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*
+0.23%
Nav*
$13.07, +0.11
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 August 05, 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 9.0%-2.4%6.9%1.0%4.5%4.1%4.0%
MSCI Emerging Markets 9.0%-1.5%6.9%3.2%6.5%3.7%4.0%
QTD YTD 1 year3 years5 years10 years Since inception
Fund 9.0%-2.4%6.9%1.0%4.5%4.1%4.0%
MSCI Emerging Markets 9.0%-1.5%6.9%3.2%6.5%3.7%4.0%
QTD YTD 1 year3 years5 years10 years Since inception
Fund 16.3%-10.4%-4.1%0.2%1.2%4.2%3.3%
MSCI Emerging Markets 18.2%-9.7%-3.0%2.3%3.2%3.6%3.3%
QTD YTD 1 year3 years5 years10 years Since inception
Fund 16.3%-10.4%-4.1%0.2%1.2%4.2%3.3%
MSCI Emerging Markets 18.2%-9.7%-3.0%2.3%3.2%3.6%3.3%
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 June 30, 2020)

Benchmark: MSCI Emerging Markets
Asset Allocation
Fund
Stocks 96.4%
Cash 3.6%
Fund Characteristics
Fund Benchmark
No. of holdings 115 1384
Weighted avg. market cap (US $MM) $119,958 $97,477
NTM price/earnings 11.0 13.7
Price/book value 1.4 1.6
NTM EPS revision (wtd. avg) 2.1 -4.4
Net assets $2,674,266,528 -
TOP 10 ACTIVE HOLDINGS
Security Country Active weight*
Samsung Electronics Co., Ltd. South Korea 1.9%
Tencent Holdings Ltd. China 1.9%
China Construction Bank Corp. China 1.8%
Anhui Conch Cement Co., Ltd. China 1.2%
Jd.com China 1.0%
Baidu China 0.9%
Lukoil Russia 0.9%
Investimentos Itau Brazil 0.9%
MediaTek, Inc. Taiwan 0.9%
JBS SA Brazil 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 20.2% 16.9%
Financials 17.0% 19.1%
Communication Services 15.5% 13.5%
Consumer Discretionary 14.1% 17.4%
Energy 6.1% 5.9%
Materials 5.9% 6.9%
Equity Funds 5.1% 0.0%
Consumer Staples 4.7% 6.5%
Industrials 3.1% 4.7%
Health Care 2.4% 4.3%
Real Estate 2.0% 2.6%
Utilities 0.3% 2.3%
TOP 10 COUNTRIES
Country Fund Benchmark
China 41.8% 41.0%
South Korea 13.4% 11.6%
Taiwan 13.3% 12.3%
India 8.1% 8.0%
Brazil 6.0% 5.1%
Russia 5.6% 3.2%
Mexico 1.7% 1.7%
South Africa 1.4% 3.8%
Thailand 1.3% 2.3%
Malaysia 1.1% 1.8%
Regional Allocation
  • Emerging Asia 79.4%
  • Emerging Europe, Middle East, Africa 8.8%
  • Emerging Latin America 8.2%
  • Multi Region Emerging (ETF) 0.0%

Commentary (As of June 30, 2020)

Highlights

  • Emerging Market (“EM”) equities continued to rebound in June, outperforming developed market equities during the month.
  • According to Bloomberg consensus estimates, analysts expect overall EM gross domestic product (“GDP”) growth to be -0.3% in 2020. The countries with the weakest 2020 GDP growth expectations include the commodity-oriented economies of Brazil, Russia, and South Africa. With growth expectations for most EM countries falling, inflation is expected to be benign.
  • Compared to developed markets, earnings growth prospects for EM companies have been relatively positive over the past three months. Despite this relative resilience, all sectors within EM except for communication services and health care experienced net downgrades. Earnings growth expectations for cyclical sectors such as financials, real estate, and energy have been the most negatively impacted by economic shutdowns.

Portfolio attribution

Causeway Emerging Markets Fund (“Fund”) underperformed the Index in June 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 value factor was the weakest bottom-up indicator in June, continuing to lag over the year-to-date period after underperforming in 2019. Our earnings growth factor was modestly positive. Price momentum was our strongest bottom-upindicator during the month. Of our top-down factors, sector, country and macroeconomic were negative indicators. Currency was a positive indicator in June.

Investment outlook

Compared to developed markets, earnings growth prospects for EM companies have been relatively positive over the past three months. Despite this relative resilience, all sectors within EM except for communication services and health care experienced net downgrades. Earnings growth expectations for cyclical sectors such as financials, real estate, and energy have been the most negatively impacted by economic shutdowns. Communication services experienced net positive upgrades as internet stocks displayed earnings resilience through the COVID-19 lockdown and telecommunications stocks benefitted from their more defensive profiles. Health care stocks also experienced net positive upgrades due to their role in combating the pandemic. Information technology, the Fund’s largest sector overweight, had median earnings upgrades relative to downgrades. From a country perspective, China and Taiwan experienced net positive upgrades over the past three months. In the case of China, this reflects the significant presence of online economy stocks, the expectation of supportive fiscal and monetary stimulus, and its relative success in controlling the COVID-19 pandemic. Compared to other EM countries, Taiwan has been one of the least affected by COVID-19. Furthermore, Taiwan’s export sector continues to be strong as the positive impact from increased global technology spending and 5G investment outweigh the negative impact of the country’s connections with the Chinese telecom equipment and smartphone manufacturing giant, Huawei. We are overweight Taiwanese stocks in the Fund due in part to attractive valuation, earnings growth, and momentum characteristics.

Following a poor 2019, the MSCI Emerging Markets Value Index has underperformed the MSCI Emerging Markets Growth Index every month this year. While strong absolute performance in broader markets has typically provided a good backdrop for value stocks, this was not the case in June as the MSCI Emerging Markets Value Index lagged the MSCI Emerging Markets Growth Index. The MSCI EM Value Index is trading at a sizable discount based on both price-to-earnings and price-to-book value ratios. We continue to emphasize value factors in our investment process and we believe that value’s relative performance should improve given the discount offered by value stocks currently.

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

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