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*
-2.84%
Nav*
$12.67, -0.34
Inception
March 30, 2007
Cusip
149498107
Benchmark
MSCI Emerging Markets
Minimum Investment
$1,000,000
Sales Charge
None
Total Expense Ratio
1.16%
*As of January 27, 2020

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 -6.0%-6.0%0.7%5.6%2.8%4.8%3.8%
MSCI Emerging Markets -4.7%-4.7%4.2%8.3%4.9%4.1%3.9%
QTD YTD 1 year3 years5 years10 years Since inception
Fund -6.0%-6.0%0.7%5.6%2.8%4.8%3.8%
MSCI Emerging Markets -4.7%-4.7%4.2%8.3%4.9%4.1%3.9%
QTD YTD 1 year3 years5 years10 years Since inception
Fund 12.1%16.7%16.7%10.2%4.2%4.7%4.4%
MSCI Emerging Markets 11.9%18.9%18.9%12.0%6.0%4.0%4.3%
QTD YTD 1 year3 years5 years10 years Since inception
Fund 12.1%16.7%16.7%10.2%4.2%4.7%4.4%
MSCI Emerging Markets 11.9%18.9%18.9%12.0%6.0%4.0%4.3%
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 January 31, 2020)

Benchmark: MSCI Emerging Markets
Asset Allocation
Fund
Stocks 98.1%
Cash 1.9%
Fund Characteristics
Fund Benchmark
No. of holdings 127 1401
Weighted avg. market cap (US $MM) $93,178 $78,987
NTM price/earnings 9.7 12.1
Price/book value 1.4 1.6
NTM EPS revision (wtd. avg) 5.3 0.7
Net assets $3,611,680,201 -
TOP 10 ACTIVE HOLDINGS
Security Country Active weight*
China Construction Bank Corp. China 1.9%
Samsung Electronics Co., Ltd. South Korea 1.9%
Lukoil Russia 1.5%
Investimentos Itau Brazil 1.5%
JBS SA Brazil 1.3%
Tencent Holdings Ltd. China 1.1%
Ping An Insurance Group Co Of China 1.1%
Anhui Conch Cement Co., Ltd. China 1.1%
Sberbank Russia 1.1%
Gazprom PJSC Russia 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
Financials 22.2% 23.8%
Information Technology 20.2% 16.1%
Consumer Discretionary 12.8% 14.3%
Communication Services 11.7% 11.4%
Energy 8.7% 7.1%
Consumer Staples 5.7% 6.5%
Materials 5.5% 7.3%
Industrials 3.7% 5.2%
Equity Funds 2.3% 0.0%
Real Estate 2.3% 2.8%
Health Care 2.2% 3.0%
Utilities 0.9% 2.7%
TOP 10 COUNTRIES
Country Fund Benchmark
China 37.1% 34.2%
South Korea 13.6% 11.6%
Taiwan 13.0% 11.7%
Brazil 9.5% 7.3%
India 8.3% 9.0%
Russia 7.7% 4.0%
Thailand 1.9% 2.5%
Mexico 1.8% 2.4%
South Africa 1.2% 4.5%
Turkey 1.0% 0.5%
Regional Allocation
  • Emerging Asia 74.9%
  • Emerging Latin America 12.0%
  • Emerging Europe, Middle East, Africa 11.2%

Commentary (As of January 31, 2020)

Highlights

  • Concerns regarding the coronavirus outbreak in China weighed on emerging markets (“EM”) equities in January.
  • Given the severe market reaction to the coronavirus outbreak, investors are implying that the negative impact from the virus will more than offset the positives from the January 15th signing of the Phase 1 US-China trade deal.
  • Value stocks tend to underperform in “risk-off” environments so we would not expect a rebound in value stock performance until there is more clarity on the coronavirus situation. However, given EM growth stocks are trading at a historically large premium to value stocks, we believe that value stocks could rally when there is more clarity around the outbreak.

Portfolio attribution

Causeway Emerging Markets Fund (“Fund”) underperformed the Index in January 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 our weakest performing bottom-up indicator in January. Our bottom-up price momentum and earnings growth factors were both positive indicators during the month. Of our top-down factors, country and sector were negative indicators. Our macroeconomic and currency factors were positive indicators during the period.

Investment outlook

Earnings growth expectations for EM companies declined relative to other regions in recent weeks as analysts incorporated the potential effects of the coronavirus outbreak. In China, companies are beginning to experience net earnings growth downgrades for the first time in a number of months. From a sector perspective, information technology companies have been particularly impacted as China is a large consumer of technology goods and services and the country is a key constituent in supply chains. We are overweight the information technology sector within the Fund as earnings growth and momentum characteristics remain attractive.

The external shock caused by the coronavirus outbreak also impacted value stocks. In January, the MSCI Emerging Markets Value Index underperformed the MSCI Emerging Markets Growth Index by 4.1%. Our value factor also underperformed during the month. Value stocks tend to underperform in “risk-off” environments so we would not expect a rebound in value stock performance until there is more clarity on the coronavirus situation. However, given EM growth stocks are trading at a historically large premium to value stocks, we believe that value stocks could rally when there is more clarity around the outbreak.

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:

Forms: