T. Rowe Price Group, Inc. · NASDAQ:TROW
T. Rowe Price — Investor Presentation (September 2022)
34 slides from T. Rowe Price's investor presentation, Sep 28, 2022
Slide 1: Global Impact Credit: Going beyond green bonds
Global Impact Credit Going beyond green bonds 28 September 2022 Join the conversation: FOR PROFESSIONAL CLIENTS ONLY. NOT FOR FURTHER DISTRIBUTION. LinkedIn: @TRowePriceUK T. R O W E P R I C E 1
Slide 2: Today's Speaker
Today’s Speaker Matt Lawton Portfolio Manager T. R O W E P R I C E 2
Slide 3: Agenda
Agenda 1. Impact Investing 2. Global Impact Credit Overview 3. Portfolio Positioning 4. Conclusion 5. Appendix T. R O W E P R I C E 3
Slide 4: Impact Investing
IMPACT INVESTING T. R O W E P R I C E 4
Slide 5: Where does impact investing sit?
Where does impact investing sit? ESG Exclusionary Inclusionary Sustainable Impact integration screening screening investing investing Incorporating E,S, Imposing value- Promoting ESG Promoting Investments offering and G factors into based investment characteristics by sustainable measurable, positiv
Slide 6: Global Impact Credit Overview
GLOBAL IMPACT CREDIT OVERVIEW T. R O W E P R I C E 6
Slide 7: Why T. Rowe Price Global Impact Credit?
Why T. Rowe Price Global Impact Credit? Going Breadth of beyond Impact and resources labelled alpha bonds Platform Seeking impact collaboration, Investing in high and alpha covering a broad impact-aligned opportunities opportunity set issuers, not limited through a portfolio across credit to green b
Slide 8: Global Impact Credit Investment Team
Global Impact Credit Investment Team As of 30 June 2022 Portfolio Manager Portfolio Strategy Team Drives portfolio construction, risk allocation and Conducts impact and ESG bond research; collaborates with Provides support to the Portfolio Manager, whilst working performance Responsible Investing te
Slide 9: Global Impact Credit Resources
Global Impact Credit Resources As of 31 August 2022 Responsible Investing Team Support the Portfolio Management Team to identify, analyze, and integrate Impact and ESG considerations most likely to have a material impact on an investment’s performance Maria Elena Drew Suha Read1 Joe Baldwin Dylan Co
Slide 10: Impact Pillars Guide our Decision Making
Impact Pillars Guide our Decision Making Impact Pillars Sub-Pillars Sub-Pillar Activities UN SDG Alignment Climate and Increasing energy efficiency Decarbonisation Resource Impact 1. Reducing greenhouse gases (GHGs) Reducing methane Carbon sequestration, Financing activities Protecting air quality,
Slide 11: Impact screening helps to ensure materiality and measurability
Impact screening helps to ensure materiality and measurability Areas that do not generate positive impact are actively excluded Our measurable inclusion criteria… Adult entertainment 1) Majority of current Alcohol Revenues or profits tied to at least one impact sub-pillar Assault-style weapons Condu
Slide 12: Evaluating ESG Labelled Bonds
Evaluating ESG Labelled Bonds We utilise a proprietary framework for assessing the credibility of ESG-labelled bonds Issuer’s ESG Profile Framework, Use of Proceeds Post-Issuance Standards, Reporting Verification ✓ Proprietary ✓ ICMA alignment ✓ Credibility of proceeds ✓ Reported allocation of T. Ro
Slide 13: Four-Step Investment Process
Four-Step Investment Process 1 2 3 4 Impact Analysis Fundamental Portfolio Measuring and Analysis Construction Reporting ▪ Proprietary ▪ Currency/sector/curve ▪ Retest theses ▪ Impact pillar and T. Rowe Price relative value UN SDG alignment fundamental credit ▪ Impact KPI rating ▪ Cycle stage progre
Slide 14: Measurement and Reporting
Measurement and Reporting As of 31 August 2022 UN SDG Alignment 2021 Annual Impact Report - Portfolio Impact Outcomes 5.8% 10.5% 7,050 Megawatts of 1.4 million Megawatts 1.2 billion Cubic meters 5 million tons of 22.7% 5.1% installed renewable hours of renewable energy of water saved materials proce
Slide 15: Portfolio Positioning
PORTFOLIO POSITIONING T. R O W E P R I C E 15
Slide 16: Portfolio Positioning by Impact Pillar and Sub-pillar
Portfolio Positioning by Impact Pillar and Sub-pillar As of 31 August 2022 Climate and Social Equity and Sustainable Resource Impact Quality of Life Innovation and Productivity 49% 44% 5% Reducing Greenhouse Sustainable Technology 4% 44% Enabling Social Equity 20% Gases (GHGs) Building Sustainable P
Slide 17: Portfolio characteristics
Portfolio characteristics As of 31 August 2022 Global Impact Credit Fund Credit Quality Rating1 Global Impact Benchmark2 Credit Average Credit Rating1 A3/Baa1 A2/A3 AAA MSCI ESG Rating3 AAA A Weighted Average Carbon Intensity AA 219.29 244.06 (mtCO2e/US$1t mn revenue)3 Weighted Average Maturity (yea
Slide 18: Market Outlook
Market Outlook As of 31 August 2022 Global Credit ▪ Corporate fundamentals impressively resilient, surprising to the upside ▪ Subdued primary issuance, low dealer inventories, and challenged market Outlook liquidity could be a technical tailwind ▪ Valuations broadly fair at index level, but several
Slide 19: Conclusion
CONCLUSION T. R O W E P R I C E 19
Slide 20: Where does Global Impact Credit sit for asset allocators?
Where does Global Impact Credit sit for asset allocators? Fixed Income Impact portfolios can be flexibly managed to client objectives T. R O W E P R I C E 20
Slide 21: A solution for clients with differing needs
A solution for clients with differing needs Global Client 1: Credit investor looking to swap out a “pure” Impact credit product Client 2: Credit Sustainable investor looking to swap out a general green product Fund Client 3: Pension fund swapping out non-green products for dark green T. R O W E P R
Slide 22: Appendix
APPENDIX T. R O W E P R I C E 22
Slide 23: Step One: Impact Analysis
Impact Fundamental Portfolio Monitoring and Analysis Analysis Construction Reporting Step One: Impact Analysis Quantify alignment with our 3 impact pillars Alignment and 8 sub pillars To create a robust and measurable impact universe Assess fundamentals through an impact lens Using the Impact Manage
Slide 24: Impact Analysis in Practice — NextEra Energy Partners
Climate & Resource Impact Impact Analysis in Practice — NextEra Energy Partners As of 31 December 2021 Impact Thesis Fundamentals – Five Dimensions of Impact NextEra is one of the largest owners of renewable energy projects in the U.S.100% of its What? Who? How much?1 Contribution Risks power comes
Slide 25: Global Impact Credit Investment Team
Global Impact Credit Investment Team As of 30 June 2022 Portfolio Manager Portfolio Strategy Team Drives portfolio construction, risk allocation and Conducts impact and ESG bond research; collaborates with Provides support to the Portfolio Manager, whilst working performance Responsible Investing te
Slide 26: Step Two: Fundamental Analysis
Impact Fundamental Portfolio Monitoring and Analysis Analysis Construction Reporting Step Two: Fundamental Analysis Fundamental and Relative Value Considerations What We Seek Credit quality Track record of strong capital allocation Responsible Investing Indicator Model score Sustainable competitive
Slide 27: Step Three: Risk-Managed Portfolio Construction
Impact Fundamental Portfolio Monitoring and Analysis Analysis Construction Reporting Step Three: Risk-Managed Portfolio Construction Top-Down Considerations Relative Value Credit Cycle Risk Management ▪ Macroeconomic outlook ▪ Tracking error volatility ▪ Across region, sector, currency, and curve ▪
Slide 28: Step Four: Measurement and Reporting
Impact Fundamental Portfolio Monitoring and Analysis Analysis Construction Reporting Step Four: Measurement and Reporting As of 31 August 2022 UN SDG Alignment 2021 Annual Impact Report - Portfolio Impact Outcomes 5.8% 10.5% 7,050 Megawatts of 1.4 million Megawatts 1.2 billion Cubic meters 5 million
Slide 29: Regional and sector report – market value (%)
Regional and sector report – market value (%) As of 31 August 2022 Global Impact Credit Fund Regional and Sector Allocation Global Impact Credit Benchmark1 North America Regional Allocation Latin America 51.6% North America 49.4% Africa/Mid-East 6.8 Latin America 2.4 Asia-Pacific 1.2 Africa / Middle
Slide 30: Top 10 Positions – Impact Theses
Top 10 Positions – Impact Theses As of 30 June 2022 Security MV% Impact Thesis Impact Pillar Sub-Pillar Primary UN SDG Proceeds (1) reducing GHGs through investment in clean transportation and renewable MercadoLibre 2.2% energy projects and (2) providing credit to Micro, Small and Medium Enterprises
Slide 31: Biographical backgrounds
Biographical backgrounds Matt Lawton, CFA Matt Lawton is a portfolio manager in the Fixed Income Division. He manages the Global Impact Credit Strategy and co-manages the US Investment Grade Corporate Bond Strategy. Matt is a vice president and member of the Investment Advisory Committees for the Co
Slide 32: T. Rowe Price Funds OEIC—Global Impact Credit Fund: General Investment Risks
T. Rowe Price Funds OEIC—Global Impact Credit Fund General Investment Risks Risks – the following risks are materially relevant to the portfolio: ▪ ABS and MBS risk – Asset-Backed Securities (ABS) and Mortgage-Backed Securities (MBS) may be subject to greater liquidity, credit, default and interest
Slide 33: Important Information
Important Information The Funds are sub-funds of the T. Rowe Price Funds OEIC, an investment company with variable capital incorporated in England and Wales which is registered with the UK Financial Conduct Authority and which qualifies as an undertaking for collective investment in transferable sec
Slide 34: Thank you
Thank you T. R O W E P R I C E 34
T. Rowe Price Group — Investor Presentation (September 2022) on 6ix