Combining our time-tested abilities in developed and emerging international markets

The Fund invests primarily in companies both in developed markets excluding the United States (the “international value portfolio”) and in emerging markets (the “emerging markets portfolio”). Causeway allocates substantially all of the Fund’s assets between the international value portfolio and the emerging markets portfolio using a proprietary asset allocation model.

International Value Portfolio: The international value portfolio consists primarily of common stocks of companies located in developed countries outside the US. Normally, the majority of this portfolio invests in companies that pay dividends or repurchase their shares. The international value portfolio may also invest in companies located in emerging (less developed) markets.

Emerging Markets Portfolio: The emerging markets portfolio is normally invested 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 that invest in emerging markets securities.

YTD Return*
-1.53%
Nav*
$13.52, -0.02
Inception
December 31, 2009
Cusip
14949Q107
Benchmark
MSCI ACWI ex US
Minimum Investment
$1,000,000
Sales Charge
None
Total Expense Ratio
1.05%
*As of January 24, 2020

Strategy overview

The portfolio managers discuss our International Opportunities strategy.

Portfolio managers

Chief Executive Officer
Fundamental Portfolio Manager
President
Head of Fundamental Research
Fundamental Portfolio Manager
Fundamental Portfolio Manager
Fundamental Portfolio Manager
Fundamental Portfolio Manager
Fundamental Portfolio Manager
Fundamental Portfolio Manager
Head of Quantitative Research
Quantitative Portfolio Manager
Quantitative Portfolio Manager
Quantitative Portfolio Manager
Fundamental Portfolio Manager

Performance

QTDYTD1 year3 years5 yearsSince inception
Fund11.7%21.7%21.7%8.8%4.3%5.8%
MSCI ACWI ex US9.0%22.1%22.1%10.4%6.0%5.4%
QTDYTD1 year3 years5 yearsSince inception
Fund11.7%21.7%21.7%8.8%4.3%5.8%
MSCI ACWI ex US9.0%22.1%22.1%10.4%6.0%5.4%
QTDYTD1 year3 years5 yearsSince inception
Fund11.7%21.7%21.7%8.8%4.3%5.8%
MSCI ACWI ex US9.0%22.1%22.1%10.4%6.0%5.4%
QTDYTD1 year3 years5 yearsSince inception
Fund11.7%21.7%21.7%8.8%4.3%5.8%
MSCI ACWI ex US9.0%22.1%22.1%10.4%6.0%5.4%
2019201820172016201520142013201220112010
Fund21.7%-18.4%29.6%2.0%-6.1%-3.7%17.8%24.6%-12.6%15.4%
MSCI ACWI ex US22.1%-13.8%27.8%5.0%-5.3%-3.4%15.8%17.4%-13.3%11.6%
Fund
MSCI ACWI ex US
2019201820172016201520142013201220112010
21.7%-18.4%29.6%2.0%-6.1%-3.7%17.8%24.6%-12.6%15.4%
22.1%-13.8%27.8%5.0%-5.3%-3.4%15.8%17.4%-13.3%11.6%

Portfolio (as of December 31, 2019)

Benchmark: MSCI ACWI ex US
Asset Allocation
Fund
Stocks99.4%
Cash0.6%
Fund Characteristics
FundBenchmark
No. of holdings 197 2411
Weighted avg. market cap (US $MM)$67,626$61,374
FY2 price/earnings11.113.9
Price/book value1.31.7
Net assets$212,981,712-
TOP 10 HOLDINGS
Security Country Percent
Volkswagen AGGermany3.8
BASF SEGermany3.0
UniCredit S.p.A.Italy3.0
Takeda Pharmaceutical Co., Ltd.Japan3.0
British American Tobacco plcUnited Kingdom2.5
FANUC Corp.Japan2.5
ABB Ltd.Switzerland2.4
Siemens AGGermany2.3
Barclays PlcUnited Kingdom2.3
Rolls-Royce Holdings PlcUnited Kingdom2.1

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.

Holdings are subject to change.

SECTOR WEIGHTS
Sector Fund Benchmark
Financials22.2%21.4%
Industrials17.1%11.9%
Health Care9.8%8.9%
Information Technology9.7%9.4%
Materials9.2%7.4%
Energy8.8%6.5%
Consumer Discretionary8.1%11.8%
Consumer Staples6.9%9.4%
Communication Services5.3%6.7%
Utilities1.5%3.4%
Real Estate0.8%3.2%
TOP 10 COUNTRIES
Country Fund Benchmark
United Kingdom22.2%10.8%
Germany16.4%5.7%
Japan10.3%16.1%
China9.8%9.4%
France6.5%7.5%
Switzerland6.1%6.1%
Taiwan4.2%3.2%
South Korea3.8%3.2%
Italy3.0%1.5%
Brazil2.9%2.1%
Regional Allocation
  • Europe – other 58.7%
  • Emerging Asia 21.1%
  • Pacific 10.3%
  • North America 2.7%
  • Emerging Latin America 3.5%
  • Emerging Europe, Middle East, Africa 3.1%

Commentary (As of December 31, 2019)

Highlights

  • 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.
  • We believe European countries may join the US and China and increase fiscal spending. To fund this spending, European governments will need to sell more bonds, which may put upward pressure on interest rates as supply meets, and potentially outpaces, demand.
  • In the absence of a recession, earnings of economically sensitive stocks should attract enough attention to garner a re-rating of valuation multiples. We seek talented senior management teams steering financially strong companies through profitability setbacks by focusing on reaccelerating earnings and cash flow.

Portfolio attribution

Causeway International Opportunities Fund (“Fund”) outperformed the Index during the month, due primarily to stock selection. Fund holdings in the banks, food beverage & tobacco, utilities, and energy industry groups, along with an underweight position in the household & personal products industry group, contributed to performance compared to the Index. Holdings in the pharmaceuticals & biotechnology, software & services, and materials industry groups, along with an overweight position in the transportation industry group and an underweight position in the media & entertainment industry group, detracted from relative performance. The top contributor to return was British American Tobacco Plc (United Kingdom). Other notable contributors included power & automation technology company, ABB Ltd.(Switzerland), oil & natural gas producer, Encana (Canada), civil construction company, Balfour Beatty Plc (United Kingdom), and banking & financial services company, Barclays Plc (United Kingdom). The largest detractor was Takeda Pharmaceutical Co., Ltd. (Japan). Additional notable detractors included robotics manufacturer, FANUC Corp. (Japan), jet engine manufacturer, Rolls-Royce Holdings Plc (United Kingdom), enterprise infrastructure software company, Micro Focus International Plc (United Kingdom), and telecommunication services provider, Vodafone Group (United Kingdom).

We use a proprietary quantitative equity allocation model that assists the portfolio managers in determining the weight of emerging versus developed markets in the Fund. Our allocation relative to the weight of emerging markets in the Index is currently neutral. We identify five primary factors as most indicative of the ideal allocation target: valuation, quality, earnings growth, macroeconomic, and risk aversion. Valuation is currently neutral for emerging markets in our model. Our quality metrics, which include such measures as profit margins and return on equity, are negative. Our earnings growth factor is positive, while our macroeconomic factor is negative for emerging markets. Lastly, our risk aversion factor is negative in our model.

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 developed market 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 developed market 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. 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.

While our value factor in our quantitative emerging markets model lagged in 2019, it has outperformed in recent months. Interestingly, the MSCI Emerging Markets Value Index underperformed the MSCI Emerging Markets Growth Index during the fourth quarter. The return differential between our value factor and the MSCI indices can be attributed in part to the strong performance of a few large cap growth stocks. While the Index is capitalization-weighted, we use equally-weighted returns for our factor in order to avoid assigning a handful of stocks a disproportionate weight. Secondly, our value factor has a sector-relative component while MSCI’s style classification schemes do not include sector adjustments. We continue to emphasize value factors in our quantitative investment process.

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. Investing in ETFs is subject to the risks of the underlying funds. Investments in smaller companies typically exhibit higher volatility. Asset allocation may not protect against market 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.

Distributions

DividendsShort-term capital gainsLong-term capital gains
2019$0.3502$0.0000$0.0327
2018$0.2904$0.0000$0.0327
2017$0.2145$0.0000$0.0000
2016$0.4494$0.0000$0.0000
2015$0.1623$0.0107$0.0199
2014$0.0000$0.0000$0.4943
2013$0.1266$0.0001$0.0739
2012$0.2451$0.0000$0.0190
2011$0.2756$0.0000$0.0303
2010$0.1858$0.0000$0.1712

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: