Diversified exposure to emerging markets, seeking to capture value and growth

The Fund normally invests at least 80% of its total assets in equity securities of companies located in emerging (less developed) markets and other investments that are tied economically to emerging markets. Generally these investments include common stock, preferred and preference stock, American Depositary Receipts, European Depositary Receipts, Global Depositary Receipts, and exchange-traded funds (“ETFs”) that invest in emerging markets securities.

Causeway uses a quantitative investment approach to purchase and sell investments for the Fund. Causeway’s proprietary computer model analyzes a variety of factors to assist in selecting securities. The model currently analyzes factors relating to valuation, earnings growth, technical indicators, macroeconomics, currency, countries and sectors.

YTD Return*
+13.60%
Nav*
$12.95, +0.10
Inception
March 30, 2007
Cusip
149498107
Benchmark
MSCI Emerging Markets
Minimum Investment
$1,000,000
Sales Charge
None
Total Expense Ratio
1.15%
*As of December 13, 2019

Strategy overview

The portfolio managers discuss our Emerging Markets strategy.

Portfolio managers

Head of Quantitative Research
Quantitative Portfolio Manager
Quantitative Portfolio Manager
Quantitative Portfolio Manager

Performance

QTDYTD1 year3 years5 years10 yearsSince inception
Fund4.2%8.5%4.7%7.6%1.7%4.4%3.8%
MSCI Emerging Markets4.1%10.6%7.7%9.4%3.5%3.7%3.7%
QTDYTD1 year3 years5 years10 yearsSince inception
Fund4.2%8.5%4.7%7.6%1.7%4.4%3.8%
MSCI Emerging Markets4.1%10.6%7.7%9.4%3.5%3.7%3.7%
QTDYTD1 year3 years5 years10 yearsSince inception
Fund-4.5%4.1%-5.2%4.7%1.1%4.6%3.5%
MSCI Emerging Markets-4.1%6.2%-1.6%6.4%2.7%3.7%3.4%
QTDYTD1 year3 years5 years10 yearsSince inception
Fund-4.5%4.1%-5.2%4.7%1.1%4.6%3.5%
MSCI Emerging Markets-4.1%6.2%-1.6%6.4%2.7%3.7%3.4%
20182017201620152014201320122011201020092008
Fund-17.9%39.8%9.2%-16.0%2.1%-2.6%25.8%-18.1%26.3%88.1%-58.4%
MSCI Emerging Markets-14.2%37.8%11.6%-14.6%-1.8%-2.3%18.6%-18.2%19.2%79.0%-53.2%
Fund
MSCI Emerging Markets
20182017201620152014201320122011201020092008
-17.9%39.8%9.2%-16.0%2.1%-2.6%25.8%-18.1%26.3%88.1%-58.4%
-14.2%37.8%11.6%-14.6%-1.8%-2.3%18.6%-18.2%19.2%79.0%-53.2%

Portfolio (as of November 30, 2019)

Benchmark: MSCI Emerging Markets
Asset Allocation
Fund
Stocks98.2%
Cash1.8%
Fund Characteristics
FundBenchmark
No. of holdings 130 1409
Weighted avg. market cap (US $MM)$72,829$61,911
NTM price/earnings9.612.1
Price/book value1.41.6
NTM EPS revision (wtd. avg)9.13.2
Net assets$3,669,247,171-
TOP 10 ACTIVE HOLDINGS
Security Country Active weight*
China Construction Bank Corp.China2.0%
Samsung Electronics Co., Ltd.South Korea1.7%
Investimentos ItauBrazil1.6%
LukoilRussia1.3%
Gazprom PJSCRussia1.3%
Tencent Holdings Ltd.China1.3%
JBS SABrazil1.2%
Anhui Conch Cement Co., Ltd.China1.1%
Ping An Insurance (Group) Co. of China Ltd.China1.1%
SberbankRussia1.0%

A "weighted average” measures a characteristic by the market capitalization of each stock. Price/book value is the weighted average of the price/book values of all the stocks in a portfolio. The P/B value 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. “Earnings-per-share” is the portion of a company’s profit allocated to each outstanding share of common stock. “Earnings-per-share year-over-year estimate growth (next 12 months)” is the average next-12-month earnings-per-share estimate from one year ago for an individual company compared with that estimate today; note that this calculation is done on a company-by-company basis and is aggregated through a weighted average based on the individual company’s weight in the corresponding index. Also note that this characteristic is supplied directly by MSCI.

*Active defined as Fund weight minus MSCI EM Index weight. Holdings are subject to change.

SECTOR WEIGHTS
Sector Fund Benchmark
Financials23.6%24.4%
Information Technology19.3%15.3%
Consumer Discretionary12.0%14.3%
Communication Services11.0%11.0%
Energy9.3%7.4%
Consumer Staples6.4%6.6%
Materials5.1%7.3%
Industrials4.2%5.4%
Real Estate2.5%2.9%
Equity Funds2.2%0.0%
Health Care2.1%2.8%
Utilities0.8%2.7%
TOP 10 COUNTRIES
Country Fund Benchmark
China35.4%34.0%
South Korea13.5%11.6%
Taiwan12.7%11.7%
Brazil9.1%7.1%
India8.5%9.1%
Russia7.4%3.9%
Thailand2.9%2.7%
Mexico1.9%2.3%
South Africa1.4%4.6%
Turkey1.1%0.5%
Regional Allocation
  • Emerging Asia 74.1%
  • Emerging Europe, Middle East, Africa 12.1%
  • Emerging Latin America 12.0%
  • Multi Region Emerging (ETF) 0.0%

Commentary (As of November 30, 2019)

Highlights

  • With growth slowing in most emerging market (“EM”) countries, EM equities posted muted returns in November.
  • Growth has been slowing for most EM countries. According to Bloomberg consensus estimates, gross domestic product (“GDP”) growth for EM countries is expected to be 3.7% in 2019 and 3.8% in 2020. Both of these estimates have been lowered over the past three months.
  • Despite slowing growth, earnings upgrades continue to be strong within EM equities compared to other regions. EM is the only major region that has experienced net positive earnings upgrades over the past three months. In addition to favorable earnings upgrades, EM countries also look compelling from a valuation perspective as EM equities have underperformed most regions YTD.

Portfolio attribution

Causeway Emerging Markets Fund (“Fund”) outperformed the Index in November 2019. 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 value factor was our strongest performing bottom-up indicator in November, but it has been the weakest indicator over the year-to-date (“YTD”) period. Our bottom-up price momentum and earnings growth factors were both negative indicators in November. Of our top-down factors, macroeconomic, country, and currency were positive indicators during the month. Our sector factor was neutral.

Investment outlook

In November, the MSCI Emerging Markets Value Index underperformed the MSCI Emerging Markets Growth Index by 1.1%, further widening the discount for value stocks. In contrast, our value factor was positive during the month. This disconnect is primarily attributable to two factors. First, the strong performance of a few large cap growth stocks buoyed the Growth Index. While the Index is capitalization-weighted, we use equally-weighted returns for our value factor in order to avoid assigning a handful of stocks a disproportionate weight. Secondly, our value factor has a sector-relative component while MSCI’s style classification schemes do not include sector adjustments.

MSCI EM small capitalization (“cap”) stocks underperformed their large cap peers in November and the YTD period, continuing their multi-year underperformance since 2016. We have been overweight mid- and small cap stocks in our Fund, which has detracted from relative performance. On the positive side, our contextual weighting scheme continued to rebound in November. When calculating a stock’s expected alpha, the relative weight assigned to each bottom-up stock-specific factor for a particular company differs depending on its classification. While this methodology has underperformed a uniform-weighted approach YTD, we remain confident in our contextual weighting scheme and are encouraged by the recent rebound in performance.

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 Fund holdings and characteristics are subject to change. There is no guarantee that any forecasts made will come to pass. Any securities identified and described in this report 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. Diversification does not protect against market loss. Current and future holdings are subject to risk. The Fund may invest in derivatives, which are often more volatile than other investments and may magnify the Fund's gains or losses. Investing in ETFs is subject to the risks of the underlying funds. International and emerging markets investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles or from social, economic or political instability in other nations. Emerging markets and smaller companies involve additional risks and higher volatility.

Distributions

DividendsShort-term capital gainsLong-term capital gains
2018$0.2296$0.0000$0.0000
2017$0.2232$0.0000$0.0000
2016$0.1597$0.0000$0.0000
2015$0.1620$0.0000$0.0000
2014$0.2775$0.0000$0.0000
2013$0.0825$0.0000$0.0000
2012$0.2526$0.0000$0.0000
2011$0.0778$0.0000$0.0000
2010$0.2451$0.0000$0.0000
2009$0.2830$0.0000$0.0000
2008$0.1186$0.0000$0.0000
2007$0.2002$0.4003$0.0000

Distributions are per share. Distribution amounts are based on gains and losses realized and income earned by the Fund through October 31 (or earlier under certain circumstances).

Documents

Fund information:

Forms: