Combining our time-tested abilities in developed and emerging international markets

The Fund invests primarily in companies both in developed markets excluding the United States (the “international value portfolio”) and in emerging markets (the “emerging markets portfolio”). Causeway allocates substantially all of the Fund’s assets between the international value portfolio and the emerging markets portfolio using a proprietary asset allocation model.

International Value Portfolio: The international value portfolio consists primarily of common stocks of companies located in developed countries outside the US. Normally, the majority of this portfolio invests in companies that pay dividends or repurchase their shares. The international value portfolio may also invest in companies located in emerging (less developed) markets.

Emerging Markets Portfolio: The emerging markets portfolio is normally invested 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 that invest in emerging markets securities.

YTD Return*
+17.29%
Nav*
$13.57, +0.12
Inception
December 31, 2009
Cusip
14949Q107
Benchmark
MSCI ACWI ex US
Minimum Investment
$1,000,000
Sales Charge
None
Total Expense Ratio
1.05%
*As of December 06, 2019

Strategy overview

The portfolio managers discuss our International Opportunities strategy.

Portfolio managers

Chief Executive Officer
Fundamental Portfolio Manager
President
Head of Fundamental Research
Fundamental Portfolio Manager
Fundamental Portfolio Manager
Fundamental Portfolio Manager
Fundamental Portfolio Manager
Fundamental Portfolio Manager
Fundamental Portfolio Manager
Head of Quantitative Research
Quantitative Portfolio Manager
Quantitative Portfolio Manager
Quantitative Portfolio Manager
Fundamental Portfolio Manager

Performance

QTDYTD1 year3 years5 yearsSince inception
Fund6.9%16.5%10.0%8.1%2.5%5.4%
MSCI ACWI ex US4.4%17.0%11.8%9.8%4.3%5.0%
QTDYTD1 year3 years5 yearsSince inception
Fund6.9%16.5%10.0%8.1%2.5%5.4%
MSCI ACWI ex US4.4%17.0%11.8%9.8%4.3%5.0%
QTDYTD1 year3 years5 yearsSince inception
Fund-2.4%9.0%-5.4%4.9%1.2%4.8%
MSCI ACWI ex US-1.7%12.1%-0.7%6.8%3.4%4.7%
QTDYTD1 year3 years5 yearsSince inception
Fund-2.4%9.0%-5.4%4.9%1.2%4.8%
MSCI ACWI ex US-1.7%12.1%-0.7%6.8%3.4%4.7%
201820172016201520142013201220112010
Fund-18.4%29.6%2.0%-6.1%-3.7%17.8%24.6%-12.6%15.4%
MSCI ACWI ex US-13.8%27.8%5.0%-5.3%-3.4%15.8%17.4%-13.3%11.6%
Fund
MSCI ACWI ex US
201820172016201520142013201220112010
-18.4%29.6%2.0%-6.1%-3.7%17.8%24.6%-12.6%15.4%
-13.8%27.8%5.0%-5.3%-3.4%15.8%17.4%-13.3%11.6%

Portfolio (as of October 31, 2019)

Benchmark: MSCI ACWI ex US
Asset Allocation
Fund
Stocks99.1%
Cash0.9%
Fund Characteristics
FundBenchmark
No. of holdings 203 2216
Weighted avg. market cap (US $MM)$56,569$52,871
FY2 price/earnings10.313.2
Price/book value1.21.6
Net assets$208,329,646-
TOP 10 HOLDINGS
Security Country Percent
Volkswagen AGGermany3.6
BASF SEGermany3.3
Takeda Pharmaceutical Co., Ltd.Japan3.1
UniCredit S.p.A.Italy3.1
FANUC Corp.Japan2.5
Barclays PlcUnited Kingdom2.4
ABB Ltd.Switzerland2.3
Prudential PlcUnited Kingdom2.3
British American Tobacco plcUnited Kingdom2.2
Siemens AGGermany2.2

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. The FY2 P/E ratio is a forward P/E ratio using a next-twenty-four months EPS estimate in the denominator.

Holdings are subject to change.

