Seeking value primarily in developed markets worldwide

The global value portfolio is constructed from an equity universe composed of companies with market capitalizations typically greater than $1 billion located throughout the global developed and emerging market countries. The investment process comprises three stages: quantitative screening and initial analysis, fundamental research and portfolio construction.

Benchmark
MSCI ACWI
Inception
September 30, 2001

Strategy overview

The portfolio managers discuss our Global 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
Strategy (gross)-1.2%10.7%-4.6%7.7%4.3%10.9%10.3%
Strategy (net)-1.3%10.4%-5.0%7.2%3.9%10.3%9.6%
MSCI ACWI0.3%17.0%3.5%10.8%7.1%9.8%7.6%
QTDYTD1 year3 years5 years10 yearsSince inception
Strategy (gross)-1.2%10.7%-4.6%7.7%4.3%10.9%10.3%
Strategy (net)-1.3%10.4%-5.0%7.2%3.9%10.3%9.6%
MSCI ACWI0.3%17.0%3.5%10.8%7.1%9.8%7.6%
QTDYTD1 year3 years5 years10 yearsSince inception
Strategy (gross)0.6%12.1%0.7%9.7%4.4%12.4%10.4%
Strategy (net)0.5%11.8%0.3%9.2%3.9%11.8%9.7%
MSCI ACWI3.8%16.6%6.3%12.2%6.7%10.7%7.7%
QTDYTD1 year3 years5 years10 yearsSince inception
Strategy (gross)0.6%12.1%0.7%9.7%4.4%12.4%10.4%
Strategy (net)0.5%11.8%0.3%9.2%3.9%11.8%9.7%
MSCI ACWI3.8%16.6%6.3%12.2%6.7%10.7%7.7%
Fund2018201720162015201420132012201120102009
Strategy (gross)-10.2%19.2%8.8%-5.3%6.5%30.6%17.8%-0.2%19.8%41.7%
Strategy (net)-10.1%19.2%8.8%-5.4%6.5%30.7%17.7%0.0%0.0%0.0%
MSCI ACWI-11.1%17.9%7.7%-6.3%5.4%29.2%16.5%-1.3%18.5%40.1%
Strategy (gross)
Strategy (net)
MSCI ACWI
2018201720162015201420132012201120102009
-10.2%19.2%8.8%-5.3%6.5%30.6%17.8%-0.2%19.8%41.7%
-10.1%19.2%8.8%-5.4%6.5%30.7%17.7%0.0%0.0%0.0%
-11.1%17.9%7.7%-6.3%5.4%29.2%16.5%-1.3%18.5%40.1%

Portfolio (as of July 31, 2019)

Benchmark: MSCI ACWI
Asset Allocation
Strategy
Stocks99.1%
Cash0.9%
Strategy Characteristics
StrategyBenchmark
No. of holdings 51 2843
Weighted avg. market cap (US $MM)$76,074$141,514
FY2 price/earnings11.014.6
Price/book value1.42.3
Dividend yield (%)3.42.5
TOP 10 HOLDINGS
Security Country Percent
Volkswagen AGGermany3.9%
Takeda Pharmaceutical Co., Ltd.Japan3.3%
BASF SEGermany3.3%
UniCredit S.p.A.Italy3.2%
Sabre Corp.United States3.2%
China Mobile Ltd.China3.0%
Alaska Air Group, Inc.United States3.0%
British American Tobacco plcUnited Kingdom2.8%
AstraZeneca PlcUnited Kingdom2.7%
ABB Ltd.Switzerland2.7%

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 Strategy Benchmark
Information Technology17.0%16.4%
Financials14.7%16.8%
Industrials14.2%10.4%
Communication Services12.1%8.9%
Health Care11.8%11.3%
Energy8.6%5.7%
Materials7.3%4.8%
Consumer Discretionary4.4%10.9%
Consumer Staples4.3%8.4%
Utilities4.0%3.3%
Real Estate0.8%3.2%
TOP 10 COUNTRIES
Country Strategy Benchmark
United States37.4%55.9%
United Kingdom19.4%4.9%
Japan11.6%7.1%
Germany7.8%2.5%
China5.3%3.7%
South Korea4.5%1.4%
Switzerland4.3%2.8%
Italy3.2%0.7%
France2.0%3.3%
Netherlands1.8%1.1%
Regional Allocation
  • North America 38.8%
  • Europe – other 38.6%
  • Pacific 11.6%
  • Emerging Asia 9.9%
  • Emerging Europe, Middle East, Africa 0.3%

Commentary (As of July 31, 2019)

Highlights

  • Following strong performance in the first half of the year, equity markets delivered more muted returns in July. On the back of central banks signaling stimulus, value stock valuations continued to contract while growth stock valuations rose.

Portfolio attribution

The Portfolio underperformed the Index during the month, due primarily to stock selection. Portfolio holdings in the software & services, media & entertainment, technology hardware & equipment, capital goods, and materials industry groups detracted from relative performance. Holdings in the pharmaceuticals & biotechnology, health care equipment & services, utilities, real estate, and banks industry groups contributed to relative performance. The largest detractor was enterprise infrastructure software company, Micro Focus International Plc (United Kingdom). Additional notable detractors included diversified chemicals manufacturer, BASF SE (Germany), mobile telecommunications operator,China Mobile Ltd. (China), Takeda Pharmaceutical Co., Ltd. (Japan), and oil & natural gas producer, Encana (Canada). The top contributor to return was medical device producer, Zimmer Biomet Holdings, Inc. (United States). Other notable contributors included travel & tourism technology company, Sabre Corp. (United States), telecommunication services provider, Vodafone Group (United Kingdom), pharmaceutical company, AstraZeneca Plc (United Kingdom), and property & casualty insurer, Sompo Holdings, Inc. (Japan).

Investment outlook

On the back of central banks signaling stimulus, value stock valuations continued to contract in July while growth stock valuations rose. Central bank liquidity and momentum-driven investing trends continue to support long duration equities. We believe that additional accommodative central bank policies may already be priced into growth stocks. The de-rating of value has resulted in current market multiples for MSCI Value indices implying negative perpetuity earnings growth rates across geographies, even as the world economy is forecast to grow. We find such pessimism towards value stocks to be unwarranted, especially considering that the earnings of value stocks have outpaced those of growth stocks since the Global Financial Crisis. We believe that value stocks that have improved their earnings growth should re-rate as investors consider fundamentals rather than price momentum. In such a long period of falling interest rates, some companies with longer duration cash flows have become highly levered. If policy action cannot drive a meaningful improvement in economic data and downside risks materialize even marginally, companies exhibiting balance sheet strength should fare better than those with excess debt levels. Rather than trying to time monetary policy, we are remaining disciplined in our bottom-up valuation process. We seek to identify companies committed to improving free cash flow generation and rewarding shareholders via dividends and buybacks.

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 portfolio holdings and characteristics are subject to change. There is no guarantee that any forecasts made will come to pass. The securities identified and described above 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. Past performance does not guarantee future results. For a description of our performance attribution methodology, or to obtain a list showing every holding's contribution to the overall account's performance during the quarter, please contact our product manager, Kevin Moutes, at 310-231-6116 or moutes@causewaycap.com.