Global Value Fund

Portfolio Attribution

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 technology hardware & equipment, semiconductors & semi equipment, and software & services industry groups contributed to relative performance. Holdings in the capital goods, utilities, and pharmaceuticals & biotechnology industry groups offset some of the outperformance compared to the Index. The top contributor to return was design-to-distribution business process services technology company, TD SYNNEX Corp. (United States). Other notable contributors included global financial services giant, Citigroup, Inc. (United States), and rail operator, Canadian Pacific Kansas City Ltd. (Canada). The largest detractor was rolling stock, signaling, and services provider for the rail industry, Alstom SA (France). Additional notable detractors included power utility, PG&E Corp. (United States), 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. China’s exports remain strong, driven by investments in new business operations abroad in automotive, clean energy, information technology, and mining, though potential tariffs and slower growth in 2025 may pressure its trading partners in Asia and Africa. 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.

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, we continue to identify companies focused on operational restructuring, enhancing efficiency, and driving earnings growth to deliver shareholder value in the year ahead.

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 investable 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. The strategy’s value factors delivered negative returns in January; however, value remains the best-performing factor group over the last twelve months. Our sentiment factors were positive for the month and over the last twelve months. Our technical factors posted negative returns in the month as January witnessed several changes in market leadership. Our quality and corporate events factors were positive indicators in January. Returns to our macroeconomic and country aggregate factors were also positive as countries exhibiting more attractive characteristics (such as Australia) outperformed those with relatively weaker characteristics (such as India). All factor groups remain positive on an inception to date basis.

Quarterly Investment Outlook

The US Federal Reserve reduced its benchmark interest rate by another 0.25% in December, but its forward guidance was interpreted as more hawkish than expected. Nevertheless, inflation in the US is still trending down, with November PCE inflation at just +0.1% month-over-month. This trajectory could change depending on the policies of the incoming Trump administration; however more accommodative central bank policy in the US, and the potential for a weaker US dollar, should be tailwinds for international small caps.

Chinese authorities have continued to talk up supporting their economy and markets in recent months; however specific fiscal stimulus efforts remain unclear. We expect plans will become more crystallized as the Trump tariff negotiations proceed. Although China is approximately 3% of the ACWI ex USA Small Cap Index, additional monetary and fiscal stimulus should be supportive of global economic growth.

International small caps (ACWI ex USA Small Cap Index) continue to trade at a rare discount to their larger-cap (ACWI ex USA Index) peers on a forward P/E basis. In addition to the attractive relative valuation of the asset class overall, 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.

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 capital goods, financial services, and technology hardware & equipment detracted from relative performance. Banks, household & personal products, and consumer discretionary distribution & retail contributed to relative performance. The largest individual detractors from absolute returns included rolling stock, signaling, and services provider for the rail industry, Alstom SA (France), alcoholic beverage distributor, Diageo Plc (United Kingdom), and paints & coatings producer, Akzo Nobel (Netherlands). The greatest individual contributors to absolute returns included banking & financial services company, Barclays PLC (United Kingdom), multinational luxury conglomerate, Kering SA (France), and household & personal care products company, Reckitt Benckiser Group Plc (United Kingdom).

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 neutral. We identify five primary factors as most indicative of the ideal allocation target: valuation, quality, earnings growth, macroeconomic, and risk aversion. Our valuation metric is currently positive for emerging markets and quality, which include such measures as profit margins and return on equity, is neutral. Our earnings growth, macroeconomic, and risk aversion indicators are negative for emerging markets.

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 budget 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 the possibility of 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 Fund, 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 Fund, we continue to identify companies focused on operational restructuring, enhancing efficiency, and driving earnings growth to deliver shareholder value in the year ahead.

Emerging Markets Fund

Portfolio attribution

The Causeway Emerging Markets Fund (“Fund”), on a net asset value basis, underperformed the Index in January 2025. We use both bottom-up “stock-specific” and top-down factor categories to seek to forecast alpha for the stocks in the Fund’s investable universe. Our bottom-up competitive strength, technical (price momentum), valuation, and growth factors were negative indicators in January. Corporate events was neutral during the month. Our top-down macroeconomic factor was a negative indicator while country/sector aggregate and currency were positive.

Quarterly Investment Outlook

In the US, Donald Trump won the presidential election on a platform of higher tariffs and tighter immigration policies and the implications for EM assets are nuanced. Higher tariffs should be negative for EM as it is an export-oriented asset class. However, the incoming Trump administration’s policies may cause higher structural inflation and greater US fiscal deficits, leading to a weaker US dollar in the medium to long-term, which could bolster EM assets. In South Korea, the country’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 remain overweight South Korean stocks in the Fund, due in part to compelling valuations. 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 Fund, due in part to attractive valuations.

International Value Fund

Portfolio Attribution

The Causeway International Value Fund (“Fund”), on a net asset value basis, underperformed the Index during the month, due primarily to country allocation (a byproduct of our bottom-up stock selection process). On a gross return basis, Fund holdings in the pharmaceuticals & biotechnology, transportation, and banks industry groups contributed to relative performance. Holdings in the capital goods, technology hardware & equipment, and food beverage & tobacco industry groups offset some of the outperformance compared to the Index. The largest detractor was rolling stock, signaling, and services provider for the rail industry, Alstom SA (France). Additional notable detractors included alcoholic beverage distributor, Diageo Plc (United Kingdom), and paints & coatings producer, Akzo Nobel (Netherlands). The top contributor to return was banking & financial services company, Barclays PLC (United Kingdom). Other notable contributors included multinational luxury conglomerate, Kering SA (France), and household & personal care products company, Reckitt Benckiser Group 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. China’s exports remain strong, driven by investments in new business operations abroad in automotive, clean energy, information technology, and mining, though potential tariffs and slower growth in 2025 may pressure its trading partners in Asia and Africa. 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.

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, we continue to identify companies focused on operational restructuring, enhancing efficiency, and driving earnings growth to deliver shareholder value in the year ahead.