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*
- +5.82%
- Nav*
- $12.19, +0.03
- Inception
- March 30, 2007
- Cusip
- 149498206
- Benchmark
- MSCI Emerging Markets
- Minimum Investment
- $5,000
- Sales Charge
- None
- Total Expense Ratio
- 1.40%
Portfolio managers
Arjun Jayaraman, PhD, CFA
Quantitative Portfolio Manager
Dr. Jayaraman is a director, quantitative portfolio manager and head of the quantitative research at Causeway and has been with the firm since January 2006. Dr. Jayaraman’s responsibilities and research include stock selection, asset allocation, risk model development, and portfolio construction.
From 2004 to 2005, Dr. Jayaraman was a portfolio manager at PanAgora Asset Management. He was the lead portfolio manager on the non-U.S. large cap core equity portfolios and was the co-portfolio manager on the global large cap core equity portfolios. From 2000 to 2004, Dr. Jayaraman managed the same portfolios at Putnam Investments, in addition to working closely with the teams that managed Putnam's traditional non-U.S. strategies. From 1998 to 2000, Dr. Jayaraman worked as a quantitative analyst at Harborview Trading Associates.
Dr. Jayaraman earned a PhD from New York University at the Stern School of Business and a BA in economics from Columbia University. Dr. Jayaraman is a CFA charterholder.
MacDuff Kuhnert, CFA
Mr. Kuhnert is a director and a quantitative portfolio manager at Causeway and has been with the firm since its inception in June 2001. Mr. Kuhnert’s responsibilities and research include stock selection, asset allocation, risk model development, and portfolio construction.
From 1996 to 2001, Mr. Kuhnert worked for the international team of the Hotchkis & Wiley division of Merrill Lynch Investment Managers (HW-MLIM) as a quantitative research associate. During his tenure at HW-MLIM, Mr. Kuhnert created and developed advanced quantitative models used in the international value investment process. He also helped develop the team’s first equity risk model.
Mr. Kuhnert earned a BA in chemistry from Dartmouth College. He is a CFA charterholder, a member of the CFA Society of Los Angeles, and a member of the Chicago Quantitative Alliance. Mr. Kuhnert co-authored “To Hedge or Not to Hedge: Factor Dependence and Skill among Hedge Funds” published in The Journal of Alternative Investments.
Joe Gubler, CFA
Mr. Gubler is a quantitative portfolio manager at Causeway. He joined the firm in 2005 and has been a portfolio manager since January 2014. In addition to managing quantitative portfolios and conducting alpha research, Mr. Gubler also leads the efforts to maintain and enhance Causeway’s proprietary risk models. He is also a member of the operating committee.
From 1999 to 2005, Mr. Gubler worked as a software engineer, with employers ranging from startups to established businesses such as Monster.com. From 1998 to 1999, Mr. Gubler worked as a staff scientist for News Corporation, conducting studies on the RF propagation of broadcast signals. While studying astrophysics at UC San Diego, Mr. Gubler worked as a graduate research assistant in the Jet Propulsion Laboratory's stellar interferometry group.
Mr. Gubler earned a BS, cum laude, in physics from UC Irvine, an MS in physics from UC San Diego, and an MBA from the UCLA Anderson Graduate School of Management. Mr. Gubler is a CFA charterholder.
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. The expense ratio for Investor Class shares is 1.40% and for Institutional Class shares is 1.15%.
Portfolio (as of September 30, 2019)
Asset Allocation
| Fund | |
|---|---|
| Stocks | 99.0% |
| Cash | 1.0% |
Fund Characteristics
| Fund | Benchmark | |
|---|---|---|
| No. of holdings | 140 | 1201 |
| Weighted avg. market cap (US $MM) | $61,887 | $51,469 |
| NTM price/earnings | 9.3 | 11.8 |
| Price/book value | 1.3 | 1.6 |
| NTM EPS revision (wtd. avg) | 0.6 | -0.1 |
| Net assets | $405,058,921 | - |
TOP 10 ACTIVE HOLDINGS
| Security | Country | Active weight* |
|---|---|---|
| China Construction Bank Corp. | China | 1.9% |
| Tencent Holdings Ltd. | China | 1.8% |
| Investimentos Itau | Brazil | 1.6% |
| Samsung Electronics Co., Ltd. | South Korea | 1.5% |
| JBS SA | Brazil | 1.4% |
| Gazprom PJSC | Russia | 1.3% |
| Lukoil | Russia | 1.2% |
| Sberbank | Russia | 1.1% |
| Ping An Insurance (Group) Co. of China Ltd. | China | 1.1% |
| Anhui Conch Cement Co., Ltd. | China | 1.0% |
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 |
|---|---|---|
| Financials | 24.1% | 24.7% |
| Information Technology | 18.1% | 15.1% |
| Communication Services | 11.8% | 11.6% |
| Consumer Discretionary | 11.4% | 13.1% |
| Energy | 9.2% | 7.7% |
| Consumer Staples | 6.7% | 6.9% |
| Materials | 5.4% | 7.3% |
| Industrials | 4.8% | 5.4% |
| Real Estate | 2.4% | 2.9% |
| Equity Funds | 2.2% | 0.0% |
| Health Care | 2.0% | 2.6% |
| Utilities | 1.0% | 2.8% |
TOP 10 COUNTRIES
| Country | Fund | Benchmark |
|---|---|---|
| China | 34.9% | 31.9% |
| South Korea | 14.1% | 12.2% |
| Taiwan | 11.6% | 11.5% |
| India | 9.4% | 8.9% |
| Brazil | 9.1% | 7.6% |
| Russia | 7.2% | 4.0% |
| Thailand | 3.1% | 2.9% |
| Mexico | 2.1% | 2.5% |
| South Africa | 1.6% | 4.7% |
| Indonesia | 1.1% | 2.1% |
Regional Allocation
- Emerging Asia 74.7%
- Emerging Latin America 12.2%
- Emerging Europe, Middle East, Africa 12.1%
Distributions
| Dividends | Short-term capital gains | Long-term capital gains | |
|---|---|---|---|
| 2018 | $0.1777 | $0.0000 | $0.0000 |
| 2017 | $0.1937 | $0.0000 | $0.0000 |
| 2016 | $0.1353 | $0.0000 | $0.0000 |
| 2015 | $0.1434 | $0.0000 | $0.0000 |
| 2014 | $0.2425 | $0.0000 | $0.0000 |
| 2013 | $0.1100 | $0.0000 | $0.0000 |
| 2012 | $0.2768 | $0.0000 | $0.0000 |
| 2011 | $0.0972 | $0.0000 | $0.0000 |
| 2010 | $0.2560 | $0.0000 | $0.0000 |
| 2009 | $0.2866 | $0.0000 | $0.0000 |
| 2008 | $0.1506 | $0.0000 | $0.0000 |
| 2007 | $0.2097 | $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:
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Commentary (As of September 30, 2019)
Highlights
Portfolio attribution
Causeway Emerging Markets Fund (“Fund”) outperformed the Index in September 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. Despite rebounding in September, our value factor was the weakest bottom-up indicator during the quarter and the year-to-date (“YTD”) period. While positive for the quarter and YTD periods, our earnings growth and price momentum factors were both negative indicators in September. Of our top-down factors, country and sector factors were positive indicators during the month. The macroeconomic and currency factors were negative in September.
Investment outlook
Despite rebounding in September, EM value stocks have underperformed YTD. Compared to developed markets, September’s value rally in EM was more modest. In many developed markets, inverted yield curves and negative interest rates have become the norm and any hint of normalizing monetary policy can lead to sharp value rallies. In contrast, EM central banks are pursuing relatively orthodox monetary policies and EM yield curves are still positively sloped. EM value stocks trade at significant discounts to EM growth stocks while offering attractive dividend yields. We continue to emphasize value factors in our investment process, which should benefit the portfolio if EM value stocks rebound, which we believe they ultimately will.
We are also overweight EM small cap stocks within the Fund. This has been a headwind for performance as the MSCI Emerging Markets Small Cap Index has lagged the MSCI Emerging Markets Large Cap Index each year since 2016. In addition to our small cap overweight, our contextual weighting approach has contributed to underperformance YTD. 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. 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.