Global Technology 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

Global technology stocks faced pressure during the period as the market saw a continuation of the macro-driven-style headwinds in equity markets that have persisted since late 2021. The Federal Reserve's mid-June decision to raise interest rates by three-quarters of a percentage point, the most aggressive hike since 1994, also exacerbated fears that higher borrowing costs could tip the U.S. into a recession. As interest rates have increased, the market's duration has shortened, which hasn't boded well for long duration growth assets like technology stocks. In recent months, many technology companies, including several mega-cap stocks as well as technology companies that we don't own in the portfolio, missed quarterly earnings estimates and issued disappointing guidance as a result of difficult year-over-year comparables, which has further weighed on valuations within the technology space. At the end of June, the Nasdaq Composite remained in bear territory, while the MSCI All Country World Index Information Technology ended the month down more than 25% from the start of the year.

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As with many other areas of the market, demand distortions stemming from the coronavirus pandemic and recent supply chain issues have impacted our investment universe and challenged even some of the most seasoned management teams in our portfolio, such as Amazon.com. The scale of its business does not create immunity to these challenges; in fact, it could exaggerate it in the short term. However, many of the top holdings in the portfolio today have secular growth drivers that we think are durable, including digital transformation?in which we are participating through the public cloud providers?next-generation database companies, and infrastructure software companies. We maintain conviction in the fundamental growth profiles that our investments bring to the portfolio, and we are confident that the unique, long-term prospects of these firms will again be rewarded.

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We believe the market has more than discounted the possibility of greater interest rate hikes in the coming months as reflected in technology valuations that have corrected to pre-pandemic levels. Going forward, we think recessionary pressures will come from earnings revisions, as opposed to from multiple compression. We are starting to see estimate revisions, but so far these revisions have been isolated to semiconductors and the consumer. Our overweight allocation to enterprise software is a defensive position from a fundamental perspective. We have conviction of the underlying business models and profitability these companies have with established unit economics in a variety of economic scenarios.

Strategy

Fund Summary

Our fundamental company research and bottom-up analysis aims for early identification of disruptive technology trends and to identify future winners and losers of technological change. We invest in primarily mid- to large-sized companies with strong and/or increasing market share and product pipelines that appear to be strategically poised for long-term growth. 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.

31-Dec-2023 - Dom Rizzo, Portfolio Manager,

Digital semiconductors companies are direct beneficiaries of artificial intelligence (AI); one major player in the space recently projected that the AI market could grow from USD 45 billion in 2023 to USD 400 billion by 2027 and could comprise a significant portion of the total semiconductor market size. We find this projection remarkable and believe it highlights significant opportunities for several of our investments. One of our largest holdings in semiconductors is a high-quality company solidifying a leadership position in its industry as the role of graphics processing units continues to gain importance amid several powerful vectors for growth: AI, supercomputing, gaming, and autonomous driving.

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.

This product is based overseas and is not subject to UK sustainable investment labelling and disclosure requirements.

Effective 1 July 2024, the comparator benchmark for the fund changed to MSCI AC World Information Technology 10/40 Net Index. Prior to this change, the comparator benchmark was MSCI AC World Information Technology Index Net. Historical benchmark representations have not been restated.

Risks

Typical Investor

Commentary for