T. Rowe Price Global Select Equity
T. Rowe Price Global Select Equity is an unconstrained, high-conviction fund that scours the globe searching for the best opportunities. This style-agnostic fund is designed with a strong risk management framework in pursuit of creating a portfolio that looks to outperform over a full market cycle.
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Peter Bates, Fund manager Peter Bates is the portfolio manager of the Global Select Equity Strategy. He is a member of the Investment Advisory Committees of the Global Focused Growth Equity and Japan Equity strategies. Peter’s investment experience began in 2001, and he has been with T. Rowe Price since 2004, beginning in the US equity division as a research analyst covering environmental services, railroads, industrial companies, and agricultural equipment companies. Subsequently, he became portfolio manager of the Global Industrials Equity Strategy. Peter earned a BBA in business from Southern Methodist University and an MBA in finance from the University of Pennsylvania, The Wharton School. Peter also has earned the Chartered Financial Analyst designation.
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Investment process
T. Rowe Price believes that active management, driven by bottom-up fundamental research, can identify and exploit anomalies in global equities.
The strategy focuses on companies with durable competitive advantages and aims to invest before inflection points in fundamentals. It emphasises business quality, strong management, and companies that can sustainably compound value through profitable growth, free cash flow, and effective capital deployment.
With a universe of some 2,000 publicly-traded large and mid-cap stocks in both developed and emerging markets, Peter initially filters stocks based on recommendation from the analysts at T. Rowe Price
This universe is then refined to 150–200 companies that align with the strategy’s investment framework. These companies are evaluated using various metrics, such as durable business models with secular tailwinds, improving strategic and financial fundamentals, understanding of change catalysts, and aspects that the market underappreciates.
Each analyst, specialised by industry or region, follows 30 to 50 equities and recommends the most attractive ones. They scrutinise current holdings and potential investments through quantitative and qualitative evaluations, gathering information from company visits, industry contacts, conferences, and financial news sources.
Analysts conduct industry analysis to assess the quality and growth prospects, differentiating between secular and cyclical factors. Valuation analysis is also undertaken.
Peter actively participates in research visits and collaborates closely with the firm’s network during idea generation and refinement. The strategy categorises companies into three buckets: cyclicals and turnarounds, steady growth, and disruptors. The aim is to build a style-balanced, core portfolio focusing on durable competitive advantages.
Using this framework, Peter constructs a global portfolio of 30-45 high-conviction ideas while managing risk at both the individual and portfolio levels.
Risk
T. Rowe Price asserts that a successful investment strategy must integrate risk management within all aspects of portfolio management. They apply a disciplined investment process, focusing on high-conviction ideas and position sizing based on prospective risks. Their approach includes detailed fundamental analysis, rigorous self-challenge, and the identification and avoidance of secular headwinds.
The firm quantitatively monitors sources of risk and alpha through factor risks, scenario analysis, and stress testing, employing numerous quantitative tools and embedding ESG risks into the process. Oversight involves regular peer reviews and compliance checks, with input from the fundamental investment and quantitative risk teams, adherence to investment guidelines, and quarterly reviews by a committee.
ESG
ESG – Integrated
The strategy integrates environmental, social, and governance (ESG) factors into its investment process to enhance decision making. ESG factors are considered alongside traditional financial analysis rather than as the sole driver. The integration occurs at two levels: research analysts incorporate ESG factors into company valuations and ratings; and with the portfolio manager as he balances these factors at the portfolio level.
Dedicated in-house resources, including ESG specialist teams, provide investment research and tools for systematic ESG analysis. The foundation of the analysis is a proprietary flagging tool called the Responsible Investing Indicator Model (RIIM) which covers approximately 15,000 securities, for potential inclusion in the portfolio.
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