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*
+6.60%
Nav*
$9.53, +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
1.39%
*As of June 05, 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 -1.4%3.5%-9.5%2.6%-2.0%1.2%2.7%
MSCI Emerging Markets -2.7%1.2%-8.1%3.9%-0.3%2.3%3.0%
QTD YTD 1 year3 years5 years10 years Since inception
Fund -1.4%3.5%-9.5%2.6%-2.0%1.2%2.7%
MSCI Emerging Markets -2.7%1.2%-8.1%3.9%-0.3%2.3%3.0%
QTD YTD 1 year3 years5 years10 years Since inception
Fund 4.9%4.9%-12.4%6.4%-2.8%1.1%2.8%
MSCI Emerging Markets 4.0%4.0%-10.3%8.2%-0.5%2.4%3.2%
QTD YTD 1 year3 years5 years10 years Since inception
Fund 4.9%4.9%-12.4%6.4%-2.8%1.1%2.8%
MSCI Emerging Markets 4.0%4.0%-10.3%8.2%-0.5%2.4%3.2%
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 April 30, 2023)

Benchmark: MSCI Emerging Markets
Asset Allocation
Fund
Stocks 97.7%
Cash 2.3%
Fund Characteristics
Fund Benchmark
No. of holdings 186 1377
Weighted avg. market cap (US $MM) $59,457 $65,002
NTM price/earnings 7.0 10.2
Price/book value 1.0 1.6
NTM EPS revision (wtd. avg) 1.8 -8.8
Net assets $233,784,059 -
TOP 10 ACTIVE HOLDINGS
Security Country Active weight*
China Construction Bank Corp. China 2.0%
Banco do Brasil SA Brazil 1.8%
Kia Corp. South Korea 1.7%
PetroChina Co., Ltd. China 1.1%
Oil & Natural Gas Corp. Ltd. India 1.1%
Vipshop Holdings China 1.0%
ITC Ltd. India 1.0%
Hon Hai Precision Industry Co., Ltd. Taiwan 1.0%
Tencent Music Entertainment Gr China 1.0%
Hana Financial Group, Inc. South Korea 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 20.3% 19.7%
Financials 16.5% 22.1%
Industrials 11.2% 6.2%
Consumer Discretionary 10.5% 13.1%
Communication Services 9.3% 10.1%
Energy 7.3% 5.0%
Materials 6.3% 8.8%
Consumer Staples 5.9% 6.4%
Health Care 3.9% 3.9%
Equity Funds 2.7% 0.0%
Utilities 1.9% 2.7%
Real Estate 0.7% 1.9%
TOP 10 COUNTRIES
Country Fund Benchmark
China 36.0% 31.4%
Taiwan 16.1% 14.8%
South Korea 14.3% 12.0%
India 14.0% 13.7%
Brazil 4.7% 5.0%
Indonesia 2.6% 2.0%
Mexico 2.4% 2.7%
Thailand 2.0% 2.1%
Saudi Arabia 1.5% 4.2%
Turkey 1.2% 0.6%
Regional Allocation
  • Emerging Asia 85.0%
  • Emerging Latin America 7.4%
  • Emerging Europe, Middle East, Africa 5.3%
  • Frontier 0.0%
  • Multi Region Emerging (ETF) 0.0%

Commentary (As of April 30, 2023)

Highlights

  • EM equities posted negative returns in April, with the MSCI Emerging Markets Growth Index lagging the MSCI Emerging Markets Value Index during the period.
  • With risk aversion moderating and the US Federal Reserve (“Fed”) seemingly nearing the end of its interest rate hiking cycle, the outlook for EM assets is positive. Furthermore, macroeconomic data in China, the largest country within the EM Index, have been positive. The country’s first quarter gross domestic product growth was 4.5%, exceeding most analyst estimates. Additionally, muted inflation near 2% should allow the Chinese government to engage in sufficient stimulus in order to meet its 5% growth target for 2023. We are overweight Chinese stocks in the Fund due to a combination of favorable valuation, price momentum, and macroeconomic characteristics.
  • 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, outperformed the Index in April 2023. 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 growth and valuation factors were positive indicators during the month. Our technical (price momentum) and competitive strength factors were negative indicators. Of our top-down factors, country, sector, currency, and macroeconomic were negative indicators in April.

Economic outlook

Economic data in the US are indicating that growth is falling and inflation is cooling. The March ISM Services Purchasing Managers Index, fell sharply in March to 46.3, its lowest level since May 2020. The latest casualty in the banking crisis was First Republic Bank, whose assets were seized by regulators and sold to JP Morgan. Outside of this incident, however, volatility in the banking sector fell in April relative to March. Financial conditions are improving as reflected in high yield credit spreads, which fell slightly in April after spiking in March. With risk aversion stabilizing and the US Federal Reserve (“Fed”) seemingly nearing the end of its interest rate hiking cycle, the outlook for EM assets is positive. Furthermore, macroeconomic data in China, the largest country within the EM Index, have been positive. The country’s first quarter gross domestic product growth was 4.5%, exceeding most analyst estimates. Additionally, muted inflation near 2% should allow the Chinese government to engage in sufficient stimulus in order to meet its 5% growth target for 2023. We are overweight Chinese stocks in the Fund due to a combination of favorable valuation, price momentum, and macroeconomic characteristics.


Investment outlook

Earnings growth upgrades for EM equities continue to lag those in the ex-US developed markets. The EM countries with the weakest net upgrades included the externally-oriented economy of Taiwan, reflecting concerns that global growth is slowing. Net upgrades in Saudi Arabia and Qatar were also negative, reflecting falling energy prices. The smaller countries of Poland, Indonesia, and Turkey had positive net upgrades as they tend to be less impacted by slowing global growth than some of their EM peers. The sectors with the strongest net upgrades were communication services and consumer discretionary. Both sectors are dominated by Chinese stocks, which are benefitting from the country’s easing Covid-19 restrictions and solid growth outlook. The sectors with negative net upgrades included information technology and materials, both reflecting global growth pessimism. 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

Fund information:

Forms: