Our full alpha-generating capabilities, seeking lower volatility or no equity market correlation
The Fund takes long and short exposures in common and preferred stocks of companies located primarily in developed countries outside the US and of companies in the US. 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). The Fund’s investment objective is to seek long-term growth of capital with low or no correlation to the MSCI World Index.
- YTD Return*
- -2.92%
- Nav*
- $7.31, -0.05
- Inception
- January 24, 2011
- Cusip
- 14949P505
- Benchmark
- ICE BoAML 3-Month US TBill
- Minimum Investment
- $5,000
- Sales Charge
- None
- Net Expense Ratio
- 1.77%
- Gross Expense Ratio
- 2.00%
Portfolio managers
Sarah Ketterer
Fundamental Portfolio Manager
Ms. Ketterer is the chief executive officer at Causeway, fundamental portfolio manager, and is responsible for investment research across all sectors. Ms. Ketterer co-founded the firm in June 2001 and is a member of the operating committee.
From 1996 to 2001, Ms. Ketterer worked for the Hotchkis & Wiley division of Merrill Lynch Investment Managers (HW-MLIM). At HW-MLIM, she was a managing director and co-head of the firm's HW-MLIM International and Global Value team. From 1990 to 1996, Ms. Ketterer was a portfolio manager at Hotchkis & Wiley, where she founded the International Equity product.
Ms. Ketterer earned a BA in economics and political science from Stanford University and an MBA from the Tuck School, Dartmouth College. She is currently a member of the Stanford University Board of Trustees, co-chair of the Los Angeles World Affairs Council and Town Hall, a director of the Los Angeles Philharmonic, the Music Center Foundation (as chair of the investment committee), and serves on the Advisory Board of Girls Who Invest.
Harry Hartford
Head of Fundamental Research
Fundamental Portfolio Manager
Mr. Hartford is the president at Causeway, fundamental portfolio manager, and head of fundamental research. Mr. Hartford co-founded the firm in June 2001 and is a member of the operating committee.
From 1996 to June 2001, Mr. Hartford was a managing director for the Hotchkis & Wiley division of Merrill Lynch Investment Managers (HW-MLIM) and co-head of the firm's HW-MLIM international and global value team. From 1994 to 1996, Mr. Hartford was a portfolio manager for Hotchkis & Wiley. From 1984 to 1994, Mr. Hartford was with The Investment Bank of Ireland, where he gained ten years’ experience in both international and global equity management. During this time, Mr. Hartford also managed the Irish Investment Fund, a closed-end country fund quoted on the NYSE. Before entering the investment business, Mr. Hartford lectured in micro and macroeconomics at Oklahoma State University.
Mr. Hartford earned a BA, with honors, in economics from the University of Dublin, Trinity College, an MSc in economics from Oklahoma State University, and is a Phi Kappa Phi member. Mr. Hartford is a member of The Ireland Funds America Board of Directors and serves as chair of the Los Angeles Regional Board.
James Doyle
Mr. Doyle is a director and a fundamental portfolio manager at Causeway and has been with the firm since its inception in June 2001. Mr. Doyle has covered a variety of industries, including financials, industrials and consumer. His current responsibilities include technology, telecommunications and healthcare. He is also a member of the operating committee.
Previously, Mr. Doyle was an equity analyst and portfolio manager with the international team of the Hotchkis & Wiley division of Merrill Lynch Investment Managers. He also was an equity research consultant for Morgan Stanley Asset Management, and a financial analyst for LaSalle Partners.
Mr. Doyle earned a BA in economics from Northwestern University and an MBA in finance from the Wharton School, University of Pennsylvania. He is the co-chair of the Northwestern University Leadership Circle of Los Angeles.
Jonathan Eng
Mr. Eng is a director and fundamental portfolio manager at Causeway and is responsible for investment research in the global consumer discretionary and industrials sectors. He joined the firm in July 2001 and has been a portfolio manager since February 2002.
From 1997 to 2001, Mr. Eng was an equity research associate for the Hotchkis & Wiley division of Merrill Lynch Investment Managers (HW-MLIM). In 1996, Mr. Eng worked as a summer research associate for Hotchkis & Wiley, performing U.K. and European equity research. From 1993 to 1995, Mr. Eng analyzed merger and acquisition candidates at Slusser Associates. From 1990 to 1993, Mr. Eng worked as a middle market corporate lender for Bank of Boston.
Mr. Eng earned a BA in history and economics from Brandeis University and an MBA from the UCLA Anderson Graduate School of Management.
Conor Muldoon, CFA
Mr. Muldoon is a director and fundamental portfolio manager at Causeway and is responsible for investment research in the global financials and materials sectors. He joined the firm in August 2003 and has been a portfolio manager since September 2010.
From 1995 to 2003, Mr. Muldoon was an investment consultant for Fidelity Investments where he served as a liaison between institutional clients and investment managers within Fidelity. He was responsible for communicating current information on the financial markets, the economy and investment performance.
Mr. Muldoon earned a BSc and an MA from the University of Dublin, Trinity College and an MBA, with high honors, from the University of Chicago. Mr. Muldoon was inducted into the Beta Gamma Sigma honors society and is also a CFA charterholder.
Alessandro Valentini, CFA
Mr. Valentini is a director and fundamental portfolio manager at Causeway and is responsible for investment research in the global healthcare and financials sectors. He joined the firm in July 2006 and has been a portfolio manager since April 2013.
During the summer of 2005, Mr. Valentini worked as a research analyst at Thornburg Investment Management, where he conducted fundamental research for the international value fund and the value fund, focusing on the European telecommunication and Canadian oil sectors. From 2000 to 2004, Mr. Valentini worked as a financial analyst at Goldman Sachs in the European equities research-sales division in New York.
Mr. Valentini earned an MBA from Columbia Business School, with honors, an MA in economics from Georgetown University and a BS, magna cum laude, from Georgetown University. Mr. Valentini was inducted into the Beta Gamma Sigma honors society, is a Phi Beta Kappa member, and is a CFA charterholder.
Ellen Lee
Ms. Lee is a director and fundamental portfolio manager at Causeway and is responsible for investment research in the global consumer, utilities, and energy sectors. Prior to the current role, she also covered transportation and autos. She joined the firm in August 2007 and has been a portfolio manager since January 2015.
During the summer of 2006, Ms. Lee interned at Tiger Asia, a long short equity hedge fund focused on China, Japan, and Korea. From 2001 to 2004, Ms. Lee was an associate in the mergers and acquisitions division of Credit Suisse First Boston in Seoul, where she advised Korean corporates and multinational corporations. From 1999 to 2000, she was an analyst in the mergers and acquisitions division of Credit Suisse First Boston in Hong Kong.
Ms. Lee earned a BA in business administration from Seoul National University and an MBA from the Stanford Graduate School of Business. She currently serves on the audit and investment committee at the Center for Early Education in West Hollywood.
Steven Nguyen, CFA
Mr. Nguyen is a director and fundamental portfolio manager at Causeway and is responsible for investment research in the energy, utilities, and healthcare sectors. He joined the firm in April 2012.
From 2006 to 2012, Mr. Nguyen was a senior credit analyst at Bradford & Marzec covering high yield and investment grade companies in the telecommunication services, cable, media, gaming, insurance, and REIT industries. From 2003 to 2006, Mr. Nguyen was a credit analyst/portfolio manager in the corporate bond department of Allegiance Capital.
Mr. Nguyen earned a BA in business economics from Brown University and an MBA, with honors, from the UCLA Anderson School of Management. Mr. Nguyen was the president of the Anderson Student Asset Management association. Mr. Nguyen is a CFA charterholder.
Arjun Jayaraman, PhD, CFA
Quantitative Portfolio Manager
Dr. Jayaraman is a director, quantitative portfolio manager and head of the quantitative research at Causeway and has been with the firm since January 2006. Dr. Jayaraman’s responsibilities and research include stock selection, asset allocation, risk model development, and portfolio construction.
