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Emerging Markets Fund
Diversified exposure to emerging markets, capturing value and growth
NAV (as of 18 Apr 2019)
$12.86, -0.08
YTD
+11.63%
INCEPTION
30 Mar 2007
TICKER/CUSIP
CEMVX/149498206
Emerging Markets Fund
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 Charge | None |
| Net Expense Ratio | 1.40% |
| Dividend Frequency | Annual |
| Capital Gain Frequency | Annual |
| Benchmark | MSCI Emerging Markets |
Performance
The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth less than their original cost and current performance may be lower than the performance quoted. Returns greater than one year are average annual total returns. Total returns assume reinvestment of dividends and capital gains distributions at net asset value when paid. All information is as of the date shown. Investment performance may reflect contractual fee waivers. In the absence of such fee waivers, total return would be reduced. Contractual fee waivers are in effect until 1/31/20. The expense ratio for Investor Class shares is 1.40% and for Institutional Class shares is 1.15%. There is a 2% redemption fee on shares held less than 60 days to protect shareholders from short-term investors. If your account incurred a redemption fee, your performance will be lower than the performance quoted. If you invest through a financial intermediary, it may apply the Fund’s redemption fee or other frequent trading restrictions.
Portfolio
Asset Allocation as of 31 Mar 2019
| Stocks | 97.4% |
| Cash | 2.6% |
Characteristics as of 31 Mar 2019
| Causeway | MSCI Emerging Markets | |
|---|---|---|
| No. of Holdings | 145 | 1135 |
| Wtd. Avg. Market Cap (Mn $US) | $59,418 | $53,563 |
| NTM Price/Earnings | 9.3 | 11.9 |
| Price/Book Value | 1.3 | 1.6 |
| NTM EPS Revision (Wtd. Avg) | -12.9 | -14.1 |
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 Mar 2019
| Financials | 24.57% |
| Information Technology | 15.03% |
| Communication Services | 13.30% |
| Energy | 10.11% |
| Consumer Discretionary | 8.16% |
| Materials | 7.35% |
| Industrials | 6.41% |
| Consumer Staples | 4.40% |
| Health Care | 2.47% |
| Real Estate | 2.31% |
| Equity Funds | 1.94% |
| Utilities | 1.36% |
(VS. Benchmark)
| Financials | 24.18% |
| Information Technology | 14.58% |
| Communication Services | 12.28% |
| Energy | 8.10% |
| Consumer Discretionary | 13.38% |
| Materials | 7.36% |
| Industrials | 5.38% |
| Consumer Staples | 6.41% |
| Health Care | 2.64% |
| Real Estate | 3.17% |
| Equity Funds | 0.00% |
| Utilities | 2.53% |
Financials
Information Technology
Communication Services
Energy
Consumer Discretionary
Materials
Industrials
Consumer Staples
Health Care
Real Estate
Equity Funds
Utilities
Other
TOP 10 COUNTRIES as of 31 Mar 2019
| China | 33.22% |
| South Korea | 15.20% |
| India | 10.81% |
| Brazil | 9.25% |
| Taiwan | 8.89% |
| Russia | 5.57% |
| Thailand | 3.07% |
| Mexico | 2.11% |
| South Africa | 1.80% |
| Indonesia | 1.18% |
| Malaysia | 1.14% |
| Turkey | 1.14% |
| Peru | 1.04% |
| Multi-National Emerging (ETF) | 0.91% |
| Poland | 0.91% |
| Saudi Arabia | 0.88% |
| Czech Republic | 0.28% |
| Multi-National Emerging (ETF) | 0.01% |
| United Arab Emirates | 0.00% |
| Pakistan | 0.00% |
| Philippines | 0.00% |
| Qatar | 0.00% |
| Hungary | 0.00% |
| Chile | 0.00% |
| Colombia | 0.00% |
| Egypt | 0.00% |
| Greece | 0.00% |
| 0.00% | |
| 0.00% | |
| 0.00% | |
| 0.00% | |
| 0.00% | |
| 0.00% | |
| 0.00% |
(VS. Benchmark)
| China | 33.00% |
| South Korea | 13.02% |
| India | 9.16% |
| Brazil | 7.23% |
| Taiwan | 11.35% |
| Russia | 3.77% |
| Thailand | 2.34% |
| Mexico | 2.65% |
| South Africa | 5.89% |
| Indonesia | 2.18% |
| Malaysia | 2.19% |
| Turkey | 0.55% |
| Peru | 0.43% |
| Multi-National Emerging (ETF) | 0.00% |
| Poland | 1.13% |
| Saudi Arabia | 0.00% |
| Czech Republic | 0.16% |
| Multi-National Emerging (ETF) | 0.00% |
