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Global Absolute Return Fund

Our full alpha-generating capabilities, with lower volatility and low or no equity market correlation

NAV (as of 24 Apr 2019)

$8.19, +0.03

YTD

-8.70%

INCEPTION

24 Jan 2011

TICKER/CUSIP

CGAVX/14949P505

Fact Sheet Prospectus

Fund Profile

The Fund takes long and short exposures in common and preferred stocks of companies located primarily in developed countries outside the U.S. and of companies in the U.S. To obtain exposure to long and short positions in securities, the Fund enters into one or more total return equity swap agreements. Although the Fund is permitted to take direct long and short positions in securities, other than swap agreements, it does not currently intend directly to purchase or sell securities or directly to hold short positions in securities. The Investment Adviser integrates fundamental and quantitative research to manage the Fund’s long exposures (the “long portfolio” of the Fund). The Investment Adviser uses its quantitative investment strategy designed to identify short exposures that it expects to underperform the MSCI World Index to manage the Fund’s short exposures (the “short portfolio” of the Fund).

Minimum Investment$5,000
Sales ChargeNone
Net Expense Ratio1.77%
Gross Expense Ratio2.00%
Dividend FrequencyAnnual
Capital Gain FrequencyAnnual
Benchmark BofA ML 3M US TBill

Performance

Fund Quarter to Date Year to Date 1 Year3 Year5 Year Since Inception
CGAVX -6.8%-6.8%2.6%0.5%-0.7%1.8%
ICE BoAML 3-Month US TBill 0.6%0.6%2.1%1.2%0.7%0.5%
Fund Quarter to Date Year to Date 1 Year3 Year5 Year Since Inception
CGAVX -6.8%-6.8%2.6%0.5%-0.7%1.8%
ICE BoAML 3-Month US TBill 0.6%0.6%2.1%1.2%0.7%0.5%

Portfolio

Position Details as of 31 Mar 2019

Cash 47,048,228
Market Value Long 77,499,761
Market Value Short -77,339,258
Net Positional Value 160,503
NAV 47,208,731
Net Exposure 0.34%
Leverage 3.28
Long Positions 106
Short Positions 122
Total 228

Characteristics as of 31 Mar 2019

Long Portfolio Short Portfolio MSCI World
No. of Exposures 106 122 1635
Wtd Avg Mkt Cap (Mn $US) $47,583 $12,302 $139,678
FY2 Price/Earnings 9.6 15.0 14.4
Price/Book Value 1.4 1.7 2.4
Return on Equity (%) 15.8 5.6 19.2

A “Weighted Average” measures a characteristic by the market capitalization of each stock. Price/Book Ratio is the weighted average of the price/book ratios of all the stocks in a portfolio. The P/B ratio 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. The FY2 P/E ratio is a forward P/E ratio using a next-twenty four months EPS estimate in the denominator. Return on equity is calculated by taking a year's worth of earnings and dividing them by the average shareholder equity for that year.

Sector Exposure as of 31 Mar 2019

Long Exposure (%)Short Exposure (%)Net Exposure (%)
Industrials29.51-22.726.79
Health Care11.94-5.736.21
Energy8.71-3.605.11
Information Technology16.12-11.194.93
Materials16.32-16.240.08
Consumer Discretionary16.87-16.98-0.11
Communication Services13.18-14.70-1.52
Utilities10.81-15.46-4.65
Consumer Staples4.29-9.43-5.14
Real Estate3.65-9.15-5.50
Financials32.97-38.48-5.51

Country Exposure as of 31 Mar 2019

Long Exposure (%)Short Exposure (%)Net Exposure (%)
China19.33-9.439.90
Canada13.76-8.954.81
United Kingdom13.86-10.023.84
Netherlands2.890.002.89
Switzerland7.11-5.042.07
South Korea7.73-5.712.02
Germany4.69-3.401.29
New Zealand1.24-0.300.94
Sweden0.750.000.75
France2.89-2.340.55
Belgium0.00-0.30-0.30
Denmark0.00-0.72-0.72
Singapore1.40-2.53-1.13
Italy0.00-1.39-1.39
United States64.22-65.71-1.49
Portugal0.00-2.29-2.29
Japan20.34-23.12-2.78
Hong Kong0.00-4.28-4.28
Norway0.00-4.52-4.52
Spain0.00-4.73-4.73
Australia4.16-8.91-4.75

TOP 10 Positions as of 31 Mar 2019

Top Ten Long PositionsTop Ten Short Positions
CompanyEnding Weight (%)CompanyEnding Weight (%)
Sinotruk Hong Kong Ltd.3.45%Carvana Co.-3.68%
Coca-Cola Amatil Ltd.3.23%Snap, Inc.-3.32%
FirstEnergy Corp.3.13%Cellnex Telecom SA-3.26%
Oracle Corp.3.11%Kansai Paint Co., Ltd.-3.11%
Gildan Activewear3.08%Premium Brands Holdings-3.10%
H&R Block, Inc.3.07%Aqua America, Inc.-3.08%
Showa Denko K.K.3.03%Dentsply Sirona, Inc.-3.08%
Takeda Pharmaceutical Co., Ltd.3.02%China Unicom (Hong Kong) Ltd.-3.08%
Manulife Financial3.02%Bâloise Holding AG-3.08%
BHP Group Plc3.01%American International Group, Inc.-3.03%

Holdings are subject to change.

Approach

Causeway Global Absolute Return (GAR) Fund is designed for investors who want equity-like returns with lower volatility and lower market correlation. The Fund invests in global developed markets equities, using swap agreements to obtain exposures to long and short positions.

Causeway integrates fundamental and quantitative research to manage the Fund’s long exposures and its quantitative investment strategy to manage the short exposures. Both the long and short portfolios seek to add alpha (performance exceeding the long or short MSCI World Index), which is amplified by leverage up to 4x, with a target of 3x.

The GAR Fund's net long/short notional exposure will generally not exceed plus or minus 10% of net assets. However, the long portfolio and the short portfolio will each have different exposures under swap agreements that will not be fully hedged. Unrealized gains or losses through swap agreements are also constrained, limiting counterparty risk.

The GAR Fund typically has 60-120 long exposures and 60-140 short exposures.

Commentary

PERFORMANCE REVIEW for the month ended 31 Mar 2019


Causeway Global Absolute Return Fund (“Fund”) underperformed the ICE BofAML US 3-Month Treasury Bill Index in the month of March. The Fund’s underperformance was driven by the long portfolio: the Fund’s long portfolio underperformed the MSCI World Index (“World Index”). The Fund’s short portfolio contributed positively to overall performance by underperforming the World Index, though by a smaller margin than the long portfolio.

Increasingly dovish rhetoric from the US Federal Reserve (“Fed”) and the European Central Bank (“ECB”) and progress on US-China trade negotiations supported equity markets in March. The top performing markets in our investable universe were New Zealand, Denmark, Belgium, Switzerland, and China. The worst performing markets were South Korea, Austria, Norway, Spain, and Germany. The best performing sectors in the World Index were real estate, consumer staples, and information technology. The worst performing sectors were financials, industrials, and health care.

The Fund takes long and short notional exposures to securities under swap agreements. We use a combination of fundamental and quantitative inputs to select exposures for the long portfolio of the Fund, while we use primarily quantitative inputs to select exposures for the short portfolio. Our fundamental inputs reflect the risk-adjusted total return potential of stocks favored by our fundamental research team. Our quantitative inputs include signals that seek long (short) positions in stocks which we believe are undervalued (overvalued) and have improving (deteriorating) earnings growth dynamics, positive (negative) technical price movements, and superior (inferior) quality of earnings. During the month of March, our growth and technical factor categories demonstrated predictive power. Stocks with improving earnings growth dynamics outperformed those with worsening dynamics, and stocks with positive technical indicators outperformed those with negative technical indicators. However, returns to value were negative as stocks with cheap valuations underperformed those with expensive valuations, contrary to expectations. Stocks demonstrating higher earnings quality performed in line with those having lower earnings quality.

Within the long portfolio, attribution effects were weakest in the technology hardware & equipment, materials, and banks industry groups. Long-side attribution effects were strongest in the capital goods, automobiles & components, and pharmaceuticals & biotechnology industry groups. Long exposures that detracted most from the Fund’s performance were optical fiber manufacturer, Yangtze Optical Fibre & Cable Joint Stock (China), furniture manufacturer, Steelcase, Inc. (United Inc.States), mortgage insurance provider, Genworth MI Canada (Canada), passenger & cargo airline, Alaska Air Group, Inc. (United States), and telecommunication services provider, KDDI Corp. (Japan). Long exposures that contributed most to performance were heavy truck manufacturer, Sinotruk Hong Kong Ltd. (China), beverage producer, Coca-Cola Amati Ltd. (Australia), pharmaceutical & consumer healthcare products producer, Novartis AG (Switzerland), diversified mining company, BHP Group Plc (United Kingdom), and business software & services provider, SAP SE (Germany).

Within the short portfolio, attribution effects were strongest in the software & services, semiconductors & semi equipment, and capital goods industry groups. Short-side attribution effects were weakest in the telecommunication services, health care equipment & services, and retailing industry groups. Short exposures that contributed most to performance were sensor producer, ams AG (Germany), shipbuilder, Samsung Heavy Industries Co., Ltd. (South Korea), healthcare housekeeping & food services provider, Healthcare Services Group, Inc. (United States), green energy supplier, GCL-Poly Energy Holdings Ltd. (China), and insurance provider, Beazley Plc (United Kingdom). Short exposures that detracted most from the Fund’s performance included online car dealer, Carvana Co. (United States), wireless telecommunications operator, Cellnex Telecom SA (Spain), chemicals manufacturer, Hitachi Chemical Co., Ltd. (Japan), dental equipment maker, Dentsply Sirona, Inc. (United States), and technology & camera company, Snap, Inc. (United States).

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.

Dividends

2018$0.8637
2017$0.0000
2016$1.0639
2015$0.3553
2014$0.0000
2013 $0.4126
2012 $0.2586
2011 $0.0948
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Short-term Capital Gains

2018$0.0000
2017$0.0000
2016$0.0000
2015$0.0000
2014$0.0000
2013 $0.0000
2012 $0.0000
2011 $0.3053
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Long-term Capital Gains

2018$0.0000
2017$0.0000
2016$0.0000
2015$0.0000
2014$0.0000
2013 $0.0000
2012 $0.0000
2011 $0.0000
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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

Consent to Electronic Delivery

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