T. Rowe Price Global Tech Eq Q1 USD

Analyst Report
Morningstar's Take
|03/09/2019

by Mathieu Caquineau, CFA
*  This rating and report were issued for a different share class of this fund. The performance and fee structure of this class may vary from that referenced.


T. Rowe Price Global Technology retains its Morningstar Analyst Rating of Neutral as its new manager settles in. A meaningful transition occurred on March 31, 2019. Predecessor Josh Spencer left for T. Rowe Price New Horizons, leaving this closed strategy to Alan Tu, a tech analyst who has covered enterprise software since joining T. Rowe in 2014. Spencer’s departure was a loss, as he’d posted exceptional returns since his 2012 start. Tu has taken logical steps in his short stint as lead manager. He has worked to build relationships across the analyst team in industries where he has less experience, such as semiconductors, media, and Internet, travelling with analysts to visit prominent companies such as Netflix, Amazon.com, and others in Asia. He transitioned the portfolio throughout the first half of the year, which wasn’t a radical overhaul. Indeed, the June 2019 portfolio had 79% of its holdings in common with the Dec. 31, 2018, iteration. Still, Tu has put his stamp on the portfolio. As telegraphed, he’s broadened out the portfolio to 44 public holdings as of June 2019 from 31 in late 2018 and upped the mid-cap stake to 15% from 10%. Unsurprisingly, he’s delved into more software names, his area of expertise, buying firms such as Zen Desk, New Relic, and Twilio; he admits valuations are at historic highs for software as a whole but likes the fundamentals and long-term growth prospects of those companies and has limited most to less than 1% of assets. He’s more valuation-conscious in cyclical industries such as semiconductors, where he’s taken some profits. Notably, he reduced the 10% stake in former top holding NXP. Tactical trading will be toned down. Tu is unlikely to replicate Spencer’s valuation-based, fast-trading approach that resulted in high turnover, instead taking a long-term view on competitively advantaged companies. This more muted approach has worked well across other T. Rowe offerings, and Tu has a talented analyst team for support. While there are positives in place, Tu needs to show he can effectively execute at his first management charge.

Morningstar Analyst Rating™
To find out how Morningstar rates a fund click here.
Portfolio RoleSpecialty.
Morningstar Pillars
PeopleNeutral
A new manager is in place.
ParentPositive
A top asset manager.
ProcessNeutral
A new manager is putting his stamp on it.
PerformanceNeutral
Reset to Neutral.
PriceNeutral
Average.
Morningstar Analyst RatingMorningstar evaluates funds based on five key pillars, which it's analysts believe lead to funds that are most likely to outperform over the long term on a risk-adjusted basis.
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A fim de prover consistência para todos os relatórios fornecidos por diferentes Asset Managers, os data points calculados apresentados são gerados usando uma metodologia de cálculo proprietária da Morningstar, que pode ser conferida com mais detalhes em(https://www.morningstar.com/research/signature)