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*
-19.85%
Nav*
$9.61, -0.11
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
1.12%
*As of June 30, 2022
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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 -4.5%-12.0%-19.3%5.0%2.9%4.4%3.8%
MSCI Emerging Markets -5.1%-11.7%-19.6%5.4%4.2%4.5%3.8%
QTD YTD 1 year3 years5 years10 years Since inception
Fund -4.5%-12.0%-19.3%5.0%2.9%4.4%3.8%
MSCI Emerging Markets -5.1%-11.7%-19.6%5.4%4.2%4.5%3.8%
QTD YTD 1 year3 years5 years10 years Since inception
Fund -7.8%-7.8%-13.4%4.6%4.5%3.5%4.1%
MSCI Emerging Markets -6.9%-6.9%-11.1%5.3%6.4%3.7%4.2%
QTD YTD 1 year3 years5 years10 years Since inception
Fund -7.8%-7.8%-13.4%4.6%4.5%3.5%4.1%
MSCI Emerging Markets -6.9%-6.9%-11.1%5.3%6.4%3.7%4.2%
20212020201920182017201620152014201320122011201020092008
Fund -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 -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
20212020201920182017201620152014201320122011201020092008
-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%
-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 May 31, 2022)

Benchmark: MSCI Emerging Markets
Asset Allocation
Fund
Stocks 98.5%
Cash 1.5%
Fund Characteristics
Fund Benchmark
No. of holdings 162 1393
Weighted avg. market cap (US $MM) $78,829 $75,367
NTM price/earnings 6.7 12.2
Price/book value 1.1 1.7
NTM EPS revision (wtd. avg) 5.7 -0.4
Net assets $1,304,060,247 -
TOP 10 ACTIVE HOLDINGS
Security Country Active weight*
China Construction Bank Corp. China 2.0%
Samsung Electronics Co., Ltd. South Korea 1.4%
JBS SA Brazil 1.3%
Banco do Brasil SA Brazil 1.3%
Kia Corp. South Korea 1.2%
Hindalco Industries India 1.2%
PetroChina Co., Ltd. China 1.1%
MediaTek, Inc. Taiwan 1.1%
KB Financial Group, Inc. South Korea 1.0%
Hana Financial Group, Inc. South Korea 1.0%

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
Information Technology 24.1% 21.1%
Financials 21.0% 21.8%
Materials 11.9% 9.1%
Industrials 8.5% 5.5%
Energy 8.1% 5.0%
Consumer Discretionary 5.7% 12.8%
Communication Services 5.3% 10.2%
Consumer Staples 5.1% 6.0%
Equity Funds 5.1% 0.0%
Health Care 2.3% 3.6%
Utilities 1.2% 2.7%
Real Estate 0.1% 2.1%
TOP 10 COUNTRIES
Country Fund Benchmark
China 28.9% 30.8%
Taiwan 17.5% 16.0%
South Korea 16.7% 12.7%
India 12.2% 12.8%
Brazil 5.8% 5.6%
Saudi Arabia 3.6% 4.4%
South Africa 3.5% 3.8%
Thailand 2.9% 1.9%
Indonesia 1.9% 1.9%
Mexico 1.7% 2.3%
Regional Allocation
  • Emerging Asia 80.6%
  • Emerging Europe, Middle East, Africa 10.1%
  • Emerging Latin America 7.8%
  • Multi Region Emerging (ETF) 0.0%

Commentary (As of May 31, 2022)

Highlights

  • Amid the ongoing war in Ukraine and continued Covid-19 restrictions in parts of China, emerging markets (“EM”) value stocks outperformed EM growth stocks in May.
  • EM currency markets signaled relief that the Fed did not tighten policy more aggressively in its efforts to combat inflation. The US dollar fell in May relative to a basket of EM currencies as many EM central banks have raised interest rates in anticipation of the Fed’s actions.
  • While we incorporate growth expectations into our multi-factor investment process, we continue to emphasize valuation in our approach. Trading at attractive valuations and supported by rising interest rates globally, we believe that EM value stocks offer compelling risk-adjusted return potential looking forward.

Portfolio attribution

The Causeway Emerging Markets Fund (“Fund”) outperformed the Index in May 2022. 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 valuation and competitive strength factors were positive indicators during the month while growth and price momentum were negative. Of our top-down factors, our country and currency factors were positive. Our macroeconomic and sector factors were negative indicators in May.

Investment outlook

Earnings growth upgrades for EM equities continue to lag those in developed markets. EM sectors with the weakest earnings upgrades were communication services, consumer discretionary, and health care. The communication services and consumer discretionary sectors are dominated by Chinese stocks, which have been impacted by the country’s economic restrictions. We are underweight communication services and consumer discretionary stocks in the Fund due to growth and price momentum considerations. The growth outlook for health care stocks deteriorated recently due, in part, to inflationary cost pressures. The sectors with the strongest earnings upgrades were energy, information technology, and industrials. Energy stocks have benefitted from strong oil prices and select large information technology companies have experienced positive growth forecast revisions. Lastly, industrials companies have been supported by resilient global growth and robust freight rates in the shipping industry. While we incorporate growth expectations into our multi-factor investment process, we continue to emphasize valuation in our approach. Trading at attractive valuations and supported by rising interest rates globally, we believe that EM value stocks offer compelling 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
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).

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