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Emerging Markets Fund

Diversified exposure to emerging markets, capturing value and growth

NAV (as of 22 Mar 2017)

$11.91, +0.06

YTD

+14.74%

INCEPTION

30 Mar 2007

TICKER/CUSIP

CEMVX/149498206

Fact Sheet Prospectus

Fund Profile

The Fund normally invests at least 80% of its total assets in equity securities of companies located in emerging (less developed) markets and other investments that are tied economically to emerging markets. Generally these investments include common stock, preferred and preference stock, American Depositary Receipts, European Depositary Receipts, Global Depositary Receipts, and exchange-traded funds (“ETFs”) that invest in emerging markets securities.

The Investment Adviser uses a quantitative investment approach to purchase and sell investments for the Fund. The Investment Adviser’s proprietary computer model analyzes a variety of factors to assist in selecting securities. The model currently analyzes factors relating to valuation, earnings growth, technical indicators, macroeconomics, currency, countries and sectors.

Minimum Investment$5,000
Sales ChargeNone
Net Expense Ratio1.43%
Dividend FrequencyAnnual
Capital Gain FrequencyAnnual
BenchmarkMSCI Emerging Markets

Performance

Fund Quarter to Date Year to Date 1 Year3 Year5 Year Since Inception
CEMVX 10.3%10.3%30.4%1.7%0.9%3.5%
MSCI Emerging Markets 8.7%8.7%29.9%1.7%-0.0%2.9%
Fund Quarter to Date Year to Date 1 Year3 Year5 Year Since Inception
CEMVX -4.0%8.9%8.9%-2.4%2.5%2.5%
MSCI Emerging Markets -4.1%11.6%11.6%-2.2%1.6%2.0%

Portfolio

Asset Allocation as of 28 Feb 2017

Stocks 98%
Cash 2%

Characteristics as of 28 Feb 2017

Causeway MSCI Emerging Markets
No. of Holdings 145 832
Wtd. Avg. Market Cap (Mn $US)$35,229$34,153
NTM Price/Earnings9.112.0
Price/Book Value1.21.6
NTM EPS Revision (Wtd. Avg)13.21.3

A "Weighted Average” measures a characteristic by the market capitalization of each stock. Price/Book Ratio is the weighted average of the price/book ratios of all the stocks in a portfolio. The P/B ratio of a company is calculated by dividing the market price of its stock by the company’s per-share book value. The Price/Earnings Ratio is the weighted average of the price/earnings ratios of the stocks in a portfolio. “Earnings-per-Share” is the portion of a company’s profit allocated to each outstanding share of common stock. “Earnings-per-Share year-over-year estimate growth (Next 12 Months)” is the average next-twelve-month earnings-per-share estimate from one year ago for an individual company compared with that estimate today; note that this calculation is done on a company by company basis and is aggregated through a weighted average based on the individual company’s weight in the corresponding index. Also note that this characteristic is supplied directly by MSCI.

SECTOR WEIGHTS as of 28 Feb 2017

Information Technology27.48%
Financials23.19%
Energy11.60%
Industrials8.03%
Consumer Discretionary5.31%
Materials5.27%
Consumer Staples4.28%
Utilities3.81%
Telecommunication Services3.40%
Health Care2.97%
Real Estate2.63%

(VS. Benchmark)

Information Technology23.88%
Financials24.47%
Energy7.41%
Industrials5.81%
Consumer Discretionary10.34%
Materials7.57%
Consumer Staples6.99%
Utilities2.85%
Telecommunication Services5.63%
Health Care2.46%
Real Estate2.59%
Information Technology
Financials
Energy
Industrials
Consumer Discretionary
Materials
Consumer Staples
Utilities
Telecommunication Services
Health Care
Real Estate
Other

TOP 10 COUNTRIES as of 28 Feb 2017

China26.91%
South Korea17.62%
Taiwan12.65%
India9.02%
Brazil8.23%
Russia5.64%
Thailand4.42%
South Africa3.26%
Indonesia2.03%
Turkey1.55%
Poland1.47%
Malaysia1.38%
Mexico1.31%
United Arab Emirates1.19%
Qatar0.51%
Hungary0.41%
Czech Republic0.38%
Egypt0.00%
Greece0.00%
Philippines0.00%
Chile0.00%
Colombia0.00%
Peru0.00%
Multi-National Emerging (ETF)0.00%

(VS. Benchmark)

China26.98%
South Korea14.73%
Taiwan12.33%
India8.45%
Brazil8.19%
Russia3.88%
Thailand2.23%
South Africa6.84%
Indonesia2.47%
Turkey1.05%
Poland1.22%
Malaysia2.43%
Mexico3.44%
United Arab Emirates0.81%
Qatar0.84%
Hungary0.29%
Czech Republic0.18%
Egypt0.15%
Greece0.32%
Philippines1.17%
Chile1.19%
Colombia0.42%
Peru0.39%
Multi-National Emerging (ETF)0.00%
China
South Korea
Taiwan
India
Brazil
Russia
Thailand
South Africa
Indonesia
Turkey
Poland
Malaysia
Mexico
United Arab Emirates
Qatar
Hungary
Czech Republic
Egypt
Greece
Philippines
Chile
Colombia
Peru
Multi-National Emerging (ETF)
Other

TOP 10 ACTIVE HOLDINGS as of 28 Feb 2017

Security Country Industry Active Weight*
PTT Public Co., Ltd. Thailand Energy 1.9
Bank of China Ltd. China Banks 1.9
China Petroleum & Chemical Corp. China Energy 1.8
Investimentos Itau Brazil Banks 1.8
Lukoil Russia Energy 1.5
Sberbank Russia OJSC Russia Banks 1.2
Banco do Brasil SA Brazil Banks 1.2
Hon Hai Precision Industry Co., Ltd. Taiwan Technology Hardware & Equipment 1.2
Hindustan Petroleum Corp. Ltd. India Energy 1.2
Samsung Electronics Co., Ltd. South Korea Technology Hardware & Equipment 1.1

*Active defined as Fund weight minus MSCI EM Index weight. Holdings are subject to change.

Approach

We believe the best way to exploit the investment opportunities in emerging markets equities is through a combination of value and growth, and bottom-up and top-down factors. For Causeway Emerging Markets Fund, our quantitative stock selection process is focused on attractively valued companies with superior earnings prospects and positive market sentiment; these companies should produce consistent returns across investment cycles. We use the same approach to select sectors and countries, comparing valuation against earnings growth and market sentiment. At the country level, we also consider the health of the macro-economy. Our quantitative process seeks to combine these factors while attempting to avoid undue sources of risk, which is defined as tracking error (a measurement of dispersion from a benchmark index).

The investment process begins with a liquidity screen on emerging markets equities. Our model creates a return forecast for every stock in the investable universe. We optimize the portfolio weights to maximize portfolio return potential, targeting a 5% tracking error relative to the benchmark MSCI Emerging Markets Index, and subject to additional relative constraints (sector, country, and stock).

Causeway Emerging Markets Fund is a fully invested portfolio of 110-150 stocks, with an average 85% annual turnover. Typically, the Fund is undervalued relative to the benchmark on a number of metrics, with greater earnings growth expectations.

Commentary

PERFORMANCE REVIEW for the month ended 28 Feb 2017


Optimism for global economic activity, supported by improving economic data from China, overcame headwinds of a rising US dollar and a looming US Federal interest rate increase to drive emerging markets equity prices upward in February. According to the Institute of International Finance, February marked the second consecutive month of investor inflows into emerging markets equities, reversing the pattern of outflows from the fourth quarter of 2016. The asset class outperformed developed markets equities for the month. China was a strong performer in February, after posting only modestly positive returns in 2016, a year when many emerging markets enjoyed double digit currency returns. Russia was the worst performing market in the MSCI Emerging Markets Index (“Index”) in February. Investor optimism for a reduction in US sanctions following the US presidential election faded, and weakness from energy stocks, the Russian market’s dominant sector, further pressured the market. The financials and consumer discretionary sectors appreciated the most over February, and the energy and telecommunications services sectors lagged.

Causeway Emerging Markets Fund (“Fund”) modestly outperformed the Index in February. We use both bottom-up and top-down factors to forecast alpha (return in excess of the Index) for the stocks in the Fund’s investable universe. Of the bottom-up factor categories, value demonstrated the greatest predictive power, indicating that investors preferred inexpensive stocks over those with positive earnings growth or price momentum. After facing headwinds last year, our top-down factors performed well in February. These factors evaluate aggregate characteristics at the sector, country, and currency levels, along with the macroeconomic conditions of emerging markets. Investors may be growing wary of countries—such as South Africa—with challenged macroeconomic climates, particularly after strong market performance last calendar year stretched their valuations. Countries with more favorable macroeconomic conditions—South Korea is one example—appear more attractively valued and could be the beneficiaries of value-oriented flows.

Positive stock selection in financials and real estate were the primary sector-level contributors to relative performance versus the Index. An overweight position in the energy sector and negative stock selection in the consumer staples sector partially offset outperformance. From a regional perspective, the Fund’s exposures to emerging Asia and Latin America contributed to outperformance, and exposure to EMEA (emerging Europe, Middle East, and Africa) was neutral. The top stock-level contributors to performance versus the Index were overweight positions in financial & industrial holdings company, Itausa- Investimentos Itau SA Pfd (Brazil), internet services provider, NetEase, Inc. Sponsored ADR (China), and retail & commercial bank, Bank of China Limited Class H (China). The largest individual detractors from relative performance were overweight positions in oil exploration & production company, LUKOIL PJSC Sponsored ADR (Russia), financial services firm, Sberbank Russia OJSC Sponsored ADR (Russia), and automobile manufacturer, Tata Motors Limited Sponsored ADR (India).

The market commentary expresses the portfolio managers’ views as of the date of this report and should not be relied on as research or investment advice regarding any stock. These views and the Fund holdings and characteristics are subject to change. There is no guarantee that any forecasts made will come to pass. Any securities identified and described in this report do not represent all of the securities purchased, sold or recommended for client accounts. The reader should not assume that an investment in the securities identified was or will be profitable. Diversification does not protect against market loss.

Dividends

2016$0.1353
2015$0.1434
2014$0.2425
2013$0.1100
2012$0.2768
2011$0.0972
2010$0.2560
2009$0.2866
2008$0.1506
2007$0.2097
Load More

Short-term Capital Gains

2016$0.0000
2015$0.0000
2014$0.0000
2013$0.0000
2012$0.0000
2011$0.0000
2010$0.0000
2009$0.0000
2008$0.0000
2007$0.4003
Load More

Long-term Capital Gains

2016$0.0000
2015$0.0000
2014$0.0000
2013$0.0000
2012$0.0000
2011$0.0000
2010$0.0000
2009$0.0000
2008$0.0000
2007$0.0000
Load More

Distributions are per share. Distribution amounts are based on gains and losses realized and income earned by the Fund through October 31 (or earlier under certain circumstances).

Documents

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