Strategy
Investment Objective
The strategy’s investment approach provides the flexibility to invest both long and short across a wide variety of traditional and non-traditional global credit instruments without constraints to particular benchmarks, asset classes or sectors, seeking consistent risk-adjusted returns over a full market cycle. The strategy seeks out high-conviction opportunities created by dynamic global market conditions and is expected to hold a relatively concentrated portfolio. 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.
Investment Approach
- Liquid credit alternative strategy within the multi-asset credit universe.
- Seeks to harvest cheap or dislocated global credit risk premia while managing tail risk and beta and duration volatility.
- Employs flexible, cross-sector approach to source high-conviction opportunities from our global multi-sector research platform.
- Combines high conviction security selection with portfolio volatility management (hedging and shorting).
- Gains insight from proprietary quantitative sources for seeking to enhance optimal sector allocations and forecasts.
- Employs a proprietary, fundamental credit research process, incorporating ESG analysis, and a rigorous risk-management approach.
- Aims to offer lower volatility performance and diversification compared to equity and traditional credit asset classes.
- Foundational excess return target gross of fees: Seeks to deliver ICE BofA 3 Month Treasury Bill index +300-500 bps over a full market cycle.
- Foundational excess return target net of fees: Seeks to deliver ICE BofA 3 Month Treasury Bill Index +250-450 bps over a full market cycle.
- Target tracking error: between 3-8% annualized.
- The foundational excess return (FER) range represents T. Rowe Price's goal of outperforming the stated standard benchmark for the strategy, employing its standard investment guidelines. A strategy's standard benchmark may be different from a client benchmark. The FER gross of fees and net of fees is based on an analysis of a strategy's historical performance, investment guidelines, relevant fees and other factors. The FER reflects the current views of T. Rowe Price and is subject to change. There is no guarantee that the FER will be realized or achieved and actual results experienced by clients may vary from the FER shown.
Portfolio Construction
- Flexible, high conviction portfolio with approximately 100-200 issuers.
- Aims to invest at least 80% in credit instruments (including high yield, loans, investment grade corporates, securitized, emerging markets, convertibles and credit derivatives.
- May invest across full credit rating spectrum
- Seeks to manage overall portfolio volatility via hedging and shorting.
- Expected duration between -2 to 6 years.
Past performance is not a reliable indicator of future performance.