Equities are off to a volatile start in 2026. While initial optimism around the AI capex boom continued to support global equity markets, a rotation into cyclical sectors, value, and non-US stocks helped broaden the rally.
Rising expectations of interest rate cuts by central banks, combined with a tailwind from commodities, further lifted sentiment. However, the launch of increasingly powerful AI models prompted investors to question the durability of technology companies’ economic moats, particularly in the software sector, triggering an indiscriminate selloff.
At the same time, the rapid escalation of the US/Israel–Iran conflict sparked a broader market downturn and reignited risk aversion. Surging energy prices pushed inflation expectations higher, threatening global economic growth and shifting market expectations from rate cuts to the possibility of renewed tightening by central banks. The Morningstar Global Target Market Exposure index lost almost 5 percent in March, resulting in a negative 1.4 percent return for the quarter.
Against this backdrop, we evaluate two strategies in the Global Large-Cap Value Equity Morningstar category that are covered by Morningstar analysts and that managed to generate a positive return in the first three months of 2026: Schroder ISF Global Recovery versus T. Rowe Price Global Value Equity.
People
While both teams have their watchpoints, our concerns are more pronounced for Schroders, resulting in an Average People Pillar rating, compared with an Above Average rating for T. Rowe Price.
Both strategies rely on collaborative cultures and deep research resources, but their team dynamics diverge meaningfully. T. Rowe’s Global Value team is anchored by long-tenured leaders. Sebastien Mallet has conceptualized and led the strategy since its inception in 2012. He is supported by associate portfolio manager Marta Yago, who provides critical sector expertise across financials, energy, commodities, and consumer sectors. Both have developed within T. Rowe’s highly centralized, sector-led research platform. This stability reinforces continuity and, together with a broad bench of analysts and experienced value peers, inspires conviction in idea generation and execution, despite some concentration around a key decision-maker and ongoing succession considerations.
Schroders’ global value team is defined by a collegiate, intellectually rigorous ethos, with portfolio managers acting as analysts and actively challenging consensus. While this culture remains intact and the team includes several high‑caliber investors, frequent senior departures and a still‑developing US research footprint temper confidence. Current leads Simon Adler and Liam Nunn are capable and well-integrated, and we appreciate the team’s introspective mindset and ongoing efforts to refine the process, but the pace of change continues to constrain conviction.
Process
Both T. Rowe Price and Schroders employ disciplined, contrarian value processes designed to exploit market inefficiencies, underpinned by robust research and a focus on identifying recovery potential while avoiding value traps, earning them an Above Average Process Pillar rating.
Both processes combine quantitative screening with deep fundamental analysis and demonstrate patience in letting investment theses play out. T. Rowe Price stands out for the breadth of its global research platform and the systematic integration of ESG considerations throughout security selection, which supports conviction but introduces added complexity and reliance on judgment when distinguishing “correctable” uncertainties from structural challenges.
Schroders differentiates itself through a highly formalized and introspective framework, including its Value Archive and explicit bias controls, reinforcing discipline and consistency. The use of both a valuation discount and a risk score in portfolio construction is a further strength. While both processes inspire confidence, disciplined execution remains critical given their inherent contrarian nature.
Portfolio
T. Rowe Price and Schroders both run unconstrained, actively managed portfolios that emphasize value and take meaningful sector and regional bets away from benchmarks. Each combines diversification with conviction, holding a mix of smaller, higher-risk positions alongside core holdings, and accepts volatility in pursuit of long-term returns.
However, T. Rowe Price typically runs a larger, more liquid portfolio of 80 to 100 holdings, explicitly balancing deep-value ideas with high-quality, cash-generative defensives, and turns the portfolio rapidly through frequent rebalancing. Sector positioning is deliberately atypical, with structural underweights to technology and consumer discretionary sectors, and no real estate exposure.
Schroders, by contrast, holds a more concentrated portfolio of 40 to 60 stocks, leans more heavily into distressed and cyclical opportunities, maintains a persistent underweight to the US, and allows smaller positions to drive returns.
Performance
T. Rowe Price and Schroders have both delivered attractive long-term outcomes versus value peers, but their performance paths have differed markedly. T. Rowe Price’s record has been steadier, with frequent first‑quartile results and consistent alpha over most market cycles, supported by slightly lower volatility than both peers and benchmark. While 2018 and 2022 weighed on short‑term results, its longer term track record remains solid. Stock picks within technology, energy and industrials drove returns at the start of 2026, including positions in SanDisk, Technip, and Deere & Co.
Schroders, by contrast, has generated strong longer-term outperformance, but with a bumpier ride. Its deeper-value, contrarian positioning has led to higher volatility, sharp drawdowns in momentum‑led markets, and more pronounced dispersion across calendar years, including a weak 2024 after a strong 2023. Its solid performance in the first quarter of 2026 was driven by picks in the energy, communication and basic materials sectors, including positions in LyondellBasell, Repsol, and Verizon Communications.
Jeffrey Schumacher is director of manager research at Morningstar Benelux. Morningstar analyzes and evaluates investment funds based on quantitative and qualitative research. Morningstar is part of Investment Officer’s expert panel.