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International Opportunities

Strategy Profile

The Causeway International Opportunities strategy is a blend of Causeway’s best skills, combining our international value (bottom-up, fundamental, developed international markets) and emerging markets (quantitatively managed with a targeted tracking error of 5%) equity strategies. Tracking error is a measurement of dispersion from a benchmark index. Our quantitative research team developed a multi-factor model that measures the relative attractiveness of emerging markets, and guides the portfolio managers in tactically allocating between the developed and emerging portfolio segments.

Inception Date30 June 2007
BenchmarkMSCI ACWI ex US

Performance

Fund Quarter to Date Year to Date 1 Year3 Year5 Year Since Inception
Gross % 9.3%9.3%15.2%0.8%6.3%2.9%
Net % 9.2%9.2%14.8%0.4%6.0%2.6%
MSCI ACWI ex US 8.0%8.0%13.7%1.0%4.8%1.0%

Portfolio

Asset Allocation as of 31 Mar 2017

Stocks 99.1%
Cash 0.9%

Characteristics as of 31 Mar 2017

Causeway MSCI ACWI ex US
No. of Holdings 187 1853
Wtd. Avg. Market Cap (Mn $US)$48,096$43,568
FY2 Price/Earnings11.413.4
Price/Book Value1.41.7
Dividend Yield (%)3.22.9

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 Mar 2017

Financials20.65%
Industrials15.77%
Consumer Discretionary10.34%
Health Care10.05%
Information Technology9.86%
Materials8.40%
Energy8.20%
Consumer Staples5.77%
Utilities4.30%
Telecommunication Services4.03%
Real Estate1.69%

(VS. Benchmark)

Financials23.33%
Industrials11.86%
Consumer Discretionary11.31%
Health Care8.04%
Information Technology9.90%
Materials8.01%
Energy6.79%
Consumer Staples9.85%
Utilities3.17%
Telecommunication Services4.51%
Real Estate3.23%
Financials
Industrials
Consumer Discretionary
Health Care
Information Technology
Materials
Energy
Consumer Staples
Utilities
Telecommunication Services
Real Estate
Other

TOP 10 COUNTRIES as of 31 Mar 2017

United Kingdom22.41%
Switzerland12.18%
Japan11.46%
France8.95%
Germany8.29%
China5.77%
Canada4.99%
South Korea4.06%
Netherlands3.97%
Taiwan3.24%
India2.27%
Italy1.97%
Russia1.42%
Thailand1.35%
Brazil1.30%
Spain1.12%
Sweden0.86%
Australia0.78%
South Africa0.62%
Malaysia0.45%
Turkey0.37%
Poland0.28%
United Arab Emirates0.25%
Mexico0.24%
Indonesia0.17%
Qatar0.12%
Hungary0.09%
Czech Republic0.06%
Philippines0.05%
Egypt0.00%
Greece0.00%
New Zealand0.00%
Singapore0.00%
Hong Kong0.00%
Norway0.00%
Portugal0.00%
Ireland0.00%
Israel0.00%
Austria0.00%
Belgium0.00%
Denmark0.00%
Finland0.00%
Peru0.00%
Chile0.00%
Colombia0.00%

(VS. Benchmark)

United Kingdom12.44%
Switzerland6.08%
Japan16.29%
France7.10%
Germany6.62%
China6.31%
Canada6.85%
South Korea3.54%
Netherlands2.41%
Taiwan2.88%
India2.08%
Italy1.51%
Russia0.89%
Thailand0.53%
Brazil1.79%
Spain2.34%
Sweden2.01%
Australia5.30%
South Africa1.56%
Malaysia0.57%
Turkey0.24%
Poland0.28%
United Arab Emirates0.18%
Mexico0.87%
Indonesia0.59%
Qatar0.19%
Hungary0.07%
Czech Republic0.04%
Philippines0.27%
Egypt0.03%
Greece0.08%
New Zealand0.12%
Singapore0.92%
Hong Kong2.44%
Norway0.44%
Portugal0.11%
Ireland0.32%
Israel0.47%
Austria0.14%
Belgium0.81%
Denmark1.14%
Finland0.67%
Peru0.09%
Chile0.29%
Colombia0.10%
United Kingdom
Switzerland
Japan
France
Germany
China
Canada
South Korea
Netherlands
Taiwan
India
Italy
Russia
Thailand
Brazil
Spain
Sweden
Australia
South Africa
Malaysia
Turkey
Poland
United Arab Emirates
Mexico
Indonesia
Qatar
Hungary
Czech Republic
Philippines
Egypt
Greece
New Zealand
Singapore
Hong Kong
Norway
Portugal
Ireland
Israel
Austria
Belgium
Denmark
Finland
Peru
Chile
Colombia
Other

TOP 10 HOLDINGS as of 31 Mar 2017

Security Country Industry % of Total
Volkswagen AG Germany Automobiles & Components 3.8
Akzo Nobel NV Netherlands Materials 3.3
Royal Dutch Shell Plc United Kingdom Energy 2.9
British American Tobacco Plc United Kingdom Food Beverage & Tobacco 2.8
Schneider Electric SE France Capital Goods 2.6
ABB Ltd. Switzerland Capital Goods 2.5
ENGIE SA France Utilities 2.3
Roche Holding AG Switzerland Pharmaceuticals & Biotechnology 2.3
East Japan Railway Co. Japan Transportation 2.2
BASF SE Germany Materials 2.2

Holdings are subject to change.

Approach

The Causeway International Opportunities strategy is a blend of Causeway’s best skills, combining our international value (bottom-up, fundamental, developed international markets) and emerging markets (quantitatively managed with a targeted tracking error of 5%) equity strategies. Tracking error is a measurement of dispersion from a benchmark index. Our quantitative research team developed a multi-factor model that measures the relative attractiveness of emerging markets, and guides the portfolio managers in tactically allocating between the developed and emerging portfolio segments.

Our developed markets exposure aims to add value through intensive fundamental research implemented via a disciplined value approach.

Our emerging markets exposure is the result of a quantitative strategy tailored to the unique growth, momentum, and risk characteristics of developing markets. Our proprietary tactical allocation model is designed to add additional value.

The Causeway International Opportunities portfolio is a fully invested, typically 120-200 stock portfolio. Allocation between developed and emerging markets can range from 0-2x the allocation of the MSCI All Country World Index ex-US, but is scalable to clients’ desired parameters.

Commentary

PERFORMANCE REVIEW for the month ended 31 Mar 2017


Global equity markets extended their positive performance through the end of the first quarter of 2017, as hopes for regulatory and tax reform in the US drive continued improvement in business and consumer confidence globally. Economic growth within emerging markets is improving, and valuations lured investors, particularly given the brightening earnings outlooks for many companies in the asset class. The top performing markets in our investable universe included Spain, Mexico, Italy, Chile, and Portugal. The worst performing markets included Egypt, New Zealand, Brazil, Norway, and Hungary. The best performing sectors in the MSCI ACWI ex US Index (“Index”) were information technology, utilities, and consumer discretionary. The worst performing sectors were real estate, materials, and energy.

The Portfolio outperformed the Index during the period, due primarily to stock selection. Portfolio holdings in the materials, banks, capital goods, insurance, and pharmaceuticals & biotechnology industry groups contributed to relative performance. Holdings in the transportation, automobiles & components, technology hardware & equipment, and software & services industry groups, along with an underweight position in the media industry group, offset some of the relative outperformance. The top contributor to performance was paints & coatings producer, Akzo Nobel NV (Netherlands). Other notable contributors included multinational electric utility company, ENGIE SA (France), banking & financial services company, UniCredit S.p.A. (Italy), retail bank, CaixaBank SA (Spain), and energy management solutions company, Schneider Electric SE (France). The largest detractor was major passenger railway operator,East Japan Railway Co. (Japan). Additional detractors included automobile manufacturer, Volkswagen AG (Germany), bank, Sumitomo Mitsui Financial Group, Inc. (Japan), banking & financial services company, Lloyds Banking Group Plc (United Kingdom), and utilities provider, SSE Plc (United Kingdom).*

*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 portfolio holdings and characteristics are subject to change. There is no guarantee that any forecasts made will come to pass. The securities identified and described above 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.  Past performance does not guarantee future results.  For a description of our performance attribution methodology, or to obtain a list showing every holding's contribution to the overall account's performance during the quarter, please contact our product manager, Kevin Moutes, at 310-231-6116 or moutes@causewaycap.com.

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