Causeway Capital Management LLC value equity strategies are committed to an investment philosophy that combines in-depth research and analysis, active portfolio construction and disciplined risk management. Our philosophy is based on the principles of long-term value investing and provides diversified exposure to mid- and large-cap equities primarily in 24 international countries outside the United States. The strategy is actively managed in a value style and uses a bottom-up approach to stock selection.
We believe stocks derive their value from the contribution of yield and the profitable reinvestment of retained earnings over time. Our portfolio managers and analysts seek to identify under-priced securities that we will hold until the market recognizes their fair value.
We believe in a team approach to investment management. Our portfolio managers and fundamental research analysts work together to determine expected returns for undervalued securities. We refine this analysis using tools developed by our quantitative specialists to manage portfolio risk.
The Causeway Emerging Markets Equity strategy combines value and growth oriented factors, as well as bottom-up and top-down factors. We believe this combination of factors can exploit investment opportunities that exist in emerging market equities. We believe that buying attractively valued companies with superior earnings prospects and which have positive market sentiment will produce consistent returns over all phases of the investment cycle.
We also believe in the same philosophy when picking which countries and sectors will outperform the benchmark. That is, we look at valuation but compare that against earnings growth and market sentiment. Furthermore, at the country level we also look at the health of the macroeconomy. The countries that we prefer have increasing GDP growth expectations, strong current account surpluses, low nominal and real interest rates, and increasing industrial production numbers indicating a strong industrial base. These countries will do especially well in a world where global growth is slowing.
Lastly, our process is a quantitative one that uses quantitative alpha models, risk models, and optimization to create a portfolio that will outperform the benchmark. We believe using a quantitative process is the best way to efficiently exploit the multiple investment opportunities while avoiding the undue sources of risk that exist in the emerging markets.