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*
+11.97%
Nav*
$10.01, +0.07
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
1.39%
*As of November 30, 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 -5.0%3.7%14.0%-2.8%1.2%0.9%2.7%
MSCI Emerging Markets -3.9%-1.8%11.3%-3.3%2.0%1.6%2.7%
QTD YTD 1 year3 years5 years10 years Since inception
Fund -5.0%3.7%14.0%-2.8%1.2%0.9%2.7%
MSCI Emerging Markets -3.9%-1.8%11.3%-3.3%2.0%1.6%2.7%
QTD YTD 1 year3 years5 years10 years Since inception
Fund -0.4%9.2%17.3%-0.5%0.4%1.8%3.0%
MSCI Emerging Markets -2.8%2.2%12.2%-1.3%0.9%2.5%3.0%
QTD YTD 1 year3 years5 years10 years Since inception
Fund -0.4%9.2%17.3%-0.5%0.4%1.8%3.0%
MSCI Emerging Markets -2.8%2.2%12.2%-1.3%0.9%2.5%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 October 31, 2023)

Benchmark: MSCI Emerging Markets
Asset Allocation
Fund
Stocks 96.3%
Cash 3.7%
Fund Characteristics
Fund Benchmark
No. of holdings 191 1437
Weighted avg. market cap (US $MM) $55,983 $64,681
NTM price/earnings 7.1 11.6
Price/book value 1.1 1.6
NTM EPS revision (wtd. avg) 10.5 0.0
Net assets $266,287,787 -
TOP 10 ACTIVE HOLDINGS
Security Country Active weight*
Banco do Brasil SA Brazil 1.9%
China Construction Bank Corp. China 1.8%
Kia Corp. South Korea 1.7%
PetroChina Co., Ltd. China 1.3%
Oil & Natural Gas Corp. Ltd. India 1.2%
REC Ltd. India 1.1%
Vipshop Holdings China 1.0%
Coal India Ltd. India 0.8%
Gerdau SA Brazil 0.8%
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
Information Technology 20.1% 20.6%
Financials 16.6% 22.4%
Consumer Discretionary 16.2% 13.6%
Industrials 10.8% 6.4%
Communication Services 7.9% 9.4%
Energy 7.6% 5.3%
Equity Funds 3.8% 0.0%
Health Care 3.6% 4.0%
Consumer Staples 3.4% 6.2%
Utilities 2.8% 2.6%
Materials 2.6% 7.8%
Real Estate 0.9% 1.7%
TOP 10 COUNTRIES
Country Fund Benchmark
China 31.2% 29.9%
India 18.0% 15.9%
South Korea 15.5% 11.8%
Taiwan 15.3% 15.1%
Brazil 5.4% 5.4%
Turkey 2.2% 0.7%
Saudi Arabia 1.8% 4.2%
Indonesia 1.7% 1.9%
Mexico 1.3% 2.4%
Thailand 1.3% 1.9%
Regional Allocation
  • Emerging Asia 83.0%
  • Emerging Latin America 6.7%
  • Emerging Europe, Middle East, Africa 6.6%

Commentary (As of October 31, 2023)

Highlights

  • Emerging markets equities retreated in October as investors digested the “higher for longer” interest rate backdrop.
  • In China, the largest country within the EM index, authorities announced the approval of 1 trillion yuan in additional Treasury bonds in 2023. In addition to accommodative monetary policy and measures aimed at supporting the ailing property market, this is the latest action designed to stimulate the economy. We are overweight Chinese stocks in the portfolio due in part to attractive valuations, particularly in the interactive media and consumer discretionary industries.
  • Within EM, we continue to identify, in our view, attractive investment opportunities in small cap companies. Historically, our investment process has uncovered EM small cap stocks with alpha potential. The Fund’s allocation to small cap stocks was near the high end of the historical range at month-end.

Portfolio attribution

On a gross return basis, Fund holdings in the emerging Asia region detracted from relative performance, primarily attributable to negative stock selection in Taiwan and China. In emerging Europe, Middle East, and Africa (“EMEA”), an underweight position in Poland detracted from relative performance. Stock selection in Brazil contributed to relative performance in emerging Latin America. From a sector perspective, information technology, industrials, and health care were the largest detractors from relative performance. Consumer discretionary and materials were the top contributors to relative performance in October. The largest stock-level detractors from relative performance included overweight positions in oil & gas producer, PetroChina Co., Ltd. (China), construction equipment manufacturer, Hyundai Doosan Infracore Co., Ltd. (South Korea), and electrical equipment and machinery component manufacturer, LS Corp. (South Korea). The top stock-level contributors to relative performance included overweight positions in bank, Banco do Brasil SA (Brazil), and bank, China Construction Bank Corp. (China), as well as an underweight position in steelmaker, POSCO Holdings Inc. (South Korea).

Economic outlook

In its September meeting, the US Federal Reserve (“Fed”) left its target interest rate unchanged. However, the yield on the 10-Year US Treasury Note continued to march higher in October, which is helping the Fed achieve its objective of slowing the economy. US inflation appears to be moderating and, while the non-farm payroll report exceeded expectations, it appears that most of the gains came from either government or part-time jobs. We believe the backdrop of slowing inflation, a modestly cooling US job market, and a flattening US yield curve will provide a tailwind for EM stocks. Most EM currencies rebounded in October. While depreciating EM currencies generally improve export competitiveness for EM countries, the capital flight out of depreciating currencies has historically been a larger driver of EM stock returns in US dollars. Therefore, a rebound of most EM currencies relative to the US dollar should be a positive for many EM stocks.

In China, the largest country within the EM index, authorities announced the approval of 1 trillion yuan in additional Treasury bonds in 2023. The issuance equals approximately 0.8% of China’s gross domestic product and the funds will be used to rebuild areas impacted by recent floods and to improve urban infrastructure. In addition to accommodative monetary policy and measures aimed at supporting the ailing property market, this is the latest action designed to stimulate the economy. We are overweight Chinese stocks in the portfolio due in part to attractive valuations, particularly in the interactive media and consumer discretionary industries.

Investment outlook

After appearing less attractive for much of the year, earnings growth upgrades for EM equities are becoming more attractive relative to those in ex-US developed markets. Within EM, the energy sector is experiencing the most net upgrades, buoyed by rising oil prices. Asian information technology stocks also have strong net upgrades, due primarily to an improving outlook for large semiconductor stocks. On the negative side, materials stocks are experiencing the most net downgrades due to lackluster demand for most commodities. In the Fund, we are underweight materials stocks due primarily to unattractive growth characteristics. Industrials stocks also have net downgrades, primarily in China and South Korea. In export-oriented South Korea, the downgrades reflect the slowing global economy. In China, the net downgrades are due to both internal and external factors. Within EM, we continue to identify, in our view, attractive investment opportunities in small cap companies. Historically, our investment process has uncovered EM small cap stocks with alpha potential. The Fund’s allocation to small cap stocks was near the high end of the historical range at month-end.

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

Fund information:

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