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*
+5.35%
Nav*
$12.01, -0.06
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 September 19, 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
Fund-6.6%1.8%-8.3%4.4%-0.6%5.3%3.4%
MSCI Emerging Markets-5.9%4.2%-4.0%6.2%0.8%4.4%3.3%
QTDYTD1 year3 years5 years10 yearsSince inception
Fund-6.6%1.8%-8.3%4.4%-0.6%5.3%3.4%
MSCI Emerging Markets-5.9%4.2%-4.0%6.2%0.8%4.4%3.3%
QTDYTD1 year3 years5 years10 yearsSince inception
Fund0.4%9.0%-1.9%9.1%1.5%7.2%4.0%
MSCI Emerging Markets0.7%10.8%1.6%11.1%2.9%6.2%3.9%
QTDYTD1 year3 years5 years10 yearsSince inception
Fund0.4%9.0%-1.9%9.1%1.5%7.2%4.0%
MSCI Emerging Markets0.7%10.8%1.6%11.1%2.9%6.2%3.9%
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 August 31, 2019)

Benchmark: MSCI Emerging Markets
Asset Allocation
Fund
Stocks97.9%
Cash2.1%
Fund Characteristics
FundBenchmark
No. of holdings 138 1201
Weighted avg. market cap (US $MM)$59,715$50,699
NTM price/earnings9.211.7
Price/book value1.31.6
NTM EPS revision (wtd. avg)-7.4-4.4
Net assets$3,525,549,651-
TOP 10 ACTIVE HOLDINGS
Security Country Active weight*
Tencent Holdings Ltd.China1.9%
China Construction Bank Corp.China1.9%
Investimentos ItauBrazil1.4%
Samsung Electronics Co., Ltd.South Korea1.3%
Gazprom PJSCRussia1.3%
JBS SABrazil1.3%
LukoilRussia1.2%
Ping An Insurance (Group) Co. of China Ltd.China1.1%
SberbankRussia1.1%
Anhui Conch Cement Co., Ltd.China0.9%

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
Financials23.7%24.6%
Information Technology16.8%14.4%
Communication Services12.1%11.6%
Consumer Discretionary11.3%13.9%
Energy9.3%7.4%
Consumer Staples6.6%6.9%
Materials5.2%7.4%
Industrials5.1%5.3%
Real Estate2.5%2.9%
Equity Funds2.2%0.0%
Health Care2.0%2.7%
Utilities1.1%2.9%
TOP 10 COUNTRIES
Country Fund Benchmark
China35.3%32.3%
South Korea13.3%11.5%
Taiwan10.8%11.2%
India9.6%8.7%
Brazil9.1%7.5%
Russia7.1%3.9%
Thailand3.2%3.0%
Mexico2.1%2.5%
South Africa1.4%5.4%
Indonesia1.3%2.2%
Regional Allocation
  • Emerging Asia 74.0%
  • Emerging Latin America 12.1%
  • Emerging Europe, Middle East, Africa 11.8%

Commentary (As of August 31, 2019)

Highlights

  • The US and China announced a new round of tariffs in August, pressuring emerging market (“EM”) equities.
  • The macroeconomic backdrop for EM assets is mixed. While the US Federal Reserve (“Fed”) lowered the target range for its federal funds rate in July, the yield on the 10-Year US Treasury Note has continued to fall, ending August at 1.50%.
  • The momentum factor, which has become more growth-oriented, continued its resurgence in August. In contrast, value stocks underperformed during the month and the YTD period.

Portfolio attribution

Causeway Emerging Markets Fund (“Fund”) outperformed the Index in August 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. Our value factor was a negative indicator in August and has been the weakest of our three bottom-up factor categories year-to-date (“YTD”). Our earnings growth factor was a positive indicator during the month. Our price momentum factor continued its resurgence and is our top performing bottom-up factor indicator YTD. Our four top-down factors – macroeconomic, country, sector, and currency – were positive indicators in August.

Investment outlook

The momentum factor, which has become more growth-oriented, continued its resurgence in August. In contrast, value stocks underperformed during the month and the year-to-date periods. In local currency terms, the MSCI Emerging Markets Value Index trailed the MSCI Emerging Markets Growth Index by 2.2% in August and is underperforming by 8.7% year-to-date. The MSCI Emerging Markets Value Index trades at a next-twelve-month price-to-earnings ratio of 8.8x and a price-to-book ratio of 1.1x, representing sizable discounts relative to the MSCI Emerging Markets Growth Index. We continue to emphasize value factors in our investment process, which should benefit the portfolio if/when value stocks rebound. We also include earnings growth and momentum factors in our alpha model to help the Fund navigate a variety of style regimes. We incorporate our value, earnings growth, and price momentum factors into our investment process through contextual weighting. When calculating a stock’s expected alpha, we first classify it as value, growth, or momentum and then assign weights that we believe are appropriate for that classification. This contextual approach has underperformed a uniform approach YTD. Despite recent underperformance, we remain confident in this methodology, which we believe has benefitted the strategy compared to an equal-weighted approach since the Fund’s inception in 2007.

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: