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

The Causeway International Opportunities strategy is a blend of Causeway’s best skills, combining our international value (bottom-up, fundamental, developed international markets, excluding the US) and emerging markets (quantitatively managed with a targeted tracking error of 5%) equity strategies. Tracking error is a measurement of dispersion from a benchmark index. Our quantitative research team developed a proprietary multi-factor model that measures the relative attractiveness of emerging markets, and guides the portfolio managers in tactically allocating between the developed and emerging portfolio segments.

Benchmark
MSCI ACWI ex US
Inception
June 30, 2007
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Strategy overview

The portfolio managers discuss our International Opportunities strategy.

Portfolio managers

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

Performance

Table Header QTD YTD 1 year3 years5 years10 years Since inception
Strategy (gross) 8.0%8.0%17.4%10.9%11.9%6.6%5.2%
Strategy (net) 7.9%7.9%16.9%10.5%11.4%6.1%4.8%
MSCI ACWI ex US 5.5%5.5%10.2%5.2%8.1%5.3%3.4%
Table Header QTD YTD 1 year3 years5 years10 years Since inception
Strategy (gross) 8.0%8.0%17.4%10.9%11.9%6.6%5.2%
Strategy (net) 7.9%7.9%16.9%10.5%11.4%6.1%4.8%
MSCI ACWI ex US 5.5%5.5%10.2%5.2%8.1%5.3%3.4%
Table Header QTD YTD 1 year3 years5 years10 years Since inception
Strategy (gross) -6.6%10.0%10.0%6.9%7.0%6.3%4.8%
Strategy (net) -6.7%9.5%9.5%6.4%6.6%5.8%4.4%
MSCI ACWI ex US -7.5%6.1%6.1%1.3%4.6%5.3%3.2%
Table Header QTD YTD 1 year3 years5 years10 years Since inception
Strategy (gross) -6.6%10.0%10.0%6.9%7.0%6.3%4.8%
Strategy (net) -6.7%9.5%9.5%6.4%6.6%5.8%4.4%
MSCI ACWI ex US -7.5%6.1%6.1%1.3%4.6%5.3%3.2%
Fund 20242023202220212020201920182017201620152014201320122011
Strategy (gross) 10.0%24.8%-11.1%8.0%6.5%23.4%-17.9%31.8%1.9%-4.0%-3.9%22.2%26.0%-11.7%
Strategy (net) 9.5%24.3%-11.4%7.6%6.1%22.9%-18.2%31.3%1.5%-4.4%-4.2%21.7%25.5%-12.0%
MSCI ACWI ex US 6.1%16.2%-15.6%8.3%11.1%22.1%-13.8%27.8%5.0%-5.3%-3.4%15.8%17.4%-13.3%
Table Header
Strategy (gross)
Strategy (net)
MSCI ACWI ex US
20242023202220212020201920182017201620152014201320122011
10.0%24.8%-11.1%8.0%6.5%23.4%-17.9%31.8%1.9%-4.0%-3.9%22.2%26.0%-11.7%
9.5%24.3%-11.4%7.6%6.1%22.9%-18.2%31.3%1.5%-4.4%-4.2%21.7%25.5%-12.0%
6.1%16.2%-15.6%8.3%11.1%22.1%-13.8%27.8%5.0%-5.3%-3.4%15.8%17.4%-13.3%

Portfolio (as of February 28, 2025)

Benchmark: MSCI ACWI ex US
Asset Allocation
Table Header Strategy
Stocks 97.5%
Cash 2.5%
Strategy Characteristics
Table Header Strategy Benchmark
No. of holdings 250 2056
Weighted avg. market cap (US $MM) $83,096 $93,908
FY2 price/earnings 10.6 12.9
Price/book value 1.6 1.9
Dividend yield (%) 2.7 2.8
TOP 10 HOLDINGS
Security Country Percent
Kering SA France 3.2%
Alstom SA France 3.0%
Rolls-Royce Holdings Plc United Kingdom 2.8%
Renesas Electronics Corp. Japan 2.7%
Barclays PLC United Kingdom 2.7%
Reckitt Benckiser Group Plc United Kingdom 2.7%
AstraZeneca PLC United Kingdom 2.4%
Canadian Pacific Kansas City Ltd. Canada 2.2%
Roche Holding AG Switzerland 2.1%
Akzo Nobel Netherlands 1.9%

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
Financials 20.0% 24.3%
Industrials 15.7% 13.8%
Information Technology 14.3% 13.2%
Consumer Discretionary 11.4% 10.9%
Health Care 10.7% 9.0%
Consumer Staples 8.4% 6.7%
Communication Services 5.8% 6.5%
Materials 5.0% 6.2%
Utilities 2.3% 2.9%
Real Estate 1.2% 1.7%
Energy 1.0% 4.8%
Equity Funds 0.9% 0.0%
TOP 10 COUNTRIES
Country Strategy Benchmark
United Kingdom 23.5% 9.6%
France 13.9% 7.2%
China 9.4% 8.8%
Japan 8.7% 13.8%
Germany 6.9% 6.2%
Taiwan 5.7% 5.5%
Netherlands 5.2% 2.9%
India 3.6% 4.8%
South Korea 3.6% 2.7%
Italy 2.9% 1.9%
Regional Allocation
  • EURO 30.9%
  • EUROPE – OTHER 26.9%
  • EMERGING ASIA 23.2%
  • PACIFIC 9.9%
  • NORTH AMERICA 2.6%
  • EMERGING EUROPE, MIDDLE EAST, AFRICA 1.9%
  • EMERGING LATIN AMERICA 1.1%
  • DEVELOPED MIDDLE EAST 0.3%
  • MULTI REGION EMERGING 0.0%

Commentary (As of February 28, 2025)

Highlights

  • In February, value stocks outperformed growth stocks across major global equity regions. EM equities outperformed US equities during the month, but lagged international developed markets.
  • We believe non-US markets, trading at historic valuation discounts to the US, offer significant upside potential in 2025, particularly laggards in the industrials, consumer staples, consumer discretionary, and healthcare sectors. European stocks could see their valuation discount narrow if there is an end to the Ukraine war, a rebound in corporate investments, and lower energy prices.
  • Across sectors and geographies in the developed markets portion of the Portfolio, we continue to identify companies focused on operational restructuring, enhancing efficiency, and driving earnings growth to deliver shareholder value in the year ahead.

Portfolio Attribution

The Portfolio outperformed the Index during the month, due primarily to stock selection. Portfolio holdings in the semiconductors & semi equipment, capital goods, and banks industry groups contributed to relative performance. Holdings in the financial services, consumer discretionary distribution & retail, and transportation industry groups offset some of the outperformance compared to the Index. The top contributor to return was jet engine manufacturer, Rolls-Royce Holdings Plc (United Kingdom). Other notable contributors included semiconductor company, Renesas Electronics Corp. (Japan), and online services company, Tencent Holdings Ltd. (China). The largest detractor was integrated circuit manufacturer, Taiwan Semiconductor Manufacturing Co., Ltd. (Taiwan). Additional notable detractors included payment service provider, Worldline SA (France), and alcoholic beverage distributor, Diageo Plc (United Kingdom).

Quarterly Investment Outlook

Deficit spending is widespread, with major economies like the US, Brazil, France, and India leading in deficit-to-GDP ratios. Despite the US having the largest deficit in the Organisation for Economic Co-operation and Development (OECD), the dollar appreciated in 2024, while currencies in other fiscally constrained nations weakened. While the Federal Reserve monitors tariff-induced inflation, the European Central Bank and Bank of England are likely to continue cutting interest rates to support their economies.

Within emerging markets, South Korea’s parliament impeached President Yoon Suk Yeol in December after he attempted to impose martial law. Korea’s parliament then impeached his replacement, Han Duck-soo, two weeks later, replacing him with finance minister Choi Sang-mok as acting president. Despite these near-term political challenges, we believe the country’s Value Up initiative will continue as it is supported by both leading political parties in the country. In China, authorities have continued to discuss supporting the country’s economy and markets. The communication from the December politburo meeting indicated moderately accommodative monetary policy and emphasized the need to stabilize China’s property market. At its Central Economic Work Conference (CEWC), authorities pledged to increase the budget deficit, issue more debt, and loosen monetary policy to support the economy. We are modestly overweight Chinese stocks in the Portfolio, due in part to attractive valuations.

We believe non-US markets, trading at historic valuation discounts to the US, offer significant upside potential in 2025, particularly laggards in the industrials, consumer staples, consumer discretionary, and healthcare sectors. European stocks could see their valuation discount narrow if there is an end to the Ukraine war, a rebound in corporate investments, and lower energy prices. Enterprise adoption of generative AI should drive IT services demand and accelerate growth in advanced processors and memory. Across sectors and geographies in the developed markets portion of the Portfolio, we continue to identify companies focused on operational restructuring, enhancing efficiency, and driving earnings growth to deliver shareholder value in the year ahead.

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 [email protected].