Why RSMR Rate this Fund

• Robust investment process focused on fundamental bottom-up stock picking

• Collaborative approach utilising a global equity research team of more than 160 analysts and industry specialists

• Strong track record of outperformance by the current manager, David Eiswert, who has managed the fund since 2012

Fund Process

The first step of the investment process is to screen the universe of approximately 4,000 companies with market caps over USD$1 billion. A number of analytical tools are used which help identify investment candidates within the universe. This high-level screening process will typically narrow the universe down to 600 – 700 companies where fundamental analysis will be conducted by the global analysts. The global analyst team is divided between sector portfolio managers, investment analysts, associate research analysts, quantitative analysts and speciality analysts. The investment process is collaborative as the management team were analysts prior to assuming their current responsibilities. The analysts are specialised by industry and region, and will follow 30 to 50 equities. Company meetings are an integral part of the research process. This can take a variety of forms including on-site visits, conference calls and face-to-face meetings. The analysts will use external research, from broker-dealers or third-party research providers to test the validity and robustness of their own internal research. When the research process is complete, the analyst rates each stock on a proprietary scale of 1 (strong buy) to 5 (strong sell) and recommends whether to buy, hold or sell the stock. These rankings are stored on a database, along with detailed descriptions that include the analyst rationale for the stock rating and the relevant analysis of the company. Each analyst is responsible for recommending the best stocks within their respective sector and keeping these ratings up to date. The fundamental research and recommendations conducted by the analysts will list between 100 – 150 investment candidates. Portfolio managers, who have regional specialties, provide an informed view on macroeconomic and local market considerations that may affect the prospective growth of the investment candidates. From this list, the portfolio management team identify the most compelling, highest conviction ideas across the global opportunity set. Position sizes are dynamically rebalanced in accordance with this concept and will generally range from a minimum of 50 basis points to a maximum of 500 basis points. Sector weights are typically within +/-15% of the benchmark’s weighting at the time of purchase while country exposures are typically within +/-10% of the benchmark’s weight. The United States and emerging markets are an exception with the former being within +/-20% and the latter being within +/-15% of the benchmark weight.

Evaluation

The fund aims to outperform through the market cycle by investing dynamically. Traditionally, the fund has found more growth opportunities across sectors such as IT, Consumer Discretionary and Health Care. These sectors tend to be overweight throughout the cycle. They find less opportunities which fit their investment framework in sectors such as Energy and Materials. The top-down view is typically contrarian and they will allocate towards countries when they are out-of-favour as they see more buying opportunities.

Application

This is a strong proposition for global investors seeking a fund that focuses on companies that have the potential for above average and sustainable rates of earnings growth. It is more diversified than some other higher conviction growth mandates in the sector which will have a lower number of companies and weightier position sizes. This has resulted in good downside protection.

Our Opinion

The competitive advantage of a fund like this is the strong resource platform at T. Rowe Price comprising analysts and industry specialists in various locations across the world. The manager has been able to harness these resources into a collaborative investment framework whereby he has generated substantial outperformance over his tenure since 2012.