T. Rowe Price leans into equity weakness
T. Rowe Price is “leaning into weakness” created by the COVID-19 pandemic by adding exposure to high yield bonds and equities.
In a monthly update on its global asset allocation, managers Richard Coghlan, Randal Jenneke, Thomas Poullaouec and Wenting Shen said allocations to equities had moved up to overweight while fixed income was an underweight, despite the high yield additions.
“Amid the coronavirus-related sell-off in risk assets, we have incrementally added to equities over the month as the broad-based, indiscriminate selling has created opportunities to buy into quality companies at discounted levels,” they said.
Within equities, it was overweight on European, Japan and emerging market equities, neutral on Australia and global equities and underweight the US. The reason for the underweight to the US was it was concerned about elevated corporate leverage and government debt levels as well as the higher economic impact of social distancing.
In the fixed income portion, it said: “We added to high yield bonds as spreads have reached attractive entry points that historically have led to the sector delivering equity-like returns, with lower volatility over our 12 to 18 month investment horizon”.
While it had added to high yield bonds, it had reduced exposure to higher-quality sovereign bonds that it felt had reached extreme valuations.
The firm was now overweight Australian bonds, global high yield, emerging market dollar sovereigns and emerging market local currency and underweight global bonds.
Performance of T. Rowe Price Global Equity fund v MSCI ACWI index over three months to 31 March, 2020.
AUTHOR
Laura Dew
Recommended for you
Retailisation of private markets such as evergreen funds may seem like appealing options for wholesale and retail investors, but providers risk undermining trust if their products are unclear.
Ethical investment manager Australian Ethical has seen its funds under management rise by a third over FY25 to close out the year at $13.9 billion.
BlackRock Australia’s head of intermediary distribution James Waterworth has taken up a new distribution role at an alternative asset manager, while Antipodes has hired a distribution director.
BlackRock’s iShares ETFs have reported a record first half for inflows, gaining US$192 billion in the past six months, to see overall ETF assets under management rise to US$4.7 trillion as it launches its first active ETF in Australia.
