The T. Rowe Price International Stock Fund’s composition
The T. Rowe Price International Stock Fund (PRITX) has been in existence since May 1980. At the end of January 2016, the fund was managing assets worth $13.3 billion and these were spread across 125 holdings.
Financials formed 20.6% of the fund’s assets and made up the single largest sector of investment as of the end of January. The industrial and consumer discretionary sectors followed, forming a combined 28.7% of the portfolio. 47.2% of the fund’s assets were invested in European equities, followed by 25% in the Asia-Pacific region excluding Japan.
Hong Kong-based insurer AIA Group is the fund’s single largest holding for January 2016. Aerospace and defense corporation Airbus Group (EADSY) is the largest company based out of the Netherlands. Representing Switzerland is Nestlé (NSRGY), while Japan is represented by Astellas Pharma (ALPMY), Japan Tobacco (JAPAY), and Nippon Telegraph and Telephone (NTT). The Priceline Group (PCLN) also forms part of the fund’s top ten holdings. The fund house did not provide security-level weights for October.
Returns of the T. Rowe Price International Stock Fund
The T. Rowe Price International Stock Fund (PRITX) was a below-average performer for both 2015 and the one-year period ended January 2016. From a purely NAV (net asset value) return standpoint, the PRITX stood sixth and seventh, respectively, in the aforementioned periods, among the nine funds in this review.
Standard deviation is used for assessing risks associated with an investment. Simply put, it measures the deviation of a series of returns from the average. A wide deviation reflects a high fluctuation in the returns, resulting in a higher risk, and vice versa.
For the one-year period ended January 2016, the standard deviation for the PRITX stood at 14.6%. Meanwhile, the arithmetic average of the standard deviation of all funds in this review was 14.5%. Excluding the PRITX, the average was 14.4%. Therefore, the returns of the fund were marginally more volatile than the average return of the peer group.
For realized returns, the Sharpe ratio assesses the average return on a risk-free asset or security over total risk as represented by a standard deviation. The higher the Sharpe ratio, the better the risk-adjusted performance.
The Sharpe ratio for the PRITX for the one-year period ended January 2016 stood at -0.47, which was the third lowest ratio among the funds in this review. It was barely positive in 2015, at 0.07.
A note for investors
The PRITX has been a below-average performer. Its volatility of returns, represented by a standard deviation, is not a worry. However, its risk-adjusted performance, measured by the Sharpe ratio, is low, showing that even with marginally above-average volatility, it is not able to generate enough returns. Investors would be well advised to look at the fund’s performance over market cycles to see if this is just an aberration or a trend. With 2016 expected to be more volatile than 2015, this analysis would be useful for assessing whether the fund fits in your portfolio. Let’s move to the next fund in this review: the Thornburg International Value Fund – Class A (TGVAX).