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*
+1.59%
Nav*
$8.94, -0.18
Inception
March 30, 2007
Cusip
149498107
Benchmark
MSCI Emerging Markets
Minimum Investment
$1,000,000
Sales Charge
None
Net Expense Ratio
1.11%
Gross Expense Ratio
1.14%
*As of March 09, 2023
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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 1.2%1.2%-18.2%0.1%-3.5%0.8%2.8%
MSCI Emerging Markets 0.9%0.9%-14.9%1.3%-1.5%1.9%3.0%
QTD YTD 1 year3 years5 years10 years Since inception
Fund 1.2%1.2%-18.2%0.1%-3.5%0.8%2.8%
MSCI Emerging Markets 0.9%0.9%-14.9%1.3%-1.5%1.9%3.0%
QTD YTD 1 year3 years5 years10 years Since inception
Fund 7.3%-23.0%-23.0%-3.9%-3.2%0.8%2.8%
MSCI Emerging Markets 9.8%-19.7%-19.7%-2.3%-1.0%1.8%3.0%
QTD YTD 1 year3 years5 years10 years Since inception
Fund 7.3%-23.0%-23.0%-3.9%-3.2%0.8%2.8%
MSCI Emerging Markets 9.8%-19.7%-19.7%-2.3%-1.0%1.8%3.0%
202220212020201920182017201620152014201320122011201020092008
Fund -23.0%-1.3%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 -19.7%-2.2%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
202220212020201920182017201620152014201320122011201020092008
-23.0%-1.3%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%
-19.7%-2.2%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 February 28, 2023)

Benchmark: MSCI Emerging Markets
Asset Allocation
Fund
Stocks 96.2%
Cash 3.8%
Fund Characteristics
Fund Benchmark
No. of holdings 182 1373
Weighted avg. market cap (US $MM) $61,054 $66,393
NTM price/earnings 6.8 10.2
Price/book value 1.0 1.6
NTM EPS revision (wtd. avg) -1.0 -9.4
Net assets $1,009,525,472 -
TOP 10 ACTIVE HOLDINGS
Security Country Active weight*
China Construction Bank Corp. China 1.9%
Banco do Brasil SA Brazil 1.6%
Kia Corp. South Korea 1.5%
Hana Financial Group, Inc. South Korea 1.1%
Oil & Natural Gas Corp. Ltd. India 1.1%
PICC Property & Casualty Co., Ltd. China 1.0%
Hon Hai Precision Industry Co., Ltd. Taiwan 1.0%
Vipshop Holdings China 0.9%
Tencent Music Entertainment Gr China 0.9%
Sun Pharmaceutical Industries Ltd. India 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 18.8% 20.2%
Financials 16.7% 21.7%
Consumer Discretionary 13.8% 13.6%
Industrials 9.1% 6.0%
Energy 7.1% 4.7%
Materials 6.8% 8.8%
Communication Services 6.5% 10.3%
Consumer Staples 5.4% 6.4%
Health Care 5.0% 3.9%
Equity Funds 4.3% 0.0%
Utilities 1.9% 2.6%
Real Estate 0.9% 1.9%
TOP 10 COUNTRIES
Country Fund Benchmark
China 35.5% 32.1%
Taiwan 15.1% 15.3%
South Korea 14.2% 11.7%
India 13.2% 13.2%
Brazil 5.2% 5.0%
Indonesia 2.5% 1.9%
Thailand 2.3% 2.1%
Mexico 1.8% 2.6%
Saudi Arabia 1.7% 3.8%
Turkey 1.3% 0.6%
Regional Allocation
  • Emerging Asia 82.9%
  • Emerging Latin America 7.1%
  • Emerging Europe, Middle East, Africa 6.2%

Commentary (As of February 28, 2023)

Highlights

  • In February, emerging market (“EM”) equities lagged developed markets as global inflation remained elevated, leading investors to anticipate greater interest rate hikes.
  • Inverted yield curves have historically been a negative indicator for EM assets as it signals an increased risk of a slowdown in global growth. However, with both China and India expected to post mid-to-high single-digit positive growth in 2023, we believe the slowdown in EM may be less pronounced than in developed markets.
  • We added a new component, the three and six-month change in nominal interest rates, to our currency factor in February. Our research has shown that EM currencies in countries where short-term interest rates are rising have tended to outperform currencies where short-term interest rates are flat or falling, during normal interest rate environments globally.

Portfolio attribution

The Causeway Emerging Markets Fund (“Fund”), on a net asset value basis, performed in line with the Index in February 2023. 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, valuation, and technical (price momentum) factors were positive indicators during the month. Our competitive strength factor was a negative indicator in February. Of our top-down factors, currency was a positive indicator. Sector, country, and macroeconomic were negative indicators.

Investment outlook

We added a new component, the three and six-month change in nominal interest rates, to our currency factor in February. Our research has shown that EM currencies in countries where short-term interest rates are rising have tended to outperform currencies where short-term interest rates are flat or falling, during normal interest rate environments globally. The component did not perform well in the previous decade during a period of significant interest rate repression. However, we believe we are entering a more normalized interest rate environment as global central banks contend with stubbornly high inflation. In such an environment characterized by lower global liquidity, EM central banks should likely be compelled to support their currencies by offering relatively high interest rates. In terms of earnings growth upgrades, the outlook for EM equities has weakened. The two principal drivers are the externally-oriented economies of South Korea and Taiwan, which reflect fears of slowing global demand. From a sector perspective, the segments with the strongest net upgrades were communications services and financials. Communications services is dominated by China and continues to benefit from the country’s economic re-opening as Covid-19 restrictions ease. With a balance of favorable valuation, growth, and price momentum characteristics relative to the Index, we believe the portfolio offers attractive risk-adjusted return potential looking forward.

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
2022 $0.4290 $0.0000 $0.0000
2021 $0.3956 $0.0000 $2.4046
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).

Documents

Fund information:

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