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International Small Cap Fund

NAV (as of 28 Jun 2017)

$12.24, +0.04

YTD

+16.35%

INCEPTION

20 Oct 2014

TICKER/CUSIP

CIISX/14949P703

Fact Sheet Prospectus

Fund Profile

The Fund invests primarily in common stocks of companies with smaller market capitalizations located in developed and emerging markets outside the U.S. The Fund normally invests at least 80% of its total assets in equity securities of companies with smaller market capitalizations. Smaller market capitalization companies are companies with market capitalizations that do not exceed the highest market capitalization of a company within the Fund’s benchmark, the MSCI ACWI ex USA Small Cap Index (Gross), at the time of purchase. Some of these companies, although small by U.S. standards, might be large companies in their local markets. The Fund may continue to hold securities of a portfolio company that appreciate above the smaller market capitalization threshold and thus may from time to time hold less than 80% of its total assets in equity securities of companies with smaller market capitalizations. The Fund may invest in a wide range of industries.

Minimum Investment$1,000,000
Sales ChargeNone
Net Expense Ratio1.33%
Gross Expense Ratio3.45%
Dividend FrequencyAnnual
Capital Gain FrequencyAnnual
BenchmarkMSCI AC World ex USA Small Cap

Performance

Fund Quarter to Date Year to Date 1 Year Since Inception
CIISX 3.7%12.4%16.5%8.7%
MSCI AC World ex USA Small Cap 5.9%15.3%16.7%8.9%
Fund Quarter to Date Year to Date 1 Year Since Inception
CIISX 8.4%8.4%13.1%7.7%
MSCI AC World ex USA Small Cap 8.9%8.9%12.7%7.0%

Portfolio

Asset Allocation as of 31 May 2017

Stocks 98.4%
Cash 1.6%

Characteristics as of 31 May 2017

Causeway MSCI AC World ex USA Small Cap
No. of Holdings 114 4254
Wtd. Avg. Market Cap (Mn $US)$1,150$1,690
FY2 Price/Earnings8.614.3
Price/Book Value1.21.6

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. The FY2 P/E ratio is a forward P/E ratio using a next-twenty four months EPS estimate in the denominator.

SECTOR WEIGHTS as of 31 May 2017

Industrials15.98%
Financials14.35%
Information Technology13.91%
Materials13.46%
Consumer Discretionary12.94%
Real Estate12.47%
Energy5.27%
Consumer Staples3.56%
Health Care3.28%
Utilities1.84%
Equity Funds1.32%
Telecommunication Services0.00%

(VS. Benchmark)

Industrials20.19%
Financials10.09%
Information Technology12.26%
Materials10.65%
Consumer Discretionary15.61%
Real Estate10.23%
Energy3.39%
Consumer Staples6.54%
Health Care7.28%
Utilities2.70%
Equity Funds0.00%
Telecommunication Services1.05%
Industrials
Financials
Information Technology
Materials
Consumer Discretionary
Real Estate
Energy
Consumer Staples
Health Care
Utilities
Equity Funds
Telecommunication Services
Other

TOP 10 COUNTRIES as of 31 May 2017

Japan16.88%
United Kingdom9.32%
Canada8.07%
Italy7.12%
Australia6.92%
China6.57%
France4.90%
South Korea3.96%
Norway3.45%
Taiwan3.18%
Germany2.91%
Thailand2.83%
Mexico2.26%
Belgium2.03%
Netherlands2.00%
Singapore1.94%
Turkey1.90%
Austria1.88%
Sweden1.83%
Indonesia1.76%
Spain1.66%
India1.32%
Greece1.21%
New Zealand0.63%
Israel0.56%
Egypt0.56%
Malaysia0.49%
Switzerland0.26%
Portugal0.00%
Hong Kong0.00%
Denmark0.00%
Finland0.00%
Ireland0.00%
Philippines0.00%
Hungary0.00%
Poland0.00%
Qatar0.00%
Russia0.00%
South Africa0.00%
Czech Republic0.00%
United Arab Emirates0.00%
Brazil0.00%
Chile0.00%
Colombia0.00%

(VS. Benchmark)

Japan21.71%
United Kingdom12.76%
Canada6.74%
Italy3.03%
Australia4.38%
China4.56%
France3.31%
South Korea3.84%
Norway1.08%
Taiwan3.89%
Germany4.81%
Thailand0.77%
Mexico0.61%
Belgium1.41%
Netherlands1.53%
Singapore1.15%
Turkey0.25%
Austria0.60%
Sweden3.71%
Indonesia0.49%
Spain1.88%
India2.91%
Greece0.16%
New Zealand0.77%
Israel1.08%
Egypt0.09%
Malaysia0.71%
Switzerland3.56%
Portugal0.28%
Hong Kong1.64%
Denmark1.15%
Finland1.09%
Ireland0.73%
Philippines0.23%
Hungary0.02%
Poland0.26%
Qatar0.12%
Russia0.17%
South Africa1.12%
Czech Republic0.03%
United Arab Emirates0.13%
Brazil0.94%
Chile0.24%
Colombia0.06%
Japan
United Kingdom
Canada
Italy
Australia
China
France
South Korea
Norway
Taiwan
Germany
Thailand
Mexico
Belgium
Netherlands
Singapore
Turkey
Austria
Sweden
Indonesia
Spain
India
Greece
New Zealand
Israel
Egypt
Malaysia
Switzerland
Portugal
Hong Kong
Denmark
Finland
Ireland
Philippines
Hungary
Poland
Qatar
Russia
South Africa
Czech Republic
United Arab Emirates
Brazil
Chile
Colombia
Other

TOP 10 ACTIVE HOLDINGS as of 31 May 2017

Security Country Industry Active Weight*
Air France-KLM SA France Transportation 2.4
ASTM SpA Italy Transportation 2.1
DIC Asset AG Germany Real Estate 2.0
Immobiliare Grande Distribuzione SpA Italy Real Estate 2.0
ASR Nederland NV Netherlands Insurance 1.9
Cape Plc United Kingdom Commercial & Professional Services 1.9
Yanlord Land Group Ltd. Singapore Real Estate 1.9
Yuzhou Properties Co., Ltd. China Real Estate 1.9
Redrow Plc United Kingdom Consumer Durables & Apparel 1.9
UNIQA Insurance Group AG Austria Insurance 1.9

*Active defined as Fund weight minus MSCI ACWI ex USA Small Cap Index weight. Holdings are subject to change.

Approach

For Causeway International Small Cap Fund, our quantitative process examines a multitude of factors within four main categories to gauge the return potential of a stock. First, we seek relatively inexpensive valuations. Second, we want to see accelerating earnings growth prospects and upward earnings estimate revisions from the sell-side analysts who cover the stock. Third, we look for positive recent momentum, since recent trends tend to persist. And fourth, we want to find quality by seeking stocks with a focus on strong free cash flow generation rather than simply sales growth. We then rank the stocks on these factors to identify candidates that we believe should produce the most attractive risk-adjusted returns. Before we establish new positions, our fundamental portfolio managers and analysts have the opportunity to review stocks in their sector of coverage and report any “red flags” that may be outside the scope of quantitative analysis.

We take many steps to monitor and manage risk within the portfolio. We start by including in our tradable universe only the roughly 2,800 stocks that trade at least $1 million per day on average, to seek sufficient liquidity and to minimize market impact when we enter and exit positions. We intend for the portfolio to also typically contain between 120 and 200 stocks at any one time, and this breadth is intended to limit idiosyncratic risk.

Commentary

PERFORMANCE REVIEW for the month ended 31 May 2017


International smaller capitalization equities continued to appreciate during May, buoyed by demand for growth stocks and by evidence of a recovery in European economies. The strongest returns within the MSCI ACWI ex USA Small Cap Index (“Index”) came from the telecommunication services, utilities, and consumer staples sectors. Energy, materials, and consumer discretionary delivered the weakest sector returns. Smaller capitalization equities underperformed larger capitalization equities in May, mostly due to their relatively weak performance in emerging markets. Within emerging markets, small caps underperformed large caps by over 200 basis points, however small caps in developed markets performed in-line with their large cap peers.

Causeway International Small Cap Fund (“Fund”) underperformed the Index during the month. To evaluate stocks in our investable universe, our multi-factor quantitative model employs four broad bottom-up factor categories: valuation, earnings growth, technical indicators, and quality. Value exhibited negative returns for the first month in the prior eight months, following a strong rebound in performance. Even after its negative performance in May, it remains the best-performing factor group over the 2017 year-to-date period and over the past 12 months. Earnings growth factors posted positive performance in May following a difficult start to the year and now have positive performance for the 2017 year-to-date period (though they remain the weakest factor group over the last 12 months). Technical factors were the top-performing factors in May. The quality, or financial strength, factor group posted modestly positive returns in May, and financial strength remains the most consistent factor group over the last twelve months with only one month of negative returns. All factor group returns are positive for the 2017 year-to-date period and over the last 12 months, and all remain positive over the inception-to-date period.

Fund holdings in the healthcare, materials, and utilities detracted the most from relative returns. Holdings in the industrials, real estate, and information technology sectors offset some of the underperformance. The largest detractor to relative performance was building materials manufacturer, CSR Limited (Australia). Additional top detractors included petrochemical manufacturer, Tosoh Corporation (Japan), soybean manufacturer, Thai Vegetable Oil Public Co. Ltd.(Thailand), gas & electric company, Just Energy Group Inc. (Canada), and mining company, PT Indo Tambangraya Megah Tbk (Indonesia). The largest positive contributor to relative performance was passenger & cargo airline company, Air France-KLM SA (France). Additional top contributors included plastics & polymers manufacturer, Korea Petro Chemical Ind. Co., Ltd. (South Korea), industrial holding company, ASTM SpA (Italy), residential property developer, Yuzhou Properties Co., Ltd. (Hong Kong), real estate investment company and real estate investment trust, Immobiliare Grande Distribuzione SIIQ S.p.A. (Italy).

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$0.2901
2015$0.2407
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Short-term Capital Gains

2016$0.0000
2015$0.0000
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Long-term Capital Gains

2016$0.0000
2015$0.0000
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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

Consent to Electronic Delivery

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