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*
+9.04%
Nav*
$16.40, +0.04
Inception
March 30, 2007
Cusip
149498107
Benchmark
MSCI Emerging Markets
Minimum Investment
$1,000,000
Sales Charge
None
Total Expense Ratio
1.08%
*As of June 14, 2021
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Strategy overview

The portfolio managers discuss our Emerging Markets strategy.

Portfolio managers

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

Performance

QTD YTD 1 year3 years5 years10 years Since inception
Fund 2.5%7.6%48.6%7.7%12.8%4.3%5.6%
MSCI Emerging Markets 4.9%7.4%51.5%10.0%14.3%4.5%5.6%
QTD YTD 1 year3 years5 years10 years Since inception
Fund 2.5%7.6%48.6%7.7%12.8%4.3%5.6%
MSCI Emerging Markets 4.9%7.4%51.5%10.0%14.3%4.5%5.6%
QTD YTD 1 year3 years5 years10 years Since inception
Fund 5.0%5.0%59.5%4.8%11.5%4.2%5.5%
MSCI Emerging Markets 2.3%2.3%58.9%6.9%12.5%4.0%5.4%
QTD YTD 1 year3 years5 years10 years Since inception
Fund 5.0%5.0%59.5%4.8%11.5%4.2%5.5%
MSCI Emerging Markets 2.3%2.3%58.9%6.9%12.5%4.0%5.4%
2020201920182017201620152014201320122011201020092008
Fund 16.9%16.7%-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 18.7%18.9%-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
2020201920182017201620152014201320122011201020092008
16.9%16.7%-17.9%39.8%9.2%-16.0%2.1%-2.6%25.8%-18.1%26.3%88.1%-58.4%
18.7%18.9%-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 May 31, 2021)

Benchmark: MSCI Emerging Markets
Asset Allocation
Fund
Stocks 97.5%
Cash 2.5%
Fund Characteristics
Fund Benchmark
No. of holdings 120 1424
Weighted avg. market cap (US $MM) $137,338 $113,899
NTM price/earnings 10.3 13.3
Price/book value 1.7 2.1
NTM EPS revision (wtd. avg) 11.1 2.2
Net assets $2,448,723,152 -
TOP 10 ACTIVE HOLDINGS
Security Country Active weight*
China Construction Bank Corp. China 1.9%
Tencent Holdings Ltd. China 1.7%
Hindalco Industries India 1.2%
Kia Corp. South Korea 1.0%
MediaTek, Inc. Taiwan 1.0%
POSCO South Korea 1.0%
Vale SA Brazil 0.9%
Fubon Financial Holding Co., Ltd. Taiwan 0.9%
Hon Hai Precision Industry Co., Ltd. Taiwan 0.9%
Delta Electronics, Inc. Taiwan 0.9%

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
Information Technology 24.0% 20.4%
Financials 17.9% 18.3%
Consumer Discretionary 13.2% 16.8%
Communication Services 11.3% 11.4%
Materials 10.7% 8.7%
Equity Funds 5.3% 0.0%
Energy 4.5% 4.9%
Consumer Staples 3.8% 5.7%
Health Care 3.1% 5.0%
Industrials 2.9% 4.7%
Real Estate 0.8% 2.1%
Utilities 0.0% 2.0%
TOP 10 COUNTRIES
Country Fund Benchmark
China 33.4% 37.6%
South Korea 17.3% 13.0%
Taiwan 17.1% 13.9%
India 10.2% 10.0%
Brazil 5.2% 5.0%
Russia 4.0% 3.2%
South Africa 2.5% 3.8%
Mexico 2.2% 1.8%
Thailand 1.9% 1.7%
Saudi Arabia 1.4% 2.8%
Regional Allocation
  • Emerging Asia 81.3%
  • Emerging Europe, Middle East, Africa 8.8%
  • Emerging Latin America 7.4%
  • Multi Region Emerging (ETF) 0.1%

Commentary (As of April 30, 2021)

Highlights

  • With contributions from each of the major region groups, emerging markets (“EM”) equities posted positive returns in April.
  • Flattening yield curves and the pause in the reopening trade weighed on value stocks during the month. However, we believe the global vaccine rollout should progress and most economies should continue to reopen, putting upward pressure on interest rates.
  • We emphasize value factors in our multi-factor investment process and we believe the outlook for value stocks is favorable as many economies continue to rebound from the Covid-19 crisis.

Portfolio attribution

The Causeway Emerging Markets Fund (“Fund”) underperformed the Index in April 2021. 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 growth factor was the strongest indicator in April. Our valuation, price momentum and competitive strength factors were also positive indicators during the month. Of our top-down factors, macroeconomic and currency were negative indicators while country and sector were positive.

Investment outlook

Within EM, earnings growth upgrades have generally been strongest in cyclical sectors, particularly materials, energy, and information technology, according to analyst estimates. Growth upgrades for these sectors reflect analysts’ optimism that economies continue to reopen and economic activity will accelerate. We are overweight materials and information technology stocks in the Fund due to attractive growth and price momentum characteristics. We are underweight energy stocks due to valuation considerations. Earnings growth upgrades have been weakest for stocks in the consumer discretionary, communication services, and real estate sectors. From a country perspective, net upgrades were particularly strong in Russia, Taiwan, and Saudi Arabia. Chinese stocks experienced the most net downgrades on a float-weighted basis. China’s economy fared relatively well during the pandemic and Chinese companies are not experiencing the cyclical rebound from a low base to the same extent as stocks in some other countries. Additionally, the Chinese government is paring back stimulus measures and consequently providing less support for its economy. We are underweight Chinese stocks in the Fund due to bottom-up and top-down considerations.

After outperforming during the first quarter, the MSCI EM Value Index underperformed the MSCI EM Growth Index in April. Flattening yield curves and the pause in the reopening trade weighed on value stocks during the month. However, we believe the global vaccine rollout should progress and most economies should continue to reopen, putting upward pressure on interest rates. This would provide a positive backdrop for value stocks, which trade at a sizable discount to growth stocks. We emphasize value factors in our multi-factor investment process and we believe the outlook for value stocks is favorable as many economies continue to rebound from the Covid-19 crisis.

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

Dividends Short-term capital gains Long-term capital gains
2020 $0.2052 $0.0000 $0.0000
2019 $0.2650 $0.0000 $0.0000
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).

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