T. Rowe Price, the US$1.28trn global asset manager, has further strengthened its UK-domiciled OEIC fund range with the addition of a global high-yield bond vehicle.
Launched on 31 October, the T. Rowe Price Global High Yield Opportunities Bond Fund aims to capitalise on the continued worldwide expansion of the sub-investment grade credit space. In addition to exposure to the US, the world’s largest high-yield market, the fund targets a 50% weighting in credits from Europe and the emerging markets.
Lead portfolio manager of the T. Rowe Price Global High Yield Opportunities Bond Fund is Michael Della Vedova, who has almost three decades of investment experience. Della Vedova has considerable expertise in the high-yield market, with the manager running several global and regional strategies at the group. He is also supported by T. Rowe Price’s 241 fixed-income professionals located all around the globe.
The new OEIC fund, which is hedged to sterling for UK-based investors, complies with the T. Rowe Price’s Responsible Exclusion List and commits to maintaining at least 10% of the value of the portfolio in sustainable investments.
Della Vedova comments: “Despite the recent elevated volatility within bond markets, high yield credit continues to exhibit resilient fundamentals – including a near-zero default rate, high recovery rates, declining leverage, and improved liquidity. The market also contains some of the highest interest coverage ratios we have seen in more than a decade. When the risk-free rate and credit spreads reach levels such as those observed today, we have historically seen strong one-year forward returns in the high yield asset class. This bodes well for high yield performance in 2023.”
Nataline Terry, head of distribution, UK and Ireland, at T. Rowe Price, adds: “T. Rowe Price has built a substantial global presence in the high yield space over recent decades, with a local presence in all major markets. A unique feature of high yield debt is the yield ‘buffer’ it offers. High coupons should provide consistent and meaningful income, which helps dampen price volatility and has delivered attractive risk adjusted returns over time. This year’s jump in yields has meant this buffer is back again, providing investors with a powerful compounding effect. We are excited to bring this vehicle and opportunity to UK investors.”
T. Rowe Price founded its fixed income division in 1971 and manages US$259bn in fixed income assets. The group has been investing in high yield securities since inception of the asset class four decades ago, with T. Rowe Price unveiling its first dedicated high yield bond portfolio in 1984. It now runs $31.5bn in high yield assets.