From 2004 to 2005, Dr. Jayaraman was a portfolio manager at PanAgora Asset Management. He was the lead portfolio manager on the non-U.S. large cap core equity portfolios and was the co-portfolio manager on the global large cap core equity portfolios. From 2000 to 2004, Dr. Jayaraman managed the same portfolios at Putnam Investments, in addition to working closely with the teams that managed Putnam's traditional non-U.S. strategies. From 1998 to 2000, Dr. Jayaraman worked as a quantitative analyst at Harborview Trading Associates.
Dr. Jayaraman earned a PhD from New York University at the Stern School of Business and a BA in economics from Columbia University. Dr. Jayaraman is a CFA charterholder.
MacDuff Kuhnert, CFA
Mr. Kuhnert is a director and a quantitative portfolio manager at Causeway and has been with the firm since its inception in June 2001. Mr. Kuhnert’s responsibilities and research include stock selection, asset allocation, risk model development, and portfolio construction.
From 1996 to 2001, Mr. Kuhnert worked for the international team of the Hotchkis & Wiley division of Merrill Lynch Investment Managers (HW-MLIM) as a quantitative research associate. During his tenure at HW-MLIM, Mr. Kuhnert created and developed advanced quantitative models used in the international value investment process. He also helped develop the team’s first equity risk model.
Mr. Kuhnert earned a BA in chemistry from Dartmouth College. He is a CFA charterholder, a member of the CFA Society of Los Angeles, and a member of the Chicago Quantitative Alliance. Mr. Kuhnert co-authored “To Hedge or Not to Hedge: Factor Dependence and Skill among Hedge Funds” published in The Journal of Alternative Investments.
Joe Gubler, CFA
Mr. Gubler is a quantitative portfolio manager at Causeway. He joined the firm in 2005 and has been a portfolio manager since January 2014. In addition to managing quantitative portfolios and conducting alpha research, Mr. Gubler also leads the efforts to maintain and enhance Causeway’s proprietary risk models. He is also a member of the operating committee.
From 1999 to 2005, Mr. Gubler worked as a software engineer, with employers ranging from startups to established businesses such as Monster.com. From 1998 to 1999, Mr. Gubler worked as a staff scientist for News Corporation, conducting studies on the RF propagation of broadcast signals. While studying astrophysics at UC San Diego, Mr. Gubler worked as a graduate research assistant in the Jet Propulsion Laboratory's stellar interferometry group.
Mr. Gubler earned a BS, cum laude, in physics from UC Irvine, an MS in physics from UC San Diego, and an MBA from the UCLA Anderson Graduate School of Management. Mr. Gubler is a CFA charterholder.
Performance
The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth less than their original cost and current performance may be lower than the performance quoted. Returns greater than one year are average annual total returns. Total returns assume reinvestment of dividends and capital gains distributions at net asset value when paid. All information is as of the date shown. Investment performance may reflect contractual fee waivers. In the absence of such fee waivers, total return would be reduced. Contractual fee waivers are in effect until 1/31/20. The expense ratios for Institutional Class shares are 1.81% and 1.52% after adviser fee waiver. The expense ratios for Investor Class shares are 2.00% and 1.77% after adviser fee waiver.
Portfolio (as of December 31, 2019)
Position Details
| Fund | |
|---|---|
| Cash | 14,254,013 |
| Market value (long) | 23,695,629 |
| Market value (short) | -23,390,667 |
| Net positional value | 304,962 |
| NAV | 14,558,975 |
| Fund | |
|---|---|
| Net exposure | 2.09% |
| Leverage | 3.23 |
| Long positions | 93 |
| Short positions | 120 |
| Total | 213 |
Fund Characteristics
| Long portfolio | Short portfolio | Benchmark | |
|---|---|---|---|
| No. of exposures | 93 | 120 | 1646 |
| Weighted avg. market cap (US $MM) | $58,461 | $9,872 | $178,043 |
| FY2 price/earnings | 10.1 | 17.3 | 16.7 |
| Price/book value | 1.3 | 1.4 | 2.6 |
| Return on equity (%) | 18.4 | 5.1 | 19.6 |
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.
Holdings are subject to change.
Top 10 Long Exposures
| Company | Ending weight |
|---|---|
| Hemfosa Fastigheter AB | 3.72% |
| Yangzijiang Shipbuilding (Holdings) Ltd. | 3.22% |
| Genworth Mi Canada | 3.17% |
| Manulife Financial | 3.17% |
| British American Tobacco plc | 3.16% |
| Spirit Realty Capital, Inc. | 3.15% |
| Microsoft Corp. | 3.14% |
| Showa Denko K.K. | 3.13% |
| WestRock Co. | 3.13% |
| Roche Holding AG | 3.13% |
Top 10 Short Exposures
| Company | Ending weight |
|---|---|
| Électricité de France SA | -3.13% |
| Umicore | -3.13% |
| Singapore Telecommunications Ltd. | -3.13% |
| Deutsche Wohnen SE | -3.11% |
| Houlihan Lokey, Inc. | -3.08% |
| Daimler AG | -3.08% |
| Argo Group International Holdi | -3.02% |
| CoreSite Realty Corp. | -2.98% |
| Bâloise Holding AG | -2.91% |
| Hokuriku Electric Power Co. | -2.91% |
Sector Exposure
| Sector | Long exposure | Short exposure | Net exposure |
|---|---|---|---|
| Information Technology | 23.4% | -18.3% | 5.09% |
| Industrials | 29.4% | -25.4% | 4.02% |
| Energy | 9.8% | -5.8% | 3.99% |
| Health Care | 10.0% | -6.5% | 3.49% |
| Materials | 14.9% | -12.2% | 2.71% |
| Communication Services | 7.7% | -6.6% | 1.07% |
| Consumer Discretionary | 13.8% | -14.7% | -0.87% |
| Real Estate | 14.0% | -15.9% | -1.91% |
| Utilities | 10.5% | -15.5% | -5.00% |
| Financials | 26.2% | -31.2% | -5.02% |
| Consumer Staples | 3.2% | -8.3% | -5.16% |
Country Exposure
| Country | Long exposure | Short exposure | Net exposure |
|---|---|---|---|
| Switzerland | 8.8% | -3.6% | 5.22% |
| China | 10.7% | -6.6% | 4.10% |
| Sweden | 3.7% | 0.0% | 3.72% |
| Canada | 10.8% | -7.4% | 3.42% |
| United Kingdom | 12.7% | -9.4% | 3.35% |
| New Zealand | 3.0% | -0.4% | 2.60% |
| Italy | 2.4% | -0.8% | 1.67% |
| Japan | 17.0% | -15.7% | 1.29% |
| Austria | 0.6% | 0.0% | 0.55% |
| Netherlands | 0.4% | 0.0% | 0.36% |
| South Korea | 12.9% | -12.7% | 0.20% |
| Singapore | 3.2% | -3.1% | 0.09% |
| Belgium | 3.0% | -3.1% | -0.10% |
| Finland | 0.0% | -0.5% | -0.54% |
| Israel | 0.0% | -0.6% | -0.62% |
| Denmark | 0.0% | -0.9% | -0.92% |
| Portugal | 0.0% | -1.3% | -1.31% |
| United States | 61.2% | -62.6% | -1.34% |
| Germany | 5.9% | -8.2% | -2.29% |
| Norway | 0.0% | -2.6% | -2.63% |
| Hong Kong | 0.0% | -2.8% | -2.77% |
| Spain | 0.3% | -3.6% | -3.36% |
| France | 3.1% | -6.9% | -3.80% |
| Australia | 3.1% | -7.5% | -4.48% |
Regional Allocation
| Long exposure | Short exposure | Net exposure | |
|---|---|---|---|
| Europe - Other | 25.3% | -16.5% | 8.7% |
| North America | 72.0% | -70.0% | 2.1% |
| Pacific | 49.9% | -48.9% | 1.0% |
| Developed Middle East | 0.0% | -0.6% | -0.6% |
| Euro | 15.6% | -24.5% | -8.8% |
Distributions
| Dividends | Short-term capital gains | Long-term capital gains | |
|---|---|---|---|
| 2019 | $0.0000 | $0.0000 | $0.0000 |
| 2018 | $0.8637 | $0.0000 | $0.0000 |
| 2017 | $0.0000 | $0.0000 | $0.0000 |
| 2016 | $1.0639 | $0.0000 | $0.0000 |
| 2015 | $0.3553 | $0.0000 | $0.0000 |
| 2014 | $0.0000 | $0.0000 | $0.0000 |
| 2013 | $0.412 | $0.000 | $0.000 |
| 2012 | $0.258 | $0.000 | $0.000 |
| 2011 | $0.094 | $0.305 | $0.000 |
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:
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Commentary (As of December 31, 2019)
Highlights
Portfolio attribution
December's rising equity markets capped a calendar year of surging stock prices, as central banks, attempting to prolong economic expansion, implemented increasingly accommodative monetary policies. For the month, the top performing markets in our investable universe were South Korea, China, Norway, New Zealand, and the United Kingdom. The worst performing markets were Israel, Australia, Germany, Japan, and Belgium. The best performing sectors in the World Index were energy, information technology, and materials. The worst performing sectors were industrials, real estate, and communication services.
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 December, all quantitative alpha factor categories demonstrated predictive power with the exception of our technical indicators. Stocks with cheap valuations outperformed those with expensive valuations, stocks with improving earnings growth dynamics outperformed those with worsening dynamics, and stocks demonstrating higher earnings quality outperformed those with lower earnings quality. However, stocks with positive technical indicators underperformed those with negative technical indicators, contrary to expectations.
Investment outlook
We believe that much of the global central bank monetary expansion is in the rear-view mirror. Massive liquidity creation has suppressed market volatility and favored momentum relative to value-oriented trading. With central banks curtailing accommodative policies, value stocks should eventually rebound. In the absence of a recession, earnings of economically sensitive stocks should attract enough attention to garner a re-rating of valuation multiples. This process began last year, as cyclical stocks outperformed broad indices in the last four months of 2019. In 2020, we expect investors to look to diversifying systematic risks, and risk aversion could rise with an escalation of US-Iranian conflict. Therefore, transparency of investment risks and full financial disclosure will become increasingly important. These preferences may favor well-established companies with a history of rewarding shareholders (via dividends and share buybacks) and place a greater hurdle rate of return on speculative, unprofitable companies. From a fundamental research perspective, we seek talented senior management teams steering financially strong companies through profitability setbacks by focusing on reaccelerating earnings and cash flow. To complement these “self-help” stocks, we seek consistent cash generating companies with generous dividend payouts. In years of more traditional equity market returns, rather than runaway bull markets, stability of cash flows and income should attract investor attention.
On an aggregate long/short portfolio basis, we are maintaining a near market-neutral posture, with 2.41% net exposure overall (long exposures minus absolute value of short exposures). Consistent with our goal of delivering low equity market sensitivity, we target a zero expected beta to the World Index. On an aggregate basis, our largest net biases by sector are toward information technology and energy, where we have significant positive net exposure, and against consumer staples and financials, where we have meaningful negative net exposure. By geography, we are net biased toward Switzerland and China, and biased against Australia and France. Gross exposure (leverage) for the Fund is 323%(3.23x) as of December 31, 2019.
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. 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. : The Fund uses swap agreements to obtain long and short exposures to securities. Swaps are derivatives which involve the use of leverage and the Fund uses significant leverage. Leverage is speculative and can magnify any losses. Short positions will lose money if the price of the underlying security increases, and losses on shorts are therefore potentially unlimited. The Fund is not appropriate for all investors.