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*
+12.09%
Nav*
$12.89, +0.04
Inception
December 31, 2009
Cusip
14949Q206
Benchmark
MSCI ACWI ex US
Minimum Investment
$5,000
Sales Charge
None
Total Expense Ratio
1.30%
*As of October 17, 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
Fund-2.4%8.9%-5.6%4.7%1.0%4.5%
MSCI ACWI ex US-1.7%12.1%-0.7%6.8%3.4%4.7%
QTDYTD1 year3 years5 yearsSince inception
Fund-2.4%8.9%-5.6%4.7%1.0%4.5%
MSCI ACWI ex US-1.7%12.1%-0.7%6.8%3.4%4.7%
QTDYTD1 year3 years5 yearsSince inception
Fund-2.4%8.9%-5.6%4.7%1.0%4.5%
MSCI ACWI ex US-1.7%12.1%-0.7%6.8%3.4%4.7%
QTDYTD1 year3 years5 yearsSince inception
Fund-2.4%8.9%-5.6%4.7%1.0%4.5%
MSCI ACWI ex US-1.7%12.1%-0.7%6.8%3.4%4.7%
201820172016201520142013201220112010
Fund-18.6%29.4%1.7%-6.3%-4.0%17.5%24.4%-12.8%15.1%
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
-18.6%29.4%1.7%-6.3%-4.0%17.5%24.4%-12.8%15.1%
-13.8%27.8%5.0%-5.3%-3.4%15.8%17.4%-13.3%11.6%

Portfolio (as of September 30, 2019)

Benchmark: MSCI ACWI ex US
Asset Allocation
Fund
Stocks97.5%
Cash2.5%
Fund Characteristics
FundBenchmark
No. of holdings 196 2214
Weighted avg. market cap (US $MM)$53,465$51,816
FY2 price/earnings9.912.9
Price/book value1.21.6
Net assets$10,531,939-
TOP 10 HOLDINGS
Security Country Percent
Volkswagen AGGermany3.4
Takeda Pharmaceutical Co., Ltd.Japan3.1
BASF SEGermany3.1
UniCredit S.p.A.Italy3.0
ABB Ltd.Switzerland2.8
Prudential PlcUnited Kingdom2.5
British American Tobacco plcUnited Kingdom2.4
Linde PlcGermany2.3
Barclays PlcUnited Kingdom2.3
Royal Dutch Shell PlcUnited Kingdom2.2

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
Financials23.1%21.6%
Industrials16.5%11.9%
Materials9.8%7.3%
Health Care9.5%8.5%
Energy9.3%6.7%
Information Technology7.9%8.9%
Consumer Discretionary7.5%11.4%
Communication Services6.0%6.8%
Consumer Staples5.6%10.2%
Utilities1.6%3.5%
Real Estate0.7%3.2%
TOP 10 COUNTRIES
Country Fund Benchmark
United Kingdom24.2%11.0%
Germany14.6%5.7%
Japan12.0%16.5%
China8.0%8.3%
Switzerland5.8%6.3%
France5.6%7.6%
Canada3.8%7.0%
Taiwan3.6%3.0%
South Korea3.4%3.2%
Italy3.0%1.6%
Regional Allocation
  • Europe – other 57.9%
  • Emerging Asia 18.4%
  • Pacific 12.0%
  • North America 3.8%
  • Emerging Latin America 2.8%
  • Emerging Europe, Middle East, Africa 2.6%

Commentary (As of September 30, 2019)

Highlights

  • After contracting in July and August, equity markets rebounded in September, likely responding to a significant move upward in global bond yields. In September, momentum-driven “quality-growth” stocks ceded market leadership to stocks with strong value and cyclicality characteristics.
  • With low-to-no cost of financing, governments in Europe and elsewhere may decide to amplify fiscal spending. Without fiscal intervention, a vicious cycle of nil return in savings forces aging European and Japanese populations to save even more, adding to demand for fixed income, and pushing interest rates lower.
  • We believe our portfolios are well-positioned to benefit from a return to favor of value and cyclicality. If economically sensitive stocks outperform, we intend to use that opportunity to lower portfolio expected volatility with bargains from less cyclical sectors.

Portfolio attribution

Causeway International Opportunities Fund (“Fund”) outperformed the Index during the month, due primarily to stock selection. Fund holdings in the banks, insurance, food beverage & tobacco, materials, and transportation industry groups contributed to performance compared to the Index. Holdings in the technology hardware & equipment, diversified financials, food & staples retailing, and consumer durables & apparel 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 life insurer, Prudential Plc (United Kingdom), automobile manufacturer, Volkswagen AG (Germany), banking & financial services company, UniCredit S.p.A. (Italy), and robotics manufacturer, FANUC Corp.(Japan). The largest detractor was pharmaceutical & consumer healthcare products producer, Novartis AG (Switzerland). Additional notable detractors included pharmaceuticals & chemicals company, Bayer AG (Germany), internet commerce company, Alibaba Group Holding (China), apparel manufacturer, Gildan Activewear (Canada), and solar panel manufacturer, Jinkosolar Holding Co (China).

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

We believe that fundamentals do prevail over the long-term…it is just very difficult to know when the market will turn. September witnessed a chain reaction of cheap stocks, often in cyclical industries, attracting bargain hunting – which, in turn, attracted more buying. Stock markets have a history of discounting future events long before they occur. We suggest that most developed market cyclical stocks priced in a recession by the end of August and are now moving upward on the hint of fiscal spending and recovery. We believe our portfolios are well-positioned to benefit from a return to favor of value and cyclicality. If economically sensitive stocks outperform, we intend to use that opportunity to lower portfolio expected volatility with bargains from less cyclical sectors. Our fundamental research team has intensified efforts to get managements to commit to specific plans to improve earnings and returns on capital. While we wait, many of these portfolio companies return capital to shareholders, often via generous dividend payouts. This dividend income is striking in a low-income world, reducing the duration of the investment. We are holding company managements’ collective “feet to the fire,” measuring their progress and holding them accountable to their operational restructuring plans. This makes our efforts in value investing “all weather,” though a tailwind for value risk would be welcome.

Compared to developed markets, September’s value rally in emerging markets (“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.

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$0.2580$0.0000$0.0327
2017$0.1923$0.0000$0.0000
2016$0.4245$0.0000$0.0000
2015$0.1357$0.0107$0.0199
2014$0.0000$0.0000$0.4943
2013$0.0958$0.0001$0.0739
2012$0.2215$0.0000$0.0190
2011$0.2487$0.0000$0.0303
2010$0.1712$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: