Global Gains at T. Rowe Price
06/16/2016 10:00 am EST
Among major fund families, T. Rowe Price stand outs for embracing the global trends, as it has expanded its roster of global funds; here's a review of two that have been around for a while, notes fund expert Mark Salzinger, editor of No-Load Fund Investor.
T. Rowe Price Global Stock (PRGSX), launched more than 20 years ago but managed since 2012 by David Eiswert, and T. Rowe Price Global Growth Stock (RPGEX), launched in 2008 but managed since 2013 by Scott Berg.
Both Eiswert and Berg have been with Price since early last decade. These two funds have a lot in common.
First, both leverage the fundamental worldwide research resources of the firm to find purchase candidates, which are chosen mainly for their individual characteristics, versus fitting selections into big-picture views on the relative attractiveness of various regions and countries.
Both favor ‘growth’ as opposed to ‘value’ stocks, and both use a benchmark -- the MSCI All Country World Index -- that includes not only the US and other highly developed countries but also emerging markets.
Both strategies are overweight mid-caps and the lower end of large-caps. The main differences are in portfolio construction.
Global Stock typically owns 70 stocks across 15 or so countries and will allow for meaningful sector bets relative to the benchmark.
Global Growth Stock offers more company and geographic diversification, as it often owns around 140 stocks across 30 or so countries and generally keeps the sector bets more constrained.
As a result, Global Stock tends to invest more in the US—recently 57%, vs. 45% for Global Growth Stock.
Another meaningful difference is their emerging markets exposure. Though Eiswert invests in emerging market equities for Global Stock, he takes an opportunistic tack, rather than targeting a certain percentage of assets.
Global Growth Stock, on the other hand, reflects a strategic overweight exposure to the segment, with about 40 to 45 of its holdings devoted to about 15 separate emerging market countries.
Currently, Global Stock has 13% of assets in emerging markets, compared to 25% for Global Growth Stock.
Finally, there’s a subtle difference in their growth styles. Global Growth Stock looks for quality, durable growth companies. Global Stock looks for companies with improving economic momentum factors when assessing stocks.
Overall, it is designed to be a core strategy that places a premium on quality and valuation, and therefore will be less oriented toward growth stocks than its diversified siblings.
Price investors who seek global exposure with the greatest potential for long-term gains should favor Global Stock, while those who like a growth slant but who also desire more emerging market exposure as part of their global investing footprint should look closely at Global Growth Stock.
By Mark Salzinger, Editor of No-Load Fund Investor