| United Arab Emirates | 0.72% |
| Pakistan | 0.03% |
| Philippines | 1.10% |
| Qatar | 0.93% |
| Hungary | 0.32% |
| Chile | 1.03% |
| Colombia | 0.46% |
| Egypt | 0.13% |
| Greece | 0.22% |
| 0.00% | |
| 0.00% | |
| 0.00% | |
| 0.00% | |
| 0.00% | |
| 0.00% | |
| 0.00% |
China
South Korea
India
Brazil
Taiwan
Russia
Thailand
Mexico
South Africa
Indonesia
Malaysia
Turkey
Peru
Multi-National Emerging (ETF)
Poland
Saudi Arabia
Czech Republic
Multi-National Emerging (ETF)
United Arab Emirates
Pakistan
Philippines
Qatar
Hungary
Chile
Colombia
Egypt
Greece
Other
TOP 10 ACTIVE HOLDINGS as of 31 Mar 2019
| Security | Country | Industry | Active Weight* |
|---|---|---|---|
| China Construction Bank Corp. | China | Banks | 1.8 |
| Tencent Holdings Ltd. | China | Media & Entertainment | 1.5 |
| Investimentos Itau | Brazil | Banks | 1.5 |
| Lukoil | Russia | Energy | 1.3 |
| Samsung Electronics Co., Ltd. | South Korea | Technology Hardware & Equipment | 1.2 |
| Banco do Brasil SA | Brazil | Banks | 1.1 |
| Anhui Conch Cement Co., Ltd. | China | Materials | 1.1 |
| Ping An Insurance (Group) Co. of China Ltd. | China | Insurance | 1.0 |
| China Petroleum & Chemical Corp. | China | Energy | 1.0 |
| Gazprom PJSC | Russia | Energy | 0.9 |
*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 Mar 2019
Buoyed by an increasingly dovish US Federal Reserve and optimism surrounding US-China trade negotiations, emerging markets (“EM”) equities posted positive returns in March. The MSCI Emerging Markets Index (“Index”) returned 1.39% in local currency terms during the month. Led by India, emerging Asia was the top performing region group within the Index. The emerging Latin America and emerging Europe, Middle East, and Africa (“EMEA”) regions also delivered positive returns during the month. Real estate, communication services, and consumer discretionary were the top performing sectors within the Index in local currency terms. Industrials, health care, and utilities were the weakest performers.
Causeway Emerging Markets Fund (“Fund”) outperformed the Index in March 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 earnings growth factor was the top performing bottom-up category during the month, rebounding from a weak start to the year. Our value factor category was a neutral indicator during the month while our price momentum category was modestly negative. Our macroeconomic factor was the only top-down category in positive territory during the month. Our country, sector, and currency factors posted negative returns.
Over the month, Fund positioning in the emerging Asia region contributed to performance relative to the Index, primarily driven by positive stock selection in India and South Korea. Within the EMEA region, an overweight position in Turkey detracted from relative performance. Positioning in the emerging Latin America region was neutral for performance. From a sector perspective, the largest contributors to relative performance were real estate, materials, and information technology. Positioning in the industrials, energy, and consumer staples sectors detracted from relative performance. The greatest stock-level contributors to relative performance included overweight positions in mortgage lender, Indiabulls Housing Finance Ltd. (India), real estate developer, Shimao Property Holdings Ltd. (China), and online services company, Tencent Holdings Ltd. (China). The largest stock-level detractors from relative performance included overweight positions in financial and industrial holdings company, Investimentos Itau (Brazil), power generation & construction company, Tekfen Holding AS (Turkey), and mobile phone operator, Turkcell Iletisim Hizmetleri AS (Turkey).
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 |
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 |
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 |
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).
