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*
+1.53%
Nav*
$13.24, +0.14
Inception
March 30, 2007
Cusip
149498107
Benchmark
MSCI Emerging Markets
Minimum Investment
$1,000,000
Sales Charge
None
Net Expense Ratio
1.10%
Gross Expense Ratio
1.16%
*As of October 29, 2020
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Strategy overview

The portfolio managers discuss our Emerging Markets strategy.

Portfolio managers

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

Performance

QTD YTD 1 year3 years5 years10 years Since inception
Fund 9.3%-2.1%9.8%0.3%6.9%3.2%4.0%
MSCI Emerging Markets 9.7%-0.9%10.9%2.8%9.4%2.9%4.0%
QTD YTD 1 year3 years5 years10 years Since inception
Fund 9.3%-2.1%9.8%0.3%6.9%3.2%4.0%
MSCI Emerging Markets 9.7%-0.9%10.9%2.8%9.4%2.9%4.0%
QTD YTD 1 year3 years5 years10 years Since inception
Fund 9.3%-2.1%9.8%0.3%6.9%3.2%4.0%
MSCI Emerging Markets 9.7%-0.9%10.9%2.8%9.4%2.9%4.0%
QTD YTD 1 year3 years5 years10 years Since inception
Fund 9.3%-2.1%9.8%0.3%6.9%3.2%4.0%
MSCI Emerging Markets 9.7%-0.9%10.9%2.8%9.4%2.9%4.0%
201920182017201620152014201320122011201020092008
Fund 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 18.9%-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
201920182017201620152014201320122011201020092008
16.7%-17.9%39.8%9.2%-16.0%2.1%-2.6%25.8%-18.1%26.3%88.1%-58.4%
18.9%-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 September 30, 2020)

Benchmark: MSCI Emerging Markets
Asset Allocation
Fund
Stocks 97.8%
Cash 2.2%
Fund Characteristics
Fund Benchmark
No. of holdings 121 1386
Weighted avg. market cap (US $MM) $163,771 $135,823
NTM price/earnings 11.1 14.0
Price/book value 1.4 1.7
NTM EPS revision (wtd. avg) 16.5 10.7
Net assets $2,689,972,893 -
TOP 10 ACTIVE HOLDINGS
Security Country Active weight*
Samsung Electronics Co., Ltd. South Korea 1.7%
Tencent Holdings Ltd. China 1.7%
China Construction Bank Corp. China 1.5%
Jd.com China 1.1%
Anhui Conch Cement Co., Ltd. China 1.0%
Taiwan Semiconductor Manufacturing Co., Ltd. Taiwan 0.9%
Kia Motors Corp. South Korea 0.9%
Baidu China 0.8%
Hindalco Industries India 0.7%
Dr. Reddy's Laboratories Ltd. India 0.7%

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 21.8% 18.5%
Consumer Discretionary 17.5% 20.2%
Financials 15.3% 17.1%
Communication Services 14.2% 12.7%
Materials 6.6% 6.9%
Energy 5.4% 5.4%
Equity Funds 4.6% 0.0%
Consumer Staples 4.4% 6.1%
Health Care 3.2% 4.3%
Industrials 2.8% 4.4%
Real Estate 1.8% 2.4%
Utilities 0.3% 2.0%
TOP 10 COUNTRIES
Country Fund Benchmark
China 41.0% 41.9%
South Korea 15.3% 12.1%
Taiwan 13.8% 12.8%
India 9.5% 8.2%
Brazil 5.3% 4.6%
Russia 4.8% 3.0%
South Africa 1.9% 3.5%
Mexico 1.7% 1.6%
Malaysia 1.2% 1.7%
Thailand 1.0% 1.8%
Regional Allocation
  • Emerging Asia 82.5%
  • Emerging Europe, Middle East, Africa 8.3%
  • Emerging Latin America 7.1%
  • Multi Region Emerging (ETF) 0.0%

Commentary (As of September 30, 2020)

Highlights

  • During a volatile month in global equity markets, emerging markets (“EM”) equities posted negative returns and value indices lagged their growth counterparts.
  • Earnings growth prospects have been improving for many EM companies. The sectors experiencing net upgrades include consumer discretionary, communication services, information technology, and materials.
  • We continue to emphasize value factors in our multi-factor investment process and we believe value stocks are poised to rebound. A catalyst for value’s resurgence could be the dissemination of one or more COVID-19 vaccines, many of which are in Phase III trials. We believe that a reduction in other sources of uncertainty, including the US election, should also support value stocks.

Portfolio attribution

Causeway Emerging Markets Fund (“Fund”) outperformed the Index in September 2020. 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 earnings growth and price momentum factors were positive indicators during the month. Our bottom-upvalue factor was a negative indicator in September and it has lagged over most recent periods. Of our top-down factors, our currency and country factors were positive indicators during the month. Our macroeconomic and sector factors were negative indicators.

Investment outlook

Earnings growth prospects have been improving for many EM companies. Earnings growth upgrades exceed downgrades in more than half of the EM sectors according to analyst forecasts. The sectors experiencing net upgrades include consumer discretionary, communication services, information technology, and materials. Information technology companies have experienced the strongest net upgrades as increased reliance on technology during the pandemic and strong 5G demand have buoyed earnings. Information technology is the Fund’s largest sector overweight due to favorable earnings growth and price momentum characteristics. From a country perspective, companies in the technology-oriented economies of South Korea and Taiwan experienced the strongest net upgrades. Russian companies also experienced strong net upgrades despite declining oil prices. This was primarily attributable to improvement relative to a low baseline as downgrades for many Russian companies were quite pronouncedearlier this year. On the negative side, companies in Thailand experienced substantial net downgrades as tourism has been halted.

Uncertainty surrounding the COVID-19 pandemic has continued to weigh on EM value stocks. Following a poor 2019, the MSCI Emerging Markets Value Index trails the MSCI Emerging Markets Growth Index by 28 percentage points on a local currency basis over the year-to-date period. The MSCI Emerging Markets Value Index is trading near record low valuations based on both price-to-earnings and price-to-book value ratios. We continue to emphasize value factors in our multi-factor investment process and we believe that EM value stocks are poised to rebound once there is a reduction in COVID-19 uncertainty given the discount relative to EM growth stocks. A catalyst for value’s resurgence could be the dissemination of one or more COVID-19 vaccines, many of which are in Phase III trials. We believe that a reduction in other sources of uncertainty, including the US election, should also support value stocks.

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
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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