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Foreign-Stock Fund Regains Its Medalist Status

T. Rowe Price International Stock Fund's manager deftly uses the same sound and distinctive strategy as his predecessor.

William Samuel Rocco, 08/21/2017

The following is our latest Fund Analyst Report for T. Rowe Price International Stock Fund PRITX.  

Lead manager Richard Clattenburg has worked on T. Rowe International Stock in various capacities for 10 years now. He has gotten off to a pretty good start at the helm. And this fund’s other strengths remain intact. Therefore, this fund’s People Pillar rating and Morningstar Analyst Rating both rise to Bronze from Neutral.

Clattenburg joined former lead manager Robert Smith as an analyst on this foreign large-growth fund in 2007. He was promoted to associate manager on this fund in 2010, and he remained in that position until he replaced Smith as the lead manager on April 1, 2015. (Smith remained at T. Rowe Price and served as a member of this fund's advisory team until he retired from the firm at the end of 2016.)

Meanwhile, Clattenburg, who has 14 years of investment experience overall, has made a number of good decisions as most emerging markets have gyrated to moderate gains during his 28 months at helm. His stock selection, for example, has paid off in China as well as several European markets. As result, from April 1, 2015, through July 31, 2017, this fund has a Morningstar Risk-Adjusted Return of 4.7% versus 4.1% for the average foreign large-growth offering and 3.1% for the MSCI ACWI ex USA Index (its benchmark).

Clattenburg has achieved these results using the same sound and distinctive strategy as Smith had employed during his 7.5-year tenure at the helm. In particular, Clattenburg has maintained the emphasis on firms with strong balance sheets, healthy free cash flows, and good growth prospects, has continued to pay ample attention to valuations, and invests in emerging-markets stocks that meet these criteria just as readily as his predecessor did.

Finally, Clattenburg has a very sizable and skilled squad of equity specialists to call on for support. This fund has a relatively modest average cost structure that gives it a leg up on most of its rivals year in and year out. And T. Rowe Price is a superior parent that has had considerable success with international equity funds.  

Process Pillar: Positive | William Samuel Rocco 08/08/2017
Lead manager Richard Clattenburg, who took the helm of this foreign large-growth fund April 1, 2015 , employs the same strategy as former lead manager Robert Smith (who ran the portfolio from Oct. 1, 2007, through March 2015). Specifically, Clattenburg focuses on companies with market caps of $2 billion or more that are positioned to grow their earnings at double-digit rates over several years and have other positive attributes, including strong market shares, superior technologies or brands, cost and other structural advantages, and robust cash flows.

The fund's benchmark is the fairly emerging-markets-heavy MSCI ACWI ex USA Index, and Clattenburg readily invests in stocks in the developing world that meet his growth and other criteria. Thus, the fund consistently has a lot more emerging-markets exposure than the average foreign large-growth offering and often has a little more such exposure than the index. He also is comfortable if his stock selection leads to moderate country and sector overweightings.

William Samuel Rocco is a senior fund analyst with Morningstar. He would like to hear from you, but he cannot provide individual-portfolio or financial-planning advice.

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