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*
-20.43%
Nav*
$10.48, +0.11
Inception
March 30, 2007
Cusip
149498206
Benchmark
MSCI Emerging Markets
Minimum Investment
$5,000
Sales Charge
None
Total Expense Ratio
1.41%
*As of April 07, 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 -23.1%-23.1%-17.5%-3.6%-1.9%1.6%2.0%
MSCI Emerging Markets -23.6%-23.6%-17.4%-1.3%0.0%1.0%2.1%
QTD YTD 1 year3 years5 years10 years Since inception
Fund -23.1%-23.1%-17.5%-3.6%-1.9%1.6%2.0%
MSCI Emerging Markets -23.6%-23.6%-17.4%-1.3%0.0%1.0%2.1%
QTD YTD 1 year3 years5 years10 years Since inception
Fund -23.1%-23.1%-17.5%-3.6%-1.9%1.6%2.0%
MSCI Emerging Markets -23.6%-23.6%-17.4%-1.3%0.0%1.0%2.1%
QTD YTD 1 year3 years5 years10 years Since inception
Fund -23.1%-23.1%-17.5%-3.6%-1.9%1.6%2.0%
MSCI Emerging Markets -23.6%-23.6%-17.4%-1.3%0.0%1.0%2.1%
201920182017201620152014201320122011201020092008
Fund 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 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
16.4%-18.1%39.5%8.9%-16.2%1.8%-2.8%25.6%-18.2%26.1%87.9%-58.5%
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 February 29, 2020)

Benchmark: MSCI Emerging Markets
Asset Allocation
Fund
Stocks 97.9%
Cash 2.1%
Fund Characteristics
Fund Benchmark
No. of holdings 122 1400
Weighted avg. market cap (US $MM) $97,192 $81,270
NTM price/earnings 9.5 11.7
Price/book value 1.4 1.6
NTM EPS revision (wtd. avg) -7.7 -7.8
Net assets $342,906,519 -
TOP 10 ACTIVE HOLDINGS
Security Country Active weight*
China Construction Bank Corp. China 2.1%
Samsung Electronics Co., Ltd. South Korea 2.0%
Investimentos Itau Brazil 1.4%
Lukoil Russia 1.3%
Anhui Conch Cement Co., Ltd. China 1.3%
Tencent Holdings Ltd. China 1.3%
JBS SA Brazil 1.2%
Ping An Insurance Group Co Of China 1.1%
Sberbank Russia 0.9%
CNOOC Ltd. China 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
Financials 21.9% 23.5%
Information Technology 20.3% 16.4%
Consumer Discretionary 13.2% 14.6%
Communication Services 12.7% 11.9%
Energy 7.9% 6.6%
Consumer Staples 5.5% 6.3%
Materials 5.4% 7.0%
Industrials 3.3% 5.2%
Equity Funds 2.4% 0.0%
Real Estate 2.3% 2.9%
Health Care 2.1% 3.1%
Utilities 0.8% 2.5%
TOP 10 COUNTRIES
Country Fund Benchmark
China 39.4% 36.4%
South Korea 13.2% 11.4%
Taiwan 12.9% 12.1%
Brazil 8.8% 6.7%
India 8.6% 8.8%
Russia 7.0% 3.6%
Mexico 1.7% 2.3%
Thailand 1.6% 2.3%
South Africa 1.0% 4.2%
Turkey 0.8% 0.5%
Regional Allocation
  • Emerging Asia 76.8%
  • Emerging Latin America 11.0%
  • Emerging Europe, Middle East, Africa 10.1%

Commentary (As of February 29, 2020)

Highlights

  • In February, concerns regarding the spread of the novel coronavirus, COVID-19, weighed on global growth expectations and drove equity markets lower.
  • In addition to China, other EM countries have enacted stimulus to offset the slowdown resulting from COVID-19.
  • In the Fund, we continue to emphasize sectors with attractive valuation and earnings growth characteristics.

Portfolio attribution

Causeway Emerging Markets Fund (“Fund”) outperformed the Index in February 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 bottom-up price momentum and earnings growth factors were positive indicators in February. While trailing significantly over the prior one year period, our value factor was a positive indicator during the month. Our four top-down factors –macroeconomic, country, sector, and currency – were all positive indicators in February.

Investment outlook

In the Fund, we continue to emphasize sectors with attractive valuation and earnings growth characteristics. EM earnings growth expectations relative to developed markets excluding the US have stabilized as the coronavirus spreads globally. Despite the disruptive impact of COVID-19 on the information technology (“IT”) supply chain, IT continues to be the only sector in EM that experienced net positive upgrades over the last three months. We maintain our largest sector overweight to IT given this attractive earnings growth. The energy sector experienced the largest net earnings growth downgrades over the last three months as oil prices have cratered. We are overweight the energy sector in the Fund due to attractive valuations.

We maintain a value emphasis in our multi-factor quantitative process. The MSCI EM Value Index trades at a wide discount to the MSCI EM Growth Index, particularly after weak performance in calendar year 2019 and 2020-to-date. Using these indices’ valuations, investors are paying over twice as much for each dollar of next year’s earnings from growth stocks than they pay for earnings from value stocks, while the dividend yield for growth stocks is less than half that of value stocks. Value tends to underperform in times of uncertainty, but given these wide disparities between growth and value, as more clarity emerges on the coronavirus situation globally, we believe value factor performance will recover.

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 $0.2362 $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).

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