SECTOR WEIGHTS
Sector Fund Benchmark
Financials23.6%21.6%
Industrials16.8%12.1%
Health Care9.5%8.7%
Information Technology9.4%9.0%
Materials9.4%7.3%
Energy8.9%6.6%
Consumer Discretionary7.6%11.6%
Consumer Staples5.8%9.8%
Communication Services5.6%6.7%
Utilities1.7%3.5%
Real Estate0.7%3.2%
TOP 10 COUNTRIES
Country Fund Benchmark
United Kingdom23.4%10.9%
Germany16.6%5.9%
Japan12.1%16.7%
China8.7%8.3%
France5.8%7.6%
Switzerland5.3%6.2%
Taiwan3.8%3.1%
South Korea3.4%3.2%
Italy3.1%1.6%
Canada3.1%6.7%
Regional Allocation
  • Europe – other 58.8%
  • Emerging Asia 19.3%
  • Pacific 12.1%
  • North America 3.1%
  • Emerging Latin America 3.1%
  • Emerging Europe, Middle East, Africa 2.8%

Commentary (As of October 31, 2019)

Highlights

  • Equities rose during the month amid signs of easing geopolitical uncertainties and continued dovish stances from global central banks, with emerging markets (“EM”) stocks outperforming developed market peers.
  • With the European Central Bank apparently intending to continue negative interest rates and asset purchases until reaching a 2% inflation target, European governments will likely need to increase fiscal stimulus to thwart further deterioration in economic conditions.
  • The resurgence of value and cyclicality over growth and momentum in developed markets continued for a second consecutive month in October. This value upturn does not surprise us given the historically wide discount of cyclical stock valuations compared to more defensive stocks that occurred this year through the end of August.

Portfolio attribution

Causeway International Opportunities Fund (“Fund”) outperformed the Index during the month, due primarily to currency allocation (a byproduct of our bottom-up stock selection process). Fund holdings in the banks, software & services, technology hardware & equipment, automobiles & components, and materials industry groups contributed to performance compared to the Index. Holdings in the consumer durables & apparel, energy, capital goods, and consumer services industry groups, along with an underweight position in the semiconductors & semi equipment industry group, detracted from relative performance. The top contributor to return was banking & financial services company, Barclays Plc (United Kingdom). Other notable contributors included automobile manufacturer, Volkswagen AG (Germany), life insurer, Prudential Plc (United Kingdom), diversified chemicals manufacturer, BASF SE (Germany), and banking & financial services company, UniCredit S.p.A. (Italy). The largest detractor was apparel manufacturer, Gildan Activewear (Canada). Additional notable detractors included oil & natural gas producer, Encana (Canada), major passenger railway operator,East Japan Railway Co. (Japan), property & casualty insurer, Sompo Holdings, Inc. (Japan), and British American Tobacco Plc (United Kingdom).

We use a proprietary quantitative equity allocation model that assists the portfolio managers in determining the weight of emerging versus developed markets in the Fund. Our allocation relative to the weight of emerging markets in the Index is currently underweight. We identify five primary factors as most indicative of the ideal allocation target: valuation, quality, earnings growth, macroeconomic, and risk aversion. Valuation is currently positive for emerging markets in our model. Our quality metrics, which include such measures as profit margins and return on equity, are negative. Our earnings growth factor is positive, while our macroeconomic factor is negative for emerging markets. Lastly, our risk aversion factor is negative in our model.

Investment outlook

The resurgence of value and cyclicality over growth and momentum in developed markets continued for a second consecutive month in October. As global bond yields have risen from their August 2019 lows, economically sensitive stocks generally recovered in price and valuation multiples. This value upturn does not surprise us given the historically wide discount of cyclical stock valuations compared to more defensive stocks that occurred this year through the end of August. However, to lessen our dependence on a sustained upturn in the value cycle, we continue to make portfolio company managements accountable to achieve their operational restructuring goals. We expect managements to boost profitability and free cash flow, ideally with the intent to return generous amounts of that surplus cash to shareholders. Dividends remain an important component of total return and pay shareholders to wait for valuations to improve. We consider dividend income particularly attractive in the current ultra-low interest rate environment.

EM value stocks resumed their decline in October after a brief rally in September. 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. We believe the outlook for EM value stocks remains compelling as they offer attractive valuations relative to growth stocks and high dividend yields.

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. Investing in ETFs is subject to the risks of the underlying funds. Investments in smaller companies typically exhibit higher volatility. Asset allocation may not protect against market risk. 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$0.2904$0.0000$0.0327
2017$0.2145$0.0000$0.0000
2016$0.4494$0.0000$0.0000
2015$0.1623$0.0107$0.0199
2014$0.0000$0.0000$0.4943
2013$0.1266$0.0001$0.0739
2012$0.2451$0.0000$0.0190
2011$0.2756$0.0000$0.0303
2010$0.1858$0.0000$0.1712

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: