growth Equity Strategy began the year positioned for COVID-19 distortions to fade, notably, for supply chain disruptions to correct and U.S. Federal Reserve stimulus to end. This was seen in our active positioning in travel and capital market-related stocks. The conflict in Ukraine catalyzed higher commodity prices and emboldened the Fed to become even more aggressive on the path of hiking interest rates. These actions have eliminated speculative behavior and shifted the market toward pricing in a recession, as seen in current reduced valuations. Because of these actions, the investment landscape has broadened in terms of opportunity set. In our view, valuations are not expensive today, but the volatility of yields will likely continue driving uncertainty of the perceived bottom.

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Today, the portfolio is positioned in many idiosyncratic names across a variety of sectors that have already priced in a shallow recession in cyclical, defensive, and secular growth companies. The portfolio is taking advantage of the opportunities where we believe we have insights about improving future economic returns that we don't think are reflected in valuations. We appreciate that the market is now evaluating the risk to future earnings; however, we estimate that inflation is peaking, which could be the key for returns of our existing stock decisions. The last six months have humbled investors but has also created a real opportunity for active managers.

Strategy

Fund Summary

We look for companies that we believe have the potential for improving economic returns in the future and that we can buy at an attractive price. In a world of secular change, this means understanding the forces enhancing or erasing durable competitive advantage to correctly identify the winners and losers ahead of the market. The promotion of environmental and/or social characteristics is achieved through the fund's commitment to maintain at least 10% of the value of its portfolio invested in Sustainable Investments, as defined by the SFDR. Additionally, we apply a proprietary responsible screen (exclusion list). The manager is not constrained by the fund’s benchmark, which is used for performance comparison purposes only.

OUR VIEWS ON GLOBAL EQUITIES

Performance - Net of Fees

Past performance is not a reliable indicator of future performance.

31-Oct-2024 - David Eiswert, Portfolio Manager,

Global equities sold off in October. Markets were pressured by strong economic data in the US diminishing expectations for more interest rate cuts, signs of deceleration in artificial intelligence demand, China stimulus scepticism, and geopolitical uncertainty. A strengthening US dollar versus other major currencies also weighed on returns for US-based investors. Within the portfolio, information technology names detracted the most from relative results. Shares of a semiconductor firm fell sharply mainly following third-quarter earnings results that, while generally in line with consensus, were interpreted by investors as showing potentially early signs of deceleration. We think the market is overreacting to recent earnings results and continue to have high conviction in the company given in our view its still-reasonable valuation and accelerating fundamentals. On the positive side, our holdings in the consumer discretionary sector contributed to relative performance. Shares of an online used car retailer spiked near the end of the period after the company reported third-quarter earnings results that strongly beat consensus estimates on both top-line and bottom-line figures. We find recent earnings results to be thesis-affirming and think the company is in the midst of an impressive turnaround strategy.

31-Dec-2023 - David Eiswert, Portfolio Manager,

We are underweight consumer staples as we feel that many companies are losing their traditional distribution strength. We also find the sector broadly expensive. Recently, we meaningfully reduced our allocation here and are being very selective about what we own, especially given the rising use of GLP-1 obesity drugs that could pressure demand for food staples. We are focused on high-quality companies with low debt that we think can deliver volume growth and margin expansion with a mix of durable growth companies and more idiosyncratic ideas that we believe are on the right side of change or currently out of favour.

Past performance is not a reliable indicator of future performance.

The Funds are sub-funds of the T. Rowe Price Funds SICAV, a Luxembourg investment company with variable capital which is registered with Commission de Surveillance du Secteur Financier and which qualifies as an undertaking for collective investment in transferable securities (“UCITS”). Full details of the objectives, investment policies and risks are located in the prospectus which is available with the key investor information documents and/or key information document (KID) in English and in an official language of the jurisdictions in which the Funds are registered for public sale, together with the articles of incorporation and the annual and semi-annual reports (together “Fund Documents”). Any decision to invest should be made on the basis of the Fund Documents which are available free of charge from the local representative, local information/paying agent or from authorised distributors. They can also be found along with a summary of investor rights in English at www.troweprice.com. The Management Company reserves the right to terminate marketing arrangements.

Hedged share classes (denoted by 'h') utilise investment techniques to mitigate currency risk between the underlying investment currency(ies) of the fund and the currency of the hedged share class. The costs of doing so will be borne by the share class and there is no guarantee that such hedging will be effective.

Before deciding to invest in the fund, you should read the offering document/prospectus (including its investment objectives, policies and any risk warnings) which are available and may be obtained from any appointed distributors.

The specific securities identified and described in this website do not represent all of the securities purchased, sold, or recommended for the sub-fund and no assumptions should be made that the securities identified and discussed were or will be profitable.

A full list of the currently issued Share Classes including Distributing, Hedged, and Accumulating Categories may be obtained, free of charge and upon request, from the registered office of the Company.

Benchmark: Investors may use the benchmark to compare the fund’s performance. The benchmark has been selected because it is similar to the investment universe used by the investment manager and therefore acts as an appropriate comparator. The investment manager is not constrained by any country, sector and/or individual security weightings relative to the benchmark and has complete freedom to invest in securities that do not form part of the benchmark.

Disclosure on Vendor Indices can be found here.

Risks

Typical Investor