The T. Rowe Price European Stock Fund: Overview
We’ll be analyzing the T. Rowe Price European Stock Fund (PRESX). The PRESX is one of the larger funds in this review. It was managing assets worth $1.6 billion as of January 2016. As of December 2015, its assets were spread across 66 holdings and included stocks of Intesa Sanpaolo (IITSF), Nestlé (NSRGY), Novartis (NVS), Roche (RHHBY), and Vodafone Group (VOD). The top ten holdings of the fund made up 25.4% of the fund’s assets.
The T. Rowe Price European Stock Fund: Performance
From a purely NAV (net asset value) return standpoint, the PRESX was an above-average performer in the one-year period until February 16, 2016, while turning in a below-average performance in 2015. It placed fifth in the former period and ninth in the latter among the 12 funds chosen for this review. For a returns comparison, we’ve chosen two ETFs: the ALPS STOXX Europe 600 ETF (STXX) and the SPDR EURO STOXX 50 ETF (FEZ).
The PRESX’s standard deviation, or the volatility of returns, in the one-year period ended February 16 was 17.5%. This is lower than both the STOXX Europe 600 Index’s 18.7% and the peer group’s average of 18.0%.
The fund’s risk-adjusted returns, calculated by the Sharpe ratio, were -0.65, compared with the STOXX Europe 600’s -0.69 for the one-year period ended February 16. Rather than evaluating a negative Sharpe ratio, let’s look at its ratio for 2015. It stood at 0.21 against the index’s 0.02, performing better than the index. However, even with a positive value, the fund placed in the bottom three of the 12 funds in this review.
The information ratio, calculated with the STOXX Europe 600 Index as the benchmark, was 0.4 for the one-year period ended February 16, placing it eighth among the 12 funds in this review. The information ratio measures the fund manager’s consistency and ability to generate excess returns over a benchmark. The higher the reading, the better the consistency. Investors should remember that we can’t evaluate a negative information ratio.
A note to investors
The PRESX’s alpha was unimpressive for both the one-year period ended February 16 and for 2015, helping it to secure the eighth and tenth positions for those time periods, respectively, among the 12 funds in this review. Similar to the PEUGX, which was evaluated in the previous article, the PRESX has not been a standout performer in terms of any metric. Investors need to evaluate alternatives as well as the longer-term performance of the fund to decide whether this fund makes their shortlist, or stay with the fund if they’re already invested in it. In the next article, we’ll look at the Franklin Mutual European Fund – Class A (TEMIX).