The new Global Government Bond High Quality Fund seeks capital appreciation and interest income by investing primarily in bonds issued by high-quality governments, government-related entities, and government agencies around the world and in global currencies.
Darren Hall, T. Rowe Price country head for Australia and New Zealand and head of distribution, noted the fund launch came alongside a “new market environment” for global fixed income.
“Over many years, much of the return from bond markets has been made by steadily falling yields and tightening credit spreads. However, this benign investment environment was upended in 2022 as the US Fed, Reserve Bank of Australia, and other central banks around the world embarked on a rapid rate hiking cycle to curb high inflation,” he said.
“This new market environment of structurally higher bond yields, higher volatility, and greater dispersion between countries creates new opportunities for asset owners to think about their global fixed income program.”
It marks the firm’s seventh Australian Unit Trust (AUT) for wholesale and institutional investors and will be managed by Arif Husain, T. Rowe Price chief investment officer and head of global fixed income, who brings almost three decades of investment experience to the fund.
The firm elaborated that the benchmark-aware fund is expected to generate alpha through highly active interest rate and country management and not by adding credit risk, with a highly flexible government bond strategy designed to seek consistent outperformance by exploiting inefficiencies within the global fixed income market and managing portfolios within a disciplined risk management framework.
“T. Rowe Price has built a substantial global presence in fixed income investing over the last 50 years, and we are committed to expanding our fixed income product range in Australia,” Hall remarked.
“Australia is the second largest market for T. Rowe Price in Asia-Pacific and is also one of seven markets that are part of T. Rowe Price’s Global Growth Initiative because of its growth potential and our ability to meet financial intermediary and institutional client needs.”
As part of this initiative, he added, the firm is “actively investing in on-the-ground products, resources, and marketing efforts” to solidify its Australian presence.
Around 88 per cent of T. Rowe Price’s fixed income composites have outperformed their respective benchmarks gross of fees while 77 per cent have outperformed their respective benchmarks net of fees in the past 10 years to 31 December 2023.
Earlier this month, the firm expanded the platform presence of its global high income portfolio to support self-managed investors and advisers by making its high conviction global high income fund available on HUB24 and BT Panorama’s menus, alongside Netwealth.
