The Causeway Global Value Fund (“Fund”), on a net asset value basis, outperformed the Index during the month, due primarily to stock selection. On a gross return basis, Fund holdings in the transportation, insurance, and materials industry groups contributed to relative performance. Holdings in the commercial & professional services and consumer durables & apparel industry groups, along with an underweight position in the semiconductors & semi equipment industry group, offset some of the outperformance relative to the Index. The top contributor to return was HVAC manufacturer, Carrier Global Corp.(United States). Other notable contributors included passenger & cargo airline, Alaska Air Group, Inc. (United States), and private-sector bank, AXIS Capital Holdings Ltd. (United States). The largest detractor was business software & services provider, SAP SE (Germany). Additional notable detractors included rolling stock, signaling, and services provider for the rail industry, Alstom SA (France), and management & technology consulting services company, Booz Allen Hamilton Holding Co (United States).
Investment Outlook
Artificial intelligence continues to reshape the investment landscape, driving substantial capital spending on data centers, semiconductors, power infrastructure, and related technologies. As investor enthusiasm has become increasingly concentrated in AI infrastructure companies, we have trimmed select semiconductor positions where share prices have risen beyond our targets. We believe the market’s narrow focus has also created attractive opportunities across other areas of the global equity market, including capital goods, consumer durables, and media and entertainment, where we do not believe long-term earnings potential is fully reflected in current valuations.
Geopolitical tensions—including ongoing conflicts in the Middle East and Ukraine, as well as strategic competition between the US and China—may weigh on valuation multiples in the near term. Amid elevated geopolitical risk, we remain focused on companies with durable competitive advantages and management teams we view as capable of navigating an increasingly complex operating environment.
Our investment process continues to emphasize bottom-up stock selection to identify businesses where operational improvements, disciplined capital allocation, and shareholder-oriented governance can unlock value not yet recognized by the market. We also seek companies that are successfully adopting AI to improve efficiency, strengthen competitive advantages, and enhance long-term earnings power. Against a backdrop of higher interest rates, persistent inflation, and geopolitical risk, our valuation discipline and bottom-up research remain central to identifying long-term investment opportunities across global equity markets.
International Small Cap Fund
Portfolio Attribution
The Causeway International Small Cap Fund (“Fund”), on a net asset value basis, underperformed the Index during the month. To evaluate stocks in our investible universe, our multi-factor quantitative model employs five bottom-up factor categories –valuation, sentiment, technical indicators, quality, and corporate events – and two top-down factor categories assessing macroeconomic and country aggregate characteristics. Alpha factor performance was mixed in June. Our corporate events, valuation, quality, and sentiment factor categories led returns in June. Our technical factors posted negative returns for the month, though they are the best-performing factor group year-to-date. Quality and value are also the only alpha factor categories with negative returns year-to-date and over the last twelve months. Meanwhile, our technical factors were the best -performing factor group year-to-date and over the last twelve months. Our macroeconomic and country aggregate factors posted negative monthly returns as countries exhibiting stronger metrics (such as Korea and Canada) underperformed those with relatively weaker characteristics (such as India and South Africa). All alpha factor group returns remain positive on an inception to date basis.
Investment Outlook
Continued AI capital expenditure was a critical driver of strong EM performance during the second quarter and should remain an important factor going forward. With 2027 AI capital expenditure estimates near $1 trillion, investors will scrutinize the efficacy and sustainability of these levels of investment. Concerns about the spending levels have contributed to volatility in EM. Furthermore, leverage in the South Korean market, whether through margin lending or levered Exchange-Traded Funds, has exacerbated volatility. We remain overweight South Korean and Taiwanese stocks in the Fund as sentiment and momentum are positive, but we are closely monitoring the risks associated with massive AI capital expenditures.
In the Middle East, transits through the Strait of Hormuz are increasing as an uneasy ceasefire between the US and Iran appears to be holding. Oil prices have declined significantly, providing a tailwind for net oil-importing countries.
Causeway’s International Small Cap portfolio continues to trade at a substantial discount to the Index while simultaneously exhibiting more favorable growth, quality, momentum, and positive estimate revisions than the Index. We believe that this highly attractive combination of characteristics better insulates our portfolio from future volatility.
We believe that this highly attractive combination of characteristics better insulates our portfolio from future volatility. We believe another attractive feature of international small caps is that they exhibit greater valuation dispersion than large caps on both a forward earnings yield and B/P basis. This indicates more information content in the valuation ratios of small caps. In addition to exhibiting greater valuation dispersion, small caps exhibit a higher long-term earnings per share growth trend.
International Opportunities Fund
Portfolio Attribution
The Causeway International Opportunities Fund (“Fund”) on a net asset value basis, underperformed the Index during the month. On a gross return basis, Fund holdings in the semiconductors & semi equipment, technology hardware & equipment, and software & services industry groups detracted from relative performance. Positioning in the materials, automobiles & components, and energy industry groups contributed to relative performance. The largest detractors from absolute returns included communication services provider, Deutsche Telekom AG (Germany), business software & services provider, SAP SE (Germany), and rolling stock, signaling, and services provider for the rail industry, Alstom SA (France). The greatest contributors to absolute returns included semiconductor company, SK hynix, Inc. (South Korea), banking & financial services company, Barclays PLC (United Kingdom), and integrated circuit manufacturer, Taiwan Semiconductor Manufacturing Co., Ltd.(Taiwan).
We use a proprietary quantitative equity allocation model that assists the portfolio managers in determining the weight of emerging versus developed markets in the Fund. Our allocation relative to the weight of emerging markets in the Index is currently significantly overweight. We identify five primary factors as most indicative of the ideal allocation target: valuation, quality, earnings growth, macroeconomic, and risk aversion. Our valuation, earnings growth, and macroeconomic factors are positive for emerging markets. Our quality metric, which includes such measures as profit margins and return on equity, is also positive. Our risk aversion factor is a neutral indicator.
Investment Outlook
Artificial intelligence continues to reshape the investment landscape, driving substantial capital spending on data centers, semiconductors, power infrastructure, and related technologies. Continued AI capital expenditure was a critical driver of strong EM performance during the second quarter and should remain an important factor going forward. Concerns about the spending levels have contributed to volatility in EM. Furthermore, leverage in the South Korean market, whether through margin lending or levered Exchange-Traded Funds, has exacerbated volatility. We remain overweight South Korean and Taiwanese stocks in the Fund as we believe valuations are reasonable and sentiment is positive, but we are closely monitoring the risks assoicated with massive AI capital expenditures. In the developed markets portion of the portfolio, we believe the market’s narrow focus has also created attractive opportunities across other areas of the global equity market, including capital goods, consumer durables, and media and entertainment, where we do not believe long-term earnings potential is fully reflected in current valuations.
While geopolitical tensions—including ongoing conflicts in the Middle East and Ukraine, as well as strategic competition between the US and China—remain important factors affecting the global economy, oil prices have declined significantly. Falling oil prices provide a tailwind for emerging markets as net oil-importing countries comprise the largest portion of the EM equity market. In developed markets, our investment process continues to emphasize bottom-up stock selection to identify businesses where operational improvements, disciplined capital allocation, and shareholder-oriented governance can unlock value not yet recognized by the market. We also seek companies that are successfully adopting AI to improve efficiency, strengthen competitive advantages, and enhance long-term earnings power.
Emerging Markets Fund
Portfolio Attribution
The Causeway Emerging Markets Fund (“Fund”), on a net asset value basis, underperformed the Index in June 2026. We use both bottom-up “stock-specific” and top-down factor categories to forecast alpha for the stocks in the Fund’s investable universe. Our bottom-up valuation factor was a negative indicator in June. Growth, technical (price momentum), corporate events, and competitive strength were positive indicators during the month. Our top-down macroeconomic, currency, and country/sector aggregate factors were negative indicators during the month.
Investment Outlook
Continued AI capital expenditure was a critical driver of strong EM performance during the second quarter and should remain an important factor going forward. With 2027 AI capital expenditure estimates near $1 trillion, investors will scrutinize the efficacy and sustainability of these levels of investment. Concerns about the spending levels have contributed to volatility in EM. Furthermore, leverage in the South Korean market, whether through margin lending or levered Exchange-Traded Funds, has exacerbated volatility. We remain overweight South Korean and Taiwanese stocks in the Fund as we believe valuations are reasonable and sentiment is positive, but we are closely monitoring the risks associated with massive AI capital expensitures. In the Middle East, transits through the Strait of Hormuz are increasing as an uneasy ceasefire between the US and Iran appears to be holding. Oil prices have declined significantly, providing a tailwind for the Fund and the EM Index as net oil-importing countries comprise the largest portion of the EM equity market. In the EMEA region, the Fund is overweight Turkish stocks due in part to bottom-up and top-down considerations. In late May, a Turkish court issued a judgment that effectively ousted the reformist leader of the main opposition party, the CHP, and reinstated his divisive predecessor, Kemal Kilicdaroglu. This move, along with others in recent years, effectively weakens the opposition party. Despite these developments, we maintain our overweight to Turkey as the central bank, in our view, continues to be disciplined, keeping short term rates comfortably above expected inflation.
International Value Fund
Portfolio Attribution
The Causeway International Value Fund (“Fund”), on a net asset value basis, outperformed the Index during the month, due primarily to industry allocation (a byproduct of our bottom-up stock selection process). On a gross return basis, Fund holdings in the materials and banks industry groups, as well as an underweight position in the energy industry group, contributed to relative performance. Holdings in the semiconductors & semi equipment, software & services, and consumer durables & apparel industry groups offset some of the outperformance relative to the Index. The top contributor to return was banking & financial services company, Barclays PLC (United Kingdom). Other notable contributors included SEGRO PLC (United Kingdom), and jet engine manufacturer, Rolls-Royce Holdings Plc (United Kingdom). The largest detractor was communication services provider, Deutsche Telekom AG (Germany). Additional notable detractors included business software & services provider, SAP SE (Germany), and rolling stock, signaling, and services provider for the rail industry, Alstom SA (France).
Investment Outlook
Artificial intelligence continues to reshape the investment landscape, driving substantial capital spending on data centers, semiconductors, power infrastructure, and related technologies. As investor enthusiasm has become increasingly concentrated in AI infrastructure companies, we have trimmed select semiconductor positions where share prices have risen beyond our targets. We believe the market’s narrow focus has also created attractive opportunities across other areas of the global equity market, including capital goods, consumer durables, and media and entertainment, where we do not believe long-term earnings potential is fully reflected in current valuations.
Geopolitical tensions—including ongoing conflicts in the Middle East and Ukraine, as well as strategic competition between the US and China—may weigh on valuation multiples in the near term. Amid elevated geopolitical risk, we remain focused on companies with durable competitive advantages and management teams we view as capable of navigating an increasingly complex operating environment.
Our investment process continues to emphasize bottom-up stock selection to identify businesses where operational improvements, disciplined capital allocation, and shareholder-oriented governance can unlock value not yet recognized by the market. We also seek companies that are successfully adopting AI to improve efficiency, strengthen competitive advantages, and enhance long-term earnings power. Against a backdrop of higher interest rates, persistent inflation, and geopolitical risk, our valuation discipline and bottom-up research remain central to identifying long-term investment opportunities across global equity markets.
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