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*
+7.61%
Nav*
$9.62, -0.01
Inception
March 30, 2007
Cusip
149498206
Benchmark
MSCI Emerging Markets
Minimum Investment
$5,000
Sales Charge
None
Net Expense Ratio
1.36%
Gross Expense Ratio
1.37%
*As of January 17, 2023
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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 7.4%-23.2%-23.2%-4.1%-3.4%0.6%2.6%
MSCI Emerging Markets 9.8%-19.7%-19.7%-2.3%-1.0%1.8%3.0%
QTD YTD 1 year3 years5 years10 years Since inception
Fund 7.4%-23.2%-23.2%-4.1%-3.4%0.6%2.6%
MSCI Emerging Markets 9.8%-19.7%-19.7%-2.3%-1.0%1.8%3.0%
QTD YTD 1 year3 years5 years10 years Since inception
Fund 7.4%-23.2%-23.2%-4.1%-3.4%0.6%2.6%
MSCI Emerging Markets 9.8%-19.7%-19.7%-2.3%-1.0%1.8%3.0%
QTD YTD 1 year3 years5 years10 years Since inception
Fund 7.4%-23.2%-23.2%-4.1%-3.4%0.6%2.6%
MSCI Emerging Markets 9.8%-19.7%-19.7%-2.3%-1.0%1.8%3.0%
202220212020201920182017201620152014201320122011201020092008
Fund -23.2%-1.5%16.7%16.4%-18.1%39.5%8.9%-16.2%1.8%-2.8%25.6%-18.2%26.1%87.9%-58.5%
MSCI Emerging Markets -19.7%-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
202220212020201920182017201620152014201320122011201020092008
-23.2%-1.5%16.7%16.4%-18.1%39.5%8.9%-16.2%1.8%-2.8%25.6%-18.2%26.1%87.9%-58.5%
-19.7%-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 December 31, 2022)

Benchmark: MSCI Emerging Markets
Asset Allocation
Fund
Stocks 98.1%
Cash 1.9%
Fund Characteristics
Fund Benchmark
No. of holdings 179 1377
Weighted avg. market cap (US $MM) $56,903 $59,873
NTM price/earnings 6.5 10.2
Price/book value 1.0 1.6
NTM EPS revision (wtd. avg) 4.2 -6.9
Net assets $220,229,868 -
TOP 10 ACTIVE HOLDINGS
Security Country Active weight*
China Construction Bank Corp. China 2.0%
Banco do Brasil SA Brazil 1.4%
Kia Corp. South Korea 1.1%
PICC Property & Casualty Co., Ltd. China 1.1%
Hana Financial Group, Inc. South Korea 1.1%
Sun Pharmaceutical Industries Ltd. India 1.0%
Oil & Natural Gas Corp. Ltd. India 1.0%
Hon Hai Precision Industry Co., Ltd. Taiwan 1.0%
Tencent Music Entertainment Gr China 1.0%
Bank of Baroda India 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 18.7% 22.1%
Information Technology 17.5% 18.6%
Consumer Discretionary 14.6% 14.1%
Industrials 9.4% 6.1%
Energy 8.2% 4.9%
Materials 7.2% 8.9%
Communication Services 6.6% 9.9%
Health Care 4.8% 4.1%
Consumer Staples 4.7% 6.4%
Equity Funds 4.3% 0.0%
Utilities 2.1% 3.0%
Real Estate 0.3% 1.9%
TOP 10 COUNTRIES
Country Fund Benchmark
China 35.3% 32.3%
India 14.5% 14.4%
South Korea 14.3% 11.3%
Taiwan 12.5% 13.8%
Brazil 5.2% 5.3%
Thailand 3.1% 2.2%
Saudi Arabia 2.7% 4.1%
Indonesia 2.6% 1.9%
United Arab Emirates 2.1% 1.3%
South Africa 1.9% 3.7%
Regional Allocation
  • Emerging Asia 82.2%
  • Emerging Europe, Middle East, Africa 9.1%
  • Emerging Latin America 6.7%

Commentary (As of December 31, 2022)

Highlights

  • Despite the optimism surrounding the economic impact of less stringent Covid-19 restrictions in China, emerging market equities posted negative returns in December.
  • In December, the United States Public Company Accounting Oversight Board (“PCAOB”) announced that it was granted full access to inspect US-listed Chinese American Depositary Receipt (“ADR”) audit firms. This announcement significantly lowers US delisting risk of Chinese ADRs for at least three years. Chinese stocks were also bolstered by the government’s decision to ease Covid-related restrictions in the country. Authorities appear willing to tolerate rising Covid-19 cases in order to improve economic growth.
  • 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”), on a net asset value basis, underperformed the Index in December 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 technical and competitive strength factors were negative indicators during the month. Our valuation and growth factors were positive. Of our top-down factors, sector and currency were negative indicators. Our macroeconomic and country factors were positive indicators in December.

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 information technology, materials, and utilities. Forecasts for the information technology sector reflect falling demand for semiconductor memory components. Weak expectations for materials are due in part to the impact of slowing global growth on commodity prices. The sectors with the strongest net upgrades were consumer discretionary, communication services, and energy. Both consumer discretionary and communication services are heavily exposed to China and have benefited from the government’s efforts to rekindle economic growth. 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.

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
2022 $0.3931 $0.0000 $0.0000
2021 $0.3478 $0.0000 $2.4046
2020 $0.1787 $0.0000 $0.0000
2019 $0.2362 $0.0000 $0.0000
2018 $0.1777 $0.0000 $0.0000
2017 $0.1937 $0.0000 $0.0000
2016 $0.1353 $0.0000 $0.0000
2015 $0.1434 $0.0000 $0.0000
2014 $0.2425 $0.0000 $0.0000
2013 $0.1100 $0.0000 $0.0000
2012 $0.2768 $0.0000 $0.0000
2011 $0.0972 $0.0000 $0.0000
2010 $0.2560 $0.0000 $0.0000
2009 $0.2866 $0.0000 $0.0000
2008 $0.1506 $0.0000 $0.0000
2007 $0.2097 $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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