Jason White, portfolio specialist at T. Rowe Price, believes that the best way to maximize the opportunities that international markets offer is to take a targeted and focused approach to them.
The thesis for investing in international markets is stronger than ever, according to White, particularly for the long-term. Across the globe, industry structures are improving, and many emerging market companies have been improving corporate governance, while companies in developed markets are increasingly benefiting from revenues in emerging markets, which makes them even more interesting candidates for investment.
However, being able to pick and choose stocks in a flexible manner and narrowing investment choices down to but a few names is, in White’s opinion, the best way to avail of these opportunities.
He also believes that developed markets have, to a large extent, been overlooked. To that end, T. Rowe Price recently launched the International Concentrated Equity Fund, a retail vehicle that piggybacks off an existing and largely developed market international strategy that the firm debuted in 2010.
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“We launched the strategy at that time based on the feedback from our institutional clients, who said they wanted a predominantly developed market portfolio that was concentrated and also less constrained in its ability to invest across various styles and market caps,” said White.
The success of the strategy, he said, then made it clear to T. Rowe Price that “there was appetite in the retail market for a similar product, and we believe that that demand will be present going forward.”
The fund holds 60-or-less of what White terms “our highest conviction stocks.” Those names are chosen from across the globe (although the portfolio’s exposure to emerging markets is capped at 15% and has, in the early days of the strategy, been as low as 2%) and assessed based on their current valuation and where the investment team believes they should be trading.