T. Rowe launches new quality government bond product

Yasmine Raso

Senior Journalist

27 March 2024

T. Rowe Price has launched its seventh Australian Unit Trust (AUT), the Global Government Bond High Quality Fund, for Australian wholesale and institutional investors.

Managed by London-based Arif Husain, also the firm’s Chief Investment Officer and Head of Global Fixed Income, the fund invests mainly in bonds issued by high quality governments, agencies and related businesses around the world.

The fund’s launched comes as bond markets experience significant growth alongside central banks’ interest rate tightening cycle. Backed by macroeconomic research, the firm said the fund “is designed to seek consistent outperformance by exploiting inefficiencies within the global fixed income market and managing portfolios within a disciplined risk management framework”.

“Over many years, much of the return from bond markets has been made by steadily falling yields and tightening credit spreads,” Darren Hall, T. Rowe Price’s Head of Distribution and Country Head for Australia and New Zealand, said.

“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.

“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.

“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.

“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, we are actively investing in on-the-ground products, resources and marketing efforts to solidify our presence in the Australian market.”