Seeking value primarily in the non-US developed markets

The Fund invests primarily in common stocks of companies in developed countries outside the US. Normally, the Fund invests at least 80% of its total assets in stocks of companies in a number of foreign countries and invests the majority of its total assets in companies that pay dividends or repurchase their shares. The Fund may invest up to 15% of its total assets in companies in emerging (less developed) markets.

YTD Return*
+9.40%
Nav*
$14.89, +0.12
Inception
October 26, 2001
Cusip
14949P208
Benchmark
MSCI EAFE
Minimum Investment
$1,000,000
Sales Charge
None
Total Expense Ratio
0.88%
*As of September 19, 2019

Strategy overview

The portfolio managers discuss our International Value 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
Fundamental Portfolio Manager

Performance

QTDYTD1 year3 years5 years10 yearsSince inception
Fund-6.4%3.3%-10.5%2.8%-0.6%5.0%6.4%
MSCI EAFE-3.8%10.1%-2.7%6.4%2.4%5.5%6.0%
QTDYTD1 year3 years5 years10 yearsSince inception
Fund-6.4%3.3%-10.5%2.8%-0.6%5.0%6.4%
MSCI EAFE-3.8%10.1%-2.7%6.4%2.4%5.5%6.0%
QTDYTD1 year3 years5 years10 yearsSince inception
Fund0.1%10.4%-4.7%6.8%0.5%7.3%6.8%
MSCI EAFE4.0%14.5%1.6%9.6%2.7%7.4%6.3%
QTDYTD1 year3 years5 years10 yearsSince inception
Fund0.1%10.4%-4.7%6.8%0.5%7.3%6.8%
MSCI EAFE4.0%14.5%1.6%9.6%2.7%7.4%6.3%
20182017201620152014201320122011201020092008200720062005200420032002
Fund-18.6%27.2%0.4%-3.0%-6.2%24.2%24.5%-10.6%12.3%32.3%-41.9%7.9%26.1%8.1%26.6%45.9%-10.9%
MSCI EAFE-13.4%25.6%1.5%-0.4%-4.5%23.3%17.9%-11.7%8.2%32.5%-43.1%11.6%26.9%14.0%20.7%39.2%-15.7%
Fund
MSCI EAFE
20182017201620152014201320122011201020092008200720062005200420032002
-18.6%27.2%0.4%-3.0%-6.2%24.2%24.5%-10.6%12.3%32.3%-41.9%7.9%26.1%8.1%26.6%45.9%-10.9%
-13.4%25.6%1.5%-0.4%-4.5%23.3%17.9%-11.7%8.2%32.5%-43.1%11.6%26.9%14.0%20.7%39.2%-15.7%

Portfolio (as of August 31, 2019)

Benchmark: MSCI EAFE
Asset Allocation
Fund
Stocks98.1%
Cash1.9%
Fund Characteristics
FundBenchmark
No. of holdings 58 923
Weighted avg. market cap (US $MM)$53,829$52,499
FY2 price/earnings10.112.9
Price/book value1.11.6
Net assets$5,966,151,798-
TOP 10 HOLDINGS
Security Country Percent
Volkswagen AGGermany4.0%
Takeda Pharmaceutical Co., Ltd.Japan3.8%
BASF SEGermany3.7%
UniCredit S.p.A.Italy3.5%
ABB Ltd.Switzerland3.1%
Linde PlcGermany3.0%
KDDI Corp.Japan3.0%
China Mobile Ltd.China2.9%
Prudential PlcUnited Kingdom2.8%
Barclays PlcUnited Kingdom2.6%

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
Financials20.7%18.1%
Industrials17.7%14.7%
Communication Services11.6%5.5%
Health Care11.3%11.8%
Materials9.6%7.0%
Energy8.9%5.0%
Consumer Discretionary6.1%11.2%
Information Technology5.6%6.7%
Consumer Staples4.7%12.4%
Utilities2.0%3.9%
Real Estate0.0%3.6%
TOP 10 COUNTRIES
Country Fund Benchmark
United Kingdom29.0%16.2%
Germany17.6%8.6%
Japan14.2%24.4%
Switzerland6.8%9.6%
France6.5%11.4%
China5.4%0.0%
Canada4.8%0.0%
South Korea4.7%0.0%
Italy3.5%2.3%
Netherlands3.2%3.7%
Regional Allocation
  • Europe – other 68.7%
  • Pacific 14.2%
  • Emerging Asia 10.1%
  • North America 4.8%
  • Emerging Europe, Middle East, Africa 0.3%

Commentary (As of August 31, 2019)

Highlights

  • Equity markets contracted in August in a global “risk off” wave, exacerbated by increased trade tensions, recessionary fears, and sinking global bond yields.
  • With approximately one third of global bonds (European and Japanese sovereign, corporate, and mortgage) trading at negative yields, the bond market appears to be signaling an excess of savings versus available low/no risk assets. Fiscal spending, as an anti-recessionary tool, will likely lead to considerably more sovereign debt issuance, driving interest rates back into positive territory.
  • According to our estimates, many of the cheap stocks we find most compelling have a recession (trade war, disorderly Brexit, etc.) already discounted in their share prices. Faced with an actual recession, we believe share prices for these cheap cyclical stocks with superior financial strength will likely start to anticipate and discount a subsequent economic recovery.

Portfolio attribution

Causeway International Value Fund (“Fund”) underperformed the Index during the month, due primarily to stock selection. Fund holdings in the insurance, software & services, and food beverage & tobacco industry groups, along with an overweight position in the banks industry group and an underweight position in the household & personal products industry group, detracted from relative performance. Holdings in the telecommunication services, materials, and commercial & professional services industry groups, as well as an overweight position in the pharmaceuticals & biotechnology and transportation industry groups, contributed to relative performance. The largest detractor was life insurer, Prudential Plc (United Kingdom). Additional notable detractors included enterprise infrastructure software company, Micro Focus International Plc (United Kingdom), energy supermajor, Royal Dutch Shell Plc (United Kingdom), jet engine manufacturer, Rolls-Royce Holdings Plc (United Kingdom), and banking & financial services company, Barclays Plc (United Kingdom). The top contributor to return was pharmaceuticals & chemicals company, Bayer AG (Germany). Other notable contributors included pharmaceutical company, AstraZeneca Plc (United Kingdom), utilities provider, SSE Plc (United Kingdom), major passenger railway operator,East Japan Railway Co. (Japan), and telecommunication services provider, Vodafone Group (United Kingdom).

Investment outlook

August market performance indicates overwhelming risk aversion as investors (or market trading software programs) have crowded their buying into supposed growth and economically defensive stocks, especially those poised to benefit from ever-falling interest rates (real estate and utilities, for example). US stocks and the US dollar have attracted global capital flows, pushing the US equity market valuation premium relative to MSCI EAFE markets to a 20-year high. The selling pressure on economically cyclical stocks has placed what we believe is a fundamentally unjustifiable valuation discount on economic risk. According to our estimates, many of the cheap stocks we find most compelling have a recession (trade war, disorderly Brexit, etc.) already discounted in their share prices. Faced with an actual recession, we believe share prices for these cheap cyclical stocks with superior financial strength will likely start to anticipate and discount a subsequent economic recovery. From a risk factor perspective, the earnings yield spread (top minus bottom quintile) for value and cyclicality factors in both MSCI EAFE and MSCI ACWI markets has eclipsed all historical levels except for the 2008 GFC. Using earnings yield spreads in MSCI ACWI markets, growth factor “expensiveness” has eclipsed historical levels, except during the late 1990s TMT bubble (technology-media-telecoms). We are a disciplined value manager, and seek high quality managements able and willing to implement operational restructuring to enhance profitability and free cash flow.

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. A company may reduce or eliminate its dividend, causing losses to a fund. 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$0.3750$0.0000$0.1083
2017$0.3165$0.0000$0.0000
2016$0.2901$0.0000$0.0000
2015$0.2750$0.0000$0.0000
2014$0.3788$0.0000$0.0000
2013$0.1645$0.0000$0.0000
2012$0.2757$0.0000$0.0000
2011$0.3813$0.0000$0.0000
2010$0.1939$0.0000$0.0000
2009$0.1875$0.0000$0.0000
2008$0.5135$0.0000$0.4558
2007$0.4536$0.6606$3.3443
2006$0.2289$0.0222$0.8650
2005$0.3718$0.1962$0.3833
2004$0.2647$0.1379$0.3093
2003$0.1813$0.0037$0.0550
2002$0.1196$0.0000$0.0000
2001$0.0000$0.0000$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: