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. Through rigorous, bottom-up company analysis, we seek to identify undervalued stocks with upside potential. 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)11.1%23.0%23.0%9.6%6.2%10.5%10.6%
Strategy (net)11.0%22.4%22.4%9.1%5.7%9.8%10.0%
MSCI ACWI9.1%27.3%27.3%13.0%9.0%9.4%8.0%
QTDYTD1 year3 years5 years10 yearsSince inception
Strategy (gross)11.1%23.0%23.0%9.6%6.2%10.5%10.6%
Strategy (net)11.0%22.4%22.4%9.1%5.7%9.8%10.0%
MSCI ACWI9.1%27.3%27.3%13.0%9.0%9.4%8.0%
QTDYTD1 year3 years5 years10 yearsSince inception
Strategy (gross)11.1%23.0%23.0%9.6%6.2%10.5%10.6%
Strategy (net)11.0%22.4%22.4%9.1%5.7%9.8%10.0%
MSCI ACWI9.1%27.3%27.3%13.0%9.0%9.4%8.0%
QTDYTD1 year3 years5 years10 yearsSince inception
Strategy (gross)11.1%23.0%23.0%9.6%6.2%10.5%10.6%
Strategy (net)11.0%22.4%22.4%9.1%5.7%9.8%10.0%
MSCI ACWI9.1%27.3%27.3%13.0%9.0%9.4%8.0%
Fund20192018201720162015201420132012201120102009
Strategy (gross)23.0%-10.0%18.8%8.7%-5.4%7.1%31.8%18.3%-0.2%19.8%41.7%
Strategy (net)22.4%-10.4%18.3%8.2%-5.8%6.7%31.2%17.4%-1.1%18.8%40.5%
MSCI ACWI27.3%-8.9%24.6%8.5%-1.8%4.7%23.4%16.8%-6.9%13.2%35.4%
Strategy (gross)
Strategy (net)
MSCI ACWI
20192018201720162015201420132012201120102009
23.0%-10.0%18.8%8.7%-5.4%7.1%31.8%18.3%-0.2%19.8%41.7%
22.4%-10.4%18.3%8.2%-5.8%6.7%31.2%17.4%-1.1%18.8%40.5%
27.3%-8.9%24.6%8.5%-1.8%4.7%23.4%16.8%-6.9%13.2%35.4%

Portfolio (as of December 31, 2019)

Benchmark: MSCI ACWI
Asset Allocation
Strategy
Stocks98.6%
Cash1.4%
Strategy Characteristics
StrategyBenchmark
No. of holdings 51 3049
Weighted avg. market cap (US $MM)$86,339$166,138
FY2 price/earnings12.216.1
Price/book value1.52.4
Dividend yield (%)3.22.4
TOP 10 HOLDINGS
Security Country Percent
Volkswagen AGGermany4.3%
Takeda Pharmaceutical Co., Ltd.Japan3.5%
UniCredit S.p.A.Italy3.5%
BASF SEGermany3.3%
China Mobile Ltd.China3.2%
ABB Ltd.Switzerland3.1%
British American Tobacco plcUnited Kingdom3.0%
Sabre Corp.United States2.9%
Samsung Electronics Co., Ltd.South Korea2.9%
SYNNEX Corp.United States2.8%

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 Technology16.7%17.2%
Industrials16.6%10.3%
Financials13.1%16.7%
Communication Services12.4%8.7%
Health Care10.8%11.8%
Energy9.6%5.2%
Materials8.0%4.8%
Consumer Discretionary5.1%10.8%
Utilities3.4%3.3%
Consumer Staples3.0%8.0%
Real Estate0.0%3.2%
TOP 10 COUNTRIES
Country Strategy Benchmark
United States35.6%55.6%
United Kingdom17.1%4.8%
Germany11.8%2.5%
Japan8.2%7.2%
China5.6%4.2%
Switzerland5.2%2.7%
South Korea4.8%1.4%
Italy3.5%0.7%
France3.0%3.3%
Netherlands2.4%1.2%
Regional Allocation
  • Europe – other 42.9%
  • North America 37.1%
  • Emerging Asia 10.5%
  • Pacific 8.2%

Commentary (As of December 31, 2019)

Highlights

  • December's rising equity markets capped a calendar year of surging stock prices, as central banks, attempting to prolong economic expansion, implemented increasingly accommodative monetary policies.
  • We believe European countries may join the US and China and increase fiscal spending. To fund this spending, European governments will need to sell more bonds, which may put upward pressure on interest rates as supply meets, and potentially outpaces, demand.
  • In the absence of a recession, earnings of economically sensitive stocks should attract enough attention to garner a re-rating of valuation multiples. We seek talented senior management teams steering financially strong companies through profitability setbacks by focusing on reaccelerating earnings and cash flow.

Portfolio attribution

The Portfolio outperformed the Index during the month, due primarily to stock selection. Holdings in the energy, food beverage & tobacco, telecommunication services, retailing, and media & entertainment industry groups contributed to performance compared to the Index. Portfolio holdings in the transportation, software & services, pharmaceuticals & biotechnology, and materials industry groups, along with an underweight position in the semiconductors & semi equipment industry group, detracted from relative performance. The top contributor to return was energy exploration & production company, Halliburton Co. (United States). Other notable contributors included electronic equipment manufacturer, Samsung Electronics Co., Ltd. (South Korea), mobile telecommunications operator, China Mobile Ltd.(China), power & automation technology company, ABB Ltd. (Switzerland), and British American Tobacco plc (United Kingdom). The largest detractor was enterprise management software provider, Oracle Corp. (United States). Additional notable detractors included Takeda Pharmaceutical Co., Ltd. (Japan), enterprise infrastructure software company, Micro Focus International Plc (United Kingdom), robotics manufacturer, FANUC Corp. (Japan), and jet engine manufacturer, Rolls-Royce Holdings Plc (United Kingdom).

Investment outlook

We believe that much of the global central bank monetary expansion is in the rear-view mirror. Massive liquidity creation has suppressed market volatility and favored momentum relative to value-oriented trading. With central banks curtailing accommodative policies, value stocks should eventually rebound. In the absence of a recession, earnings of economically sensitive stocks should attract enough attention to garner a re-rating of valuation multiples. This process began last year, as cyclical stocks outperformed broad indices in the last four months of 2019. In 2020, we expect investors to look to diversifying systematic risks, and risk aversion could rise with an escalation of US-Iranian conflict. Therefore, transparency of investment risks and full financial disclosure will become increasingly important. These preferences may favor well-established companies with a history of rewarding shareholders (via dividends and share buybacks) and place a greater hurdle rate of return on speculative, unprofitable companies. We seek talented senior management teams steering financially strong companies through profitability setbacks by focusing on reaccelerating earnings and cash flow. To complement these “self-help” stocks, we seek consistent cash generating companies with generous dividend payouts. In years of more traditional equity market returns, rather than runaway bull markets, stability of cash flows and income should attract investor attention.

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.