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*
-20.93%
Nav*
$9.48, -0.05
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 December 01, 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 -2.3%-29.9%-30.6%-4.4%-4.3%0.8%2.2%
MSCI Emerging Markets -3.1%-29.2%-30.7%-4.1%-2.7%1.2%2.2%
QTD YTD 1 year3 years5 years10 years Since inception
Fund -2.3%-29.9%-30.6%-4.4%-4.3%0.8%2.2%
MSCI Emerging Markets -3.1%-29.2%-30.7%-4.1%-2.7%1.2%2.2%
QTD YTD 1 year3 years5 years10 years Since inception
Fund -10.5%-28.3%-28.4%-2.5%-3.2%1.1%2.3%
MSCI Emerging Markets -11.4%-26.9%-27.8%-1.7%-1.4%1.4%2.4%
QTD YTD 1 year3 years5 years10 years Since inception
Fund -10.5%-28.3%-28.4%-2.5%-3.2%1.1%2.3%
MSCI Emerging Markets -11.4%-26.9%-27.8%-1.7%-1.4%1.4%2.4%
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 October 31, 2022)

Benchmark: MSCI Emerging Markets
Asset Allocation
Fund
Stocks 97.4%
Cash 2.6%
Fund Characteristics
Fund Benchmark
No. of holdings 184
Weighted avg. market cap (US $MM) $39,412 $0
NTM price/earnings 6.2 0.0
Price/book value 1.1 0.0
NTM EPS revision (wtd. avg) 3.4 0.0
Net assets $1,153,146,443 -
TOP 10 ACTIVE HOLDINGS
Security Country Active weight*
Banco do Brasil SA Brazil 1.6%
China Construction Bank Corp. China 1.4%
Kia Corp. South Korea 1.2%
PICC Property & Casualty Co., Ltd. China 1.2%
Sun Pharmaceutical Industries Ltd. India 1.2%
Hon Hai Precision Industry Co., Ltd. Taiwan 1.1%
Hana Financial Group, Inc. South Korea 1.0%
Oil & Natural Gas Corp. Ltd. India 0.9%
JBS SA Brazil 0.9%
Bank of Baroda 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
Financials 20.2% 23.6%
Information Technology 16.8% 19.1%
Consumer Discretionary 10.7% 12.3%
Energy 9.7% 5.6%
Materials 9.3% 9.1%
Industrials 8.3% 6.1%
Consumer Staples 5.8% 6.5%
Equity Funds 4.8% 0.0%
Health Care 4.7% 4.1%
Communication Services 4.5% 8.7%
Utilities 2.1% 3.2%
Real Estate 0.4% 1.7%
TOP 10 COUNTRIES
Country Fund Benchmark
China 27.3% 26.9%
India 16.6% 16.2%
South Korea 12.5% 11.9%
Taiwan 12.2% 13.5%
Brazil 6.4% 6.4%
Saudi Arabia 6.2% 5.1%
Thailand 3.5% 2.2%
Indonesia 3.3% 2.3%
United Arab Emirates 3.2% 1.5%
South Africa 2.2% 3.7%
Regional Allocation
  • Emerging Asia 75.4%
  • Emerging Europe, Middle East, Africa 14.0%
  • Emerging Latin America 8.0%

Commentary (As of October 31, 2022)

Highlights

  • Market volatility in China and continued rising interest rates across several markets weighed on emerging market (“EM”) equities in October.
  • In October, we adjusted our earnings growth factor to, in our view, better reflect sentiment for commodity-related stocks. Based on our research, sell-side analyst earnings revisions for this cohort of stocks may be inconsistent with the price movement of the underlying commodities. In some cases, analysts are slow to update estimates, while in other cases, analysts base their forecasts on forward contracts, which adjust with a lag compared to spot prices.
  • While we incorporate growth expectations into our multi-factor investment process, we continue to emphasize valuation in our approach. 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.

Portfolio attribution

The Causeway Emerging Markets Fund (“Fund”) outperformed the Index in October 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 growth and technical factors were positive indicators during the month. Our valuation and competitive strength factors were negative. Of our top-down factors, sector was a positive indicator. Our currency, macroeconomic, and country factors were negative indicators in October.

Investment outlook

Earnings growth upgrades for EM equities continue to lag those in ex-US developed markets. The EM sectors with the weakest net upgrades were materials, communication services, and industrials. Slowing global growth has contributed to lower expectations for industrials, which reflect weakness in the shipping sector, and materials companies. Communication services is primarily driven by the Chinese platform companies, which have been impacted by the country’s slowing growth. Sectors with positive net upgrades were financials and energy. Financials are benefitting from positive credit cycles in India and Brazil, countries where we are identifying attractive investment opportunities in banks. The energy sector has been buoyed by oil, coal, and natural gas prices, which remain relatively strong. From a country perspective, South Korea, South Africa, and China had the weakest net upgrades. The export-dependent, technology-oriented South Korean economy has been impacted by slowing global growth. South Africa is a commodity-oriented economy and reflects the falling commodity prices. Covid-19 restrictions continue to slow growth in China. While we incorporate growth expectations into our multi-factor investment process, we continue to emphasize valuation in our approach. 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.

In October, we adjusted our earnings growth factor to, in our view, better reflect sentiment for commodity-related stocks. Based on our research, sell-side analyst earnings revisions for this cohort of stocks may be inconsistent with the price movement of the underlying commodities. In some cases, analysts are slow to update estimates, while in other cases, analysts base their forecasts on forward contracts, which adjust with a lag compared to spot prices. Additionally, extreme movements in commodity prices are often met with supply and demand responses, resulting in price reversals. For these reasons, we believe that adjusting our earnings growth factor for commodity-related stocks can potentially improve the Fund’s risk-adjusted returns.

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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