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Emerging Markets Fund

Diversified exposure to emerging markets, capturing value and growth

NAV (as of 20 Feb 2019)

$12.41, +0.08

YTD

+7.73%

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 Ratio1.40%
Dividend FrequencyAnnual
Capital Gain FrequencyAnnual
Benchmark MSCI Emerging Markets

Performance

Fund Quarter to Date Year to Date 1 Year3 Year5 Year10 Year Since Inception
CEMVX 8.9%8.9%-17.6%13.2%4.2%11.5%3.9%
MSCI Emerging Markets 8.8%8.8%-13.9%15.3%5.2%10.0%3.9%
Fund Quarter to Date Year to Date 1 Year3 Year5 Year10 Year Since Inception
CEMVX -8.9%-18.1%-18.1%7.6%1.2%9.6%3.2%
MSCI Emerging Markets -7.4%-14.2%-14.2%9.7%2.0%8.4%3.1%

Portfolio

Asset Allocation as of 31 Jan 2019

Stocks 97.3%
Cash 2.7%

Characteristics as of 31 Jan 2019

Causeway MSCI Emerging Markets
No. of Holdings 143 1123
Wtd. Avg. Market Cap (Mn $US)$57,259$51,403
NTM Price/Earnings8.911.6
Price/Book Value1.31.6
NTM EPS Revision (Wtd. Avg)-21.9-21.5

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 31 Jan 2019

Financials25.18%
Information Technology15.74%
Communication Services12.71%
Energy11.04%
Materials7.78%
Consumer Discretionary7.56%
Industrials6.51%
Consumer Staples4.52%
Health Care2.12%
Real Estate1.83%
Utilities1.45%
Equity Funds0.88%

(VS. Benchmark)

Financials24.84%
Information Technology14.28%
Communication Services14.16%
Energy8.09%
Materials7.34%
Consumer Discretionary10.87%
Industrials5.45%
Consumer Staples6.54%
Health Care2.73%
Real Estate3.08%
Utilities2.62%
Equity Funds0.00%
Financials
Information Technology
Communication Services
Energy
Materials
Consumer Discretionary
Industrials
Consumer Staples
Health Care
Real Estate
Utilities
Equity Funds
Other

TOP 10 COUNTRIES as of 31 Jan 2019

China30.93%
South Korea17.33%
India10.33%
Brazil9.64%
Taiwan8.15%
Russia5.59%
Thailand3.49%
Mexico2.77%
South Africa2.38%
Turkey1.52%
Malaysia1.38%
Peru1.06%
Poland0.94%
Indonesia0.88%
Saudi Arabia0.62%
Czech Republic0.30%
Multi-National Emerging (ETF)0.16%
Multi-National Emerging (ETF)0.01%
United Arab Emirates0.00%
Pakistan0.00%
Philippines0.00%
Qatar0.00%
Hungary0.00%
Chile0.00%
Colombia0.00%
Egypt0.00%
Greece0.00%

(VS. Benchmark)

China31.08%
South Korea13.98%
India8.47%
Brazil8.04%
Taiwan10.66%
Russia3.87%
Thailand2.45%
Mexico2.81%
South Africa6.44%
Turkey0.69%
Malaysia2.27%
Peru0.42%
Poland1.22%
Indonesia2.31%
Saudi Arabia0.00%
Czech Republic0.17%
Multi-National Emerging (ETF)0.00%
Multi-National Emerging (ETF)0.00%
United Arab Emirates0.72%
Pakistan0.04%
Philippines1.11%
Qatar1.05%
Hungary0.32%
Chile1.12%
Colombia0.42%
Egypt0.13%
Greece0.21%
China
South Korea
India
Brazil
Taiwan
Russia
Thailand
Mexico
South Africa
Turkey
Malaysia
Peru
Poland
Indonesia
Saudi Arabia
Czech Republic
Multi-National Emerging (ETF)
Multi-National Emerging (ETF)
United Arab Emirates
Pakistan
Philippines
Qatar
Hungary
Chile
Colombia
Egypt
Greece
Other

TOP 10 ACTIVE HOLDINGS as of 31 Jan 2019

Security Country Industry Active Weight*
Investimentos Itau Brazil Banks 2.0
China Construction Bank Corp. China Banks 1.9
Samsung Electronics Co., Ltd. South Korea Technology Hardware & Equipment 1.5
Tencent Holdings Ltd. China Media & Entertainment 1.5
China Petroleum & Chemical Corp. China Energy 1.4
Banco do Brasil SA Brazil Banks 1.3
Lukoil Russia Energy 1.2
SK hynix, Inc. South Korea Semiconductors & Semi Equipment 1.1
Anhui Conch Cement Co., Ltd. China Materials 1.1
Gazprom PJSC Russia Energy 1.0

*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 typically 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 31 Jan 2019


Emerging market (“EM”) equities rebounded in January, gaining in every region and outpacing most developed markets. The MSCI Emerging Markets Index (“Index”) returned 7.18% in local currency terms during the month. US-China trade negotiations progressed in January, supporting Chinese equities and the broader emerging Asia region. Led by Brazil, emerging Latin America was the top performing region group within the Index in local currency terms. The emerging Europe, Middle East, and Africa (“EMEA”) region also posted positive returns in January. Consumer discretionary, information technology, and real estate were the top performing sectors within the Index in local currency terms. While all sectors were in positive territory during the month, materials, consumer staples, and utilities were the weakest performers.

Causeway Emerging Markets Fund (“Fund”) performed in line with the Index in January 2019. We use both bottom-up and top-down factor categories to forecast alpha (return in excess of the Index) for the stocks in the Fund’s investable universe. Our bottom-up value factor category was a positive indicator in January. Our price momentum and earnings growth factor categories were both negative indicators during the month. Of our top-down factors, country, currency, and sector were positive in January. The macroeconomic factor was negative during the month.

Over the month, Fund positioning in the EMEA region contributed to performance versus the Index, primarily driven by holdings in Russia and Turkey. Within the emerging Asia region, holdings in South Korea, Taiwan, and Thailand added to relative performance but this positive effect was more than offset by negative stock selection in India. Positioning in the emerging Latin America region was neutral for relative performance. From a sector perspective, the largest contributors to relative performance were information technology, consumer staples, and energy. Positioning in the industrials, consumer discretionary, and materials sectors detracted from relative performance. The greatest stock-level contributors to relative performance included overweight positions in financial & industrial holdings company, Investimentos Itau S.A. (Brazil), multinational food processing company, JBS SA (Brazil), and electronic equipment manufacturer, Samsung Electronics Co., Ltd. (South Korea). The largest stock-level detractors from relative performance included overweight positions in mortgage lender, Indiabulls Housing Finance Ltd. (India), and integrated aluminum producer & copper manufacturer, Hindalco Industries (India), as well as an underweight position in bank, Banco Bradesco SA (Brazil).

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

2018$0.1777
2017$0.1937
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
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Short-term Capital Gains

2018$0.0000
2017$0.0000
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
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Long-term Capital Gains

2018$0.0000
2017$0.0000
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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