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*
-27.97%
Nav*
$9.89, +0.19
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 April 07, 2020
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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 -30.7%-30.7%-23.6%-6.4%-3.9%1.7%1.9%
MSCI ACWI ex US -23.3%-23.3%-15.1%-1.5%-0.2%2.5%2.6%
QTD YTD 1 year3 years5 years10 years Since inception
Fund -30.7%-30.7%-23.6%-6.4%-3.9%1.7%1.9%
MSCI ACWI ex US -23.3%-23.3%-15.1%-1.5%-0.2%2.5%2.6%
QTD YTD 1 year3 years5 years10 years Since inception
Fund -30.7%-30.7%-23.6%-6.4%-3.9%1.7%1.9%
MSCI ACWI ex US -23.3%-23.3%-15.1%-1.5%-0.2%2.5%2.6%
QTD YTD 1 year3 years5 years10 years Since inception
Fund -30.7%-30.7%-23.6%-6.4%-3.9%1.7%1.9%
MSCI ACWI ex US -23.3%-23.3%-15.1%-1.5%-0.2%2.5%2.6%
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 February 29, 2020)

Benchmark: MSCI ACWI ex US
Asset Allocation
Fund
Stocks 99.4%
Cash 0.6%
Fund Characteristics
Fund Benchmark
No. of holdings 198 2407
Weighted avg. market cap (US $MM) $62,418 $58,216
FY2 price/earnings 9.4 12.3
Price/book value 1.2 1.5
Net assets $144,475,958 -
TOP 10 HOLDINGS
Security Country Percent
Volkswagen AG Germany 3.8
Takeda Pharmaceutical Co., Ltd. Japan 3.0
BASF SE Germany 3.0
UniCredit S.p.A. Italy 2.7
FANUC Corp. Japan 2.7
British American Tobacco plc United Kingdom 2.6
ABB Ltd. Switzerland 2.5
Novartis AG Switzerland 2.3
Rolls-Royce Holdings Plc United Kingdom 2.3
Siemens AG Germany 2.2

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.

Holdings are subject to change.

SECTOR WEIGHTS
Sector Fund Benchmark
Financials 21.1% 21.2%
Industrials 17.3% 11.8%
Information Technology 10.4% 9.8%
Health Care 10.2% 9.2%
Consumer Discretionary 9.2% 11.7%
Materials 9.0% 7.0%
Energy 7.7% 5.9%
Consumer Staples 7.6% 9.5%
Communication Services 4.5% 7.0%
Utilities 1.7% 3.7%
Real Estate 0.8% 3.2%
TOP 10 COUNTRIES
Country Fund Benchmark
United Kingdom 19.2% 10.2%
Germany 16.8% 5.6%
China 10.9% 10.1%
Japan 10.3% 16.1%
Switzerland 7.5% 6.4%
France 6.3% 7.4%
Taiwan 4.2% 3.4%
South Korea 3.9% 3.2%
Brazil 2.7% 1.9%
Italy 2.7% 1.6%
Regional Allocation
  • Europe – other 58.4%
  • Emerging Asia 22.4%
  • Pacific 10.3%
  • Emerging Latin America 3.2%
  • Emerging Europe, Middle East, Africa 3.0%
  • North America 2.2%

Commentary (As of February 29, 2020)

Highlights

  • We expect the outbreak of the coronavirus to weigh on global gross domestic product (“GDP”) growth, with the greatest drag on China and South Korea, as well as already weak economies in Europe and Japan.
  • Monetary policymakers have already begun implementing supportive measures to ease the financial pain of a prolonged slowdown. A more direct response to counter the effects of the demand slowdown from coronavirus is fiscal stimulus. We believe the virus outbreak may act as a catalyst for European economies, in particular, to enact fiscal stimulus.
  • The recent market downdraft has presented Causeway with a rare opportunity to build positions in high-quality companies in some of the industries most impacted by short-term fear, such as transportation, travel and leisure. We believe our overweight position in cyclical stocks relative to broad benchmarks positions our client portfolios for an eventual recovery in demand for the goods and services from some of the world’s, in our view, best-managed companies with strong balance sheets able to withstand the temporary slowdown.

Portfolio attribution

Causeway International Opportunities Fund (“Fund”) underperformed the Index during the month, due primarily to stock selection. Fund holdings in the energy, transportation, pharmaceuticals & biotechnology, capital goods, and software & services industry groups detracted from performance compared to the Index. Holdings in the food & staples retailing, semiconductors & semi equipment, consumer services, and technology hardware & equipment industry groups, as well as an underweight position in the consumer durables & apparel industry group, contributed to relative performance. The largest detractor was diversified chemicals manufacturer, BASF SE (Germany). Additional notable detractors included automobile manufacturer, Volkswagen AG (Germany), industrial conglomerate, Siemens AG (Germany), TakedaPharmaceutical Co., Ltd. (Japan), and energy supermajor, Royal Dutch Shell Plc (United Kingdom). The top contributor to return was payment terminal provider, Ingenico Group SA (France). Other notable contributors included cement manufacturer, Anhui Conch Cement Co., Ltd. (China), bank, China Construction Bank Corp. (China), liquor producer, Kweichow Moutai Co (China), and online services company, Tencent Holdings Ltd. (China).

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 overweight. 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 neutral. 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

Panic can be one of the best times to invest fundamentally – especially with a value approach. The recent market downdraft has presented Causeway with a rare opportunity to build positions in high-quality developed market companies in some of the industries most impacted by short-term fear, such as transportation, travel and leisure. Though we anticipate temporary earnings reductions for these hardest-hit stocks in the short-term, assets have not been impaired and we are confident in these companies’ management teams. Valuations are increasingly attractive given the precipitous stock price drops in recent weeks. Many multinational companies, as well as those operating entirely in their domestic markets, will likely continue to suffer supply chain delays and rising costs, largely from work disruption in China, Japan, South Korea, and parts of Europe. We believe, however,the earnings and cash flow setbacks will ultimately be temporary, and normalcy should return to supply chains and logistics as virus fears recede over time. Though the nature of the late February selloff broadly punished equities, we have seen the continued divergence between economically cyclical and defensive areas of the markets. In a demand slowdown, we believe stocks at the intersection of cash flow constraints and high debt levels will face larger challenges, which underscores our emphasis on portfolio companies exhibiting superior balance sheet strength. We believe our overweight position in cyclical stocks relative to broad benchmarks positions our client portfolios for an eventual recovery in demand for the goods and services from some of the world’s, in our view, best-managed companies with strong balance sheets able to withstand the temporary slowdown. As we await clarity on the virus and its economic effects, the dividend income from our portfolio holdings is even more attractive relative to sinking bond yields. If the coronavirus does not spark a prolonged period of demand destruction, we feel confident that these companies can maintain their dividends.

In the EM portion of the Fund, we maintain a value emphasis in our multi-factor quantitative process. The MSCI EM Value Index is trading at a wide discount to the MSCI EM Growth Index, particularly after weak performance in calendar year 2019 and over the 2020 year-to-date period. 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. 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: