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*
-3.64%
Nav*
$13.23, -0.29
Inception
December 31, 2009
Cusip
14949Q107
Benchmark
MSCI ACWI ex US
Minimum Investment
$1,000,000
Sales Charge
None
Net Expense Ratio
1.05
Gross Expense Ratio
1.06
*As of January 27, 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

QTD YTD 1 year3 years5 years10 years Since inception
Fund -5.5%-5.5%7.1%5.5%3.0%5.6%5.2%
MSCI ACWI ex US -2.7%-2.7%10.5%8.1%5.5%5.7%5.1%
QTD YTD 1 year3 years5 years10 years Since inception
Fund -5.5%-5.5%7.1%5.5%3.0%5.6%5.2%
MSCI ACWI ex US -2.7%-2.7%10.5%8.1%5.5%5.7%5.1%
QTD YTD 1 year3 years5 years10 years Since inception
Fund 11.7%21.7%21.7%8.8%4.3%5.8%5.8%
MSCI ACWI ex US 9.0%22.1%22.1%10.4%6.0%5.4%5.4%
QTD YTD 1 year3 years5 years10 years Since inception
Fund 11.7%21.7%21.7%8.8%4.3%5.8%5.8%
MSCI ACWI ex US 9.0%22.1%22.1%10.4%6.0%5.4%5.4%
2019201820172016201520142013201220112010
Fund 21.7%-18.4%29.6%2.0%-6.1%-3.7%17.8%24.6%-12.6%15.4%
MSCI ACWI ex US 22.1%-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 January 31, 2020)

Benchmark: MSCI ACWI ex US
Asset Allocation
Fund
Stocks 98.7%
Cash 1.3%
Fund Characteristics
Fund Benchmark
No. of holdings 197 2408
Weighted avg. market cap (US $MM) $65,809 $60,572
FY2 price/earnings 10.5 13.5
Price/book value 1.3 1.7
Net assets $208,429,627 -
TOP 10 HOLDINGS
Security Country Percent
Volkswagen AG Germany 3.7
BASF SE Germany 3.0
Takeda Pharmaceutical Co., Ltd. Japan 3.0
UniCredit S.p.A. Italy 2.8
British American Tobacco plc United Kingdom 2.7
FANUC Corp. Japan 2.7
ABB Ltd. Switzerland 2.4
Siemens AG Germany 2.3
Barclays Plc United Kingdom 2.2
Rolls-Royce Holdings Plc United Kingdom 2.1

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
Financials 20.8% 21.1%
Industrials 17.3% 12.0%
Health Care 10.0% 9.2%
Information Technology 9.6% 9.5%
Materials 8.9% 7.2%
Consumer Discretionary 8.5% 11.6%
Energy 8.2% 6.2%
Consumer Staples 7.5% 9.6%
Communication Services 5.6% 6.7%
Utilities 1.6% 3.6%
Real Estate 0.7% 3.2%
TOP 10 COUNTRIES
Country Fund Benchmark
United Kingdom 21.5% 10.7%
Germany 16.4% 5.7%
Japan 10.7% 16.4%
China 9.4% 9.2%
Switzerland 6.8% 6.4%
France 6.5% 7.4%
Taiwan 4.1% 3.2%
South Korea 3.7% 3.1%
Brazil 2.8% 2.0%
Italy 2.8% 1.5%
Regional Allocation
  • Europe – other 58.7%
  • Emerging Asia 20.4%
  • Pacific 10.7%
  • North America 2.5%
  • Emerging Latin America 3.4%
  • Emerging Europe, Middle East, Africa 3.1%

Commentary (As of January 31, 2020)

Highlights

  • After delivering impressive returns in calendar 2019, equity markets faltered in January in local currency terms, as concerns over the coronavirus outbreak may have weighed on investor optimism.
  • In China, key infrastructure and travel were shut down in an attempt to slow the spread of the coronavirus, which will likely be a near-term drag on Chinese (and global) economic growth. Chinese authorities will likely enact additional targeted stimulus in response to the outbreak.
  • Our fundamental research seeks to identify well-managed companies with strong balance sheets, with company leaders committed to improving earnings. As we wait for these companies to emerge from operational setbacks and reignite growth, they typically generate sufficient cash flow to reward shareholders via dividends and share buybacks.

Portfolio attribution

Causeway International Opportunities Fund (“Fund”) underperformed the Index during the month, due primarily to stock selection. Fund holdings in the energy, banks, materials, software & services, and automobiles & components industry groups detracted from performance compared to the Index. Holdings in the telecommunication services, media & entertainment, and food beverage & tobacco industry groups, as well as an underweight position in the consumer services and commercial & professional services industry groups, contributed to relative performance. The largest detractor was oil & natural gas producer, Ovintiv, Inc. (Canada). Additional notable detractors included automobile manufacturer, Volkswagen AG (Germany), diversified chemicals manufacturer, BASF SE (Germany), oil & natural gas producer, Ovintiv, Inc. (Canada), banking & financial services company, UniCredit S.p.A. (Italy), and energy supermajor, Royal Dutch Shell Plc (United Kingdom). The top contributor to return was British American Tobacco Plc (United Kingdom). Other notable contributors included utilities provider, SSE Plc (United Kingdom), print & publishing company, RELX Plc (United Kingdom), pharmaceuticals & biotechnology company, Roche Holding AG (Switzerland), and payment terminal provider, Ingenico Group SA (France).

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 positive 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 neutral in our model.

Investment outlook

In the prevailing global interest rate environment with the opportunity cost of owning long duration growth stocks low to negative, investors have continued to bid up expensive stocks to even higher valuations. Should these seemingly speculative, currently high valuation stocks fail to live up to their elevated expectations, we anticipate that the stable cash flows of economically sensitive, yet financially robust, companies would attract investor attention. Our fundamental research seeks to identify well-managed companies with strong balance sheets, with company leaders committed to improving earnings. As we wait for these companies to emerge from operational setbacks and reignite growth, they typically generate sufficient cash flow to reward shareholders via dividends and share buybacks. In the current low interest rate environment, we find the income from these undervalued stocks especially compelling as a major component of total return.

The external shock caused by the coronavirus outbreak impacted emerging markets (“EM”) value stocks. In January, the MSCI Emerging Markets Value Index underperformed the MSCI Emerging Markets Growth Index by 4.1%. Our value factor also underperformed during the month. Value stocks tend to underperform in “risk-off” environments so we would not expect a rebound in value stock performance until there is more clarity on the coronavirus situation. However, given EM growth stocks are trading at a historically large premium to value stocks, we believe that value stocks could rally when there is more clarity around the outbreak.

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

Dividends Short-term capital gains Long-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: