T. Rowe Price Japanese Equity Ih EUR

Analyst Report
Morningstar's Take

by Ronald van Genderen
*  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 Japanese Equity maintains its Morningstar Analyst Rating of Bronze thanks to its personnel, a well-articulated process, and track record.Lead portfolio manager Archibald Ciganer took over management of this strategy in December 2013. Although this is his first stint as portfolio manager, he has solid experience in Japanese equities. His six years as an analyst covering Japanese stocks within T. Rowe Price's global equity research team is particularly beneficial to his current role. His most important support comes from this team, which includes nine analysts who cover Japanese equities. Most of these analysts bring a lot of experience to the table, but the team has seen some turnover. These changes among the Japan-focused analysts, together with two additional analysts joining the firm in 2019, take down the team's average firm tenure.We think the approach is well articulated. Ciganer's bottom-up process is research-driven, and he is looking for companies that deliver growth in shareholder value because he thinks they are on the right side of change (around three fourths of the portfolio) or undergoing transformation. His primary source for investment ideas is the Japanese equity team. In our opinion, this is a critical part of the process. With a majority of the analysts being part of the team for less than five years and a relatively large portion of the portfolio not officially rated by these analysts, we remain cautious for now on this aspect of the process.Ciganer has made a number of changes to the portfolio since he took over at the end of 2013, bringing it in line with his investment approach. His increased focus on quality and growth has seen the portfolio move from the blend portion of the Morningstar Style Box toward growth. He has also increased the portfolio's active share, including a shift further down the market-cap scale.The fund has performed well under Ciganer's management. It outperformed the Japan large-cap equity Morningstar Category average and its Tokyo Stock Price Index benchmark, to the end of August 2019. Outperformance is primarily explained by strong stock selection.

Morningstar Analyst Rating™
To find out how Morningstar rates a fund click here.
Portfolio RoleThis strategy can be part of a well-diversified portfolio and offers diversified exposure to the Japanese equity market.
Morningstar Pillars
A talented manager supported by a growing number of Japan-focused analysts.
A top asset manager.
A well-articulated approach without major flaws.
Outperformance over the manager's tenure has been driven by strong stock selection.
Reasonably priced.
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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