Diversified exposure to emerging markets, seeking to capture value and growth

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.

Causeway uses a quantitative investment approach to purchase and sell investments for the Fund. Causeway’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.

YTD Return*
+9.30%
Nav*
$12.46, -0.02
Inception
March 30, 2007
Cusip
149498107
Benchmark
MSCI Emerging Markets
Minimum Investment
$1,000,000
Sales Charge
None
Total Expense Ratio
1.15%
*As of November 12, 2019

Strategy overview

The portfolio managers discuss our Emerging Markets strategy.

Portfolio managers

Head of Quantitative Research
Quantitative Portfolio Manager
Quantitative Portfolio Manager
Quantitative Portfolio Manager

Performance

QTDYTD1 year3 years5 years10 yearsSince inception
Fund3.8%8.1%7.9%5.9%1.6%5.1%3.8%
MSCI Emerging Markets4.2%10.7%12.3%7.8%3.3%4.1%3.8%
QTDYTD1 year3 years5 years10 yearsSince inception
Fund3.8%8.1%7.9%5.9%1.6%5.1%3.8%
MSCI Emerging Markets4.2%10.7%12.3%7.8%3.3%4.1%3.8%
QTDYTD1 year3 years5 years10 yearsSince inception
Fund-4.5%4.1%-5.2%4.7%1.1%4.6%3.5%
MSCI Emerging Markets-4.1%6.2%-1.6%6.4%2.7%3.7%3.4%
QTDYTD1 year3 years5 years10 yearsSince inception
Fund-4.5%4.1%-5.2%4.7%1.1%4.6%3.5%
MSCI Emerging Markets-4.1%6.2%-1.6%6.4%2.7%3.7%3.4%
20182017201620152014201320122011201020092008
Fund-17.9%39.8%9.2%-16.0%2.1%-2.6%25.8%-18.1%26.3%88.1%-58.4%
MSCI Emerging Markets-14.2%37.8%11.6%-14.6%-1.8%-2.3%18.6%-18.2%19.2%79.0%-53.2%
Fund
MSCI Emerging Markets
20182017201620152014201320122011201020092008
-17.9%39.8%9.2%-16.0%2.1%-2.6%25.8%-18.1%26.3%88.1%-58.4%
-14.2%37.8%11.6%-14.6%-1.8%-2.3%18.6%-18.2%19.2%79.0%-53.2%

Portfolio (as of October 31, 2019)

Benchmark: MSCI Emerging Markets
Asset Allocation
Fund
Stocks97.3%
Cash2.7%
Fund Characteristics
FundBenchmark
No. of holdings 132 1201
Weighted avg. market cap (US $MM)$65,445$54,032
NTM price/earnings9.712.0
Price/book value1.41.6
NTM EPS revision (wtd. avg)5.92.7
Net assets$3,614,571,868-
TOP 10 ACTIVE HOLDINGS
Security Country Active weight*
China Construction Bank Corp.China2.0%
Investimentos ItauBrazil1.6%
Samsung Electronics Co., Ltd.South Korea1.5%
Gazprom PJSCRussia1.3%
Tencent Holdings Ltd.China1.3%
LukoilRussia1.2%
JBS SABrazil1.2%
Ping An Insurance (Group) Co. of China Ltd.China1.0%
SberbankRussia1.0%
Anhui Conch Cement Co., Ltd.China1.0%

A "weighted average” measures a characteristic by the market capitalization of each stock. Price/book value is the weighted average of the price/book values of all the stocks in a portfolio. The P/B value 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-12-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.

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

SECTOR WEIGHTS
Sector Fund Benchmark
Financials23.2%24.7%
Information Technology19.5%15.5%
Consumer Discretionary11.7%13.3%
Communication Services10.7%11.1%
Energy8.9%7.9%
Consumer Staples6.6%6.7%
Materials4.9%7.1%
Industrials4.4%5.3%
Real Estate2.4%2.9%
Equity Funds2.1%0.0%
Health Care1.9%2.8%
Utilities0.9%2.8%
TOP 10 COUNTRIES
Country Fund Benchmark
China33.6%31.9%
South Korea13.3%12.2%
Taiwan12.6%11.9%
India9.2%9.0%
Brazil9.0%7.7%
Russia7.4%4.1%
Thailand2.8%2.7%
Mexico2.2%2.5%
South Africa1.5%4.7%
Turkey1.1%0.5%
Regional Allocation
  • Emerging Asia 72.9%
  • Emerging Europe, Middle East, Africa 12.3%
  • Emerging Latin America 12.1%
  • Multi Region Emerging (ETF) 0.0%

Commentary (As of October 31, 2019)

Highlights

  • Benefitting from optimism surrounding the US-China trade negotiations, emerging markets (“EM”) equities outperformed developed market equities in October.
  • The macroeconomic backdrop for EM assets continues to improve. While sagging longer-term yields has resulted in an inverted US yield curve periodically throughout the year, the curve was slightly positively sloped at the end of October.A flat to slightly upward sloping yield curve is typically a positive signal for EM assets.
  • In EM, central banks are still pursuing relatively orthodox monetary policy and yield curves are generally positively sloped. Therefore, interest rate reversals are less likely to boost value stocks in EM. Furthermore, positive trade deal developments disproportionately help growth stocks by reducing China’s impetus for infrastructure stimulus, which typically benefits old economy value stocks.

Portfolio attribution

Causeway Emerging Markets Fund (“Fund”) underperformed the Index in October 2019. We use both bottom-up and top-down factor categories to seek to forecast alpha for the stocks in the Fund’s investable universe. After rebounding in September, our value factor resumed its underperformance in October and it has been the weakest bottom-up indicator over the year-to-date (“YTD”) period. Our price momentum and earnings growth factors were both positive indicators in October. Our four top-down factors, macroeconomic, country, sector, and currency, were positive indicators during the month.

Investment outlook

EM small capitalization (“cap”) stocks lagged large caps in October and have trailed over the YTD period, continuing their multi-year underperformance. We have been overweight small and mid-cap stocks in the Fund, which has detracted from relative performance. After a brief rally in September, EM value stocks resumed their decline in October. Factor performance has diverged recently between EM, where value has lagged, and developed markets, where value stocks have outperformed since the beginning of September. In developed markets, inverted yield curves and negative interest rates have been the norm recently. Therefore, any yield curve steepening or rise in interest rates can lead to value rallies. In EM, central banks are still pursuing relatively orthodox monetary policy and yield curves are generally positively sloped. Therefore, interest rate reversals are less likely to boost value stocks in EM. Furthermore, positive trade deal developments disproportionately help growth stocks by reducing China’s impetus for infrastructure stimulus, which typically benefits old economy value stocks. Trading at a significant discount to growth stocks and offering relatively high dividend yields, EM value stocks tend to be more economically cyclical. We believe that EM value stocks would perform relatively well if global growth improves, which should benefit the portfolio given our emphasis on the value factor in our portfolio construction process.

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. Current and future holdings are subject to risk. The Fund may invest in derivatives, which are often more volatile than other investments and may magnify the Fund's gains or losses. Investing in ETFs is subject to the risks of the underlying funds. International and emerging markets investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles or from social, economic or political instability in other nations. Emerging markets and smaller companies involve additional risks and higher volatility.

Distributions

DividendsShort-term capital gainsLong-term capital gains
2018$0.2296$0.0000$0.0000
2017$0.2232$0.0000$0.0000
2016$0.1597$0.0000$0.0000
2015$0.1620$0.0000$0.0000
2014$0.2775$0.0000$0.0000
2013$0.0825$0.0000$0.0000
2012$0.2526$0.0000$0.0000
2011$0.0778$0.0000$0.0000
2010$0.2451$0.0000$0.0000
2009$0.2830$0.0000$0.0000
2008$0.1186$0.0000$0.0000
2007$0.2002$0.4003$0.0000

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

Fund information:

Forms: