T.Rowe Price’s US$12 billion flagship global equity fund, run by Robert Gensler, will close to new mandates so it can preserve its ability to take meaningful all-cap bets – but the manager has proposed an alternative.
The managing director of T.Rowe Price in Australasia, Murray Brewer, stressed Gensler’s Global Equity Fund would continue to accept platform inflows and top-ups from existing institutional clients.
Prospective investors are being pointed toward a Global Large Cap Equity strategy, launched last October out of T.Rowe’s Baltimore base, for which the portfolio manager is Canberra-born Scott Berg.
Berg, who has spent six years at T.Rowe Price via McKinsey, has discretion to invest across all markets, with a bias toward larger-cap stocks with growth prospects in each market.
Berg said the fund, which still has south of US$500 million under management and is only now being introduced to Australian investors, had added 1500 bps to the MSCI All Country World Index since its October 27 inception.
Berg’s biggest sector overweight is information technology, which touches part of a particular theme around ‘smartphones’ that manifests itself in everything from Apple, to a maker of 3G chips (Qualcomm) and the manufacturer of the silicon wafers inside the phones (Japan’s Shin-Etsu).
The growth credentials of this theme were strongest in emerging markets like Mexico and Brazil, Berg said, which lack a major landline infrastructure, so that the major means of internet access is wireless via a mobile phone handset.
The portfolio is underweight financials overall, but Berg pointed to “sub-sets of opportunity”, in particular Bank Of America, which his portfolio bought into around US$7, and which after getting to US$3.50 now sits around US$25.
After a better-than-expected ‘stress test’ result and some asset sales (such as Merrill Lynch), Berg said ‘B of A’ got to the point where it had to raise far less capital than people were fearing, so that a “virtuous circle” opposite to what drove its price down in the first place began to occur.
“Thanks to a steepening yield curve, banks are also making great margins off new lending business,” Berg said.
T.Rowe Price has $3.3 billion of Australian-sourced FUM, 15 per cent of which is from retail model portfolio allocations and discretionary platforms. The manager has never paid commissions, so Brewer hoped that retail flows would be helped by the industry’s reconstruction under a fee-for-service model.
