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*
+8.51%
Nav*
$16.32, +0.39
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 March 01, 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 3.7%3.7%29.0%2.4%13.7%4.5%5.5%
MSCI Emerging Markets 3.1%3.1%28.3%4.8%15.4%4.6%5.5%
QTD YTD 1 year3 years5 years10 years Since inception
Fund 3.7%3.7%29.0%2.4%13.7%4.5%5.5%
MSCI Emerging Markets 3.1%3.1%28.3%4.8%15.4%4.6%5.5%
QTD YTD 1 year3 years5 years10 years Since inception
Fund 19.4%16.9%16.9%3.9%11.3%3.9%5.2%
MSCI Emerging Markets 19.8%18.7%18.7%6.6%13.2%4.0%5.3%
QTD YTD 1 year3 years5 years10 years Since inception
Fund 19.4%16.9%16.9%3.9%11.3%3.9%5.2%
MSCI Emerging Markets 19.8%18.7%18.7%6.6%13.2%4.0%5.3%
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 January 31, 2021)

Benchmark: MSCI Emerging Markets
Asset Allocation
Fund
Stocks 99.1%
Cash 0.9%
Fund Characteristics
Fund Benchmark
No. of holdings 117 1379
Weighted avg. market cap (US $MM) $174,125 $145,130
NTM price/earnings 11.9 15.0
Price/book value 1.7 2.1
NTM EPS revision (wtd. avg) 22.9 14.2
Net assets $3,181,845,784 -
TOP 10 ACTIVE HOLDINGS
Security Country Active weight*
China Construction Bank China 2.0%
Tencent Holdings China 2.0%
TSMC Taiwan 1.3%
KIA Motors South Korea 1.2%
Jd.com China 1.0%
Baidu China 1.0%
HON Hai Precision Industry Co Taiwan 0.9%
Mediatek Taiwan 0.9%
CIA Vale Do Rio Doce Brazil 0.8%
Hindalco Industries India 0.8%

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 24.6% 20.9%
Consumer Discretionary 16.7% 19.3%
Financials 15.5% 17.1%
Communication Services 13.3% 12.3%
Materials 8.3% 7.4%
Equity Funds 5.5% 0.0%
Energy 4.1% 4.6%
Consumer Staples 3.9% 5.7%
Health Care 3.2% 4.7%
Industrials 2.7% 4.2%
Real Estate 1.3% 1.9%
Utilities 0.2% 1.9%
TOP 10 COUNTRIES
Country Fund Benchmark
China 37.8% 40.1%
South Korea 17.6% 13.3%
Taiwan 16.7% 13.3%
India 9.0% 8.9%
Brazil 5.6% 4.6%
Russia 3.7% 2.8%
South Africa 2.3% 3.5%
Mexico 1.9% 1.6%
Saudi Arabia 1.1% 2.4%
Malaysia 1.0% 1.4%
Regional Allocation
  • Emerging Asia 83.7%
  • Emerging Latin America 7.9%
  • Emerging Europe, Middle East, Africa 7.5%
  • Multi Region Emerging (ETF) 0.0%

Commentary (As of January 31, 2021)

Highlights

  • Propelled by Chinese stocks, emerging market (“EM”) equities delivered positive returns in January.
  • Given the Democrats control both branches of US Congress, albeit with a slim majority, we believe the prospects for sizable fiscal stimulus have improved. The potential impact on EM assets is multi-faceted. Fiscal stimulus should bolster global growth, which would be a positive for EM. However, it would also decrease the need for monetary stimulus, which would likely be a negative for EM assets.
  • In addition to our growth, valuation, and price momentum factors, we recently added a bottom-up competitive strength factor to our model. The new alpha factor examines current levels and longer-term trends in a broad range of metrics relevant to competitive strength: margins, returns, competition, industry structure, market share, and balance sheet strength. Based on our research, the competitive strength factor is a good complement to our value factor, which continues to be the dominant indicator in our model.

Portfolio attribution

The Causeway Emerging Markets Fund (“Fund”) outperformed the Index in January 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 new competitive strength factor was the best performing bottom-up indicator in January. Our bottom-up growth and valuation factors were also positive indicators during the month. Our bottom-up price momentum factor was a negative indicator. Of our top-down factors, currency and macroeconomic were positive indicators while sector and country were negative.

Investment outlook

Earnings growth prospects have continued to rebound for many EM companies. Earnings growth upgrades exceeded downgrades in all but three sectors – real estate, consumer discretionary, and consumer staples. We are underweight each of these sectors in the Fund due in part to low earnings growth expectations. The materials, information technology, and financials sectors have exhibited the strongest net upgrades. From a country perspective, net earnings growth upgrades have been the most compelling in Taiwan, Russia, and India. In addition to our growth, valuation, and price momentum factors, we recently added a bottom-up competitive strength factor to our model. The new alpha factor examines current levels and longer-term trends in a broad range of metrics relevant to competitive strength: margins, returns, competition, industry structure, market share, and balance sheet strength. The factor has quality aspects as it highlights companies with increasing profit margins and returns on equity. This indicator also seeks to identify companies that operate in environments with few competitors and enjoy significant market share. Given these favorable competitive dynamics, these companies should be better positioned to sustain their strong performance. The factor also includes a balance sheet strength component that considers financial leverage and default risk. Based on our research, the competitive strength factor is a good complement to our value factor, which continues to be the dominant indicator in our model.

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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