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*
-15.18%
Nav*
$11.57, +0.22
Inception
December 31, 2009
Cusip
14949Q206
Benchmark
MSCI ACWI ex US
Minimum Investment
$5,000
Sales Charge
None
Net Expense Ratio
1.30
Gross Expense Ratio
1.31
*As of July 02, 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
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 13.7%-21.3%-9.8%-4.1%-2.4%4.1%2.9%
MSCI ACWI ex US 11.2%-14.7%-3.0%0.2%1.3%4.9%3.6%
QTD YTD 1 year3 years5 years10 years Since inception
Fund 13.7%-21.3%-9.8%-4.1%-2.4%4.1%2.9%
MSCI ACWI ex US 11.2%-14.7%-3.0%0.2%1.3%4.9%3.6%
QTD YTD 1 year3 years5 years10 years Since inception
Fund -30.8%-30.8%-23.7%-6.7%-4.1%1.4%1.7%
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 -30.8%-30.8%-23.7%-6.7%-4.1%1.4%1.7%
MSCI ACWI ex US -23.3%-23.3%-15.1%-1.5%-0.2%2.5%2.6%
2019201820172016201520142013201220112010
Fund 21.4%-18.6%29.4%1.7%-6.3%-4.0%17.5%24.4%-12.8%15.1%
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
21.4%-18.6%29.4%1.7%-6.3%-4.0%17.5%24.4%-12.8%15.1%
22.1%-13.8%27.8%5.0%-5.3%-3.4%15.8%17.4%-13.3%11.6%

Portfolio (as of May 31, 2020)

Benchmark: MSCI ACWI ex US
Asset Allocation
Fund
Stocks 98.7%
Cash 1.3%
Fund Characteristics
Fund Benchmark
No. of holdings 191 2405
Weighted avg. market cap (US $MM) $61,416 $59,557
FY2 price/earnings 10.6 13.4
Price/book value 1.1 1.5
Net assets $11,064,770 -
TOP 10 HOLDINGS
Security Country Percent
Volkswagen AG Germany 3.3
BASF SE Germany 3.1
UniCredit S.p.A. Italy 2.9
Siemens AG Germany 2.6
Takeda Pharmaceutical Co., Ltd. Japan 2.6
FANUC Corp. Japan 2.6
ABB Ltd. Switzerland 2.4
Barclays Plc United Kingdom 2.4
Novartis AG Switzerland 2.1
Tencent Holdings Ltd. China 1.9

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 20.7% 18.2%
Industrials 19.3% 11.7%
Information Technology 12.8% 10.5%
Consumer Discretionary 10.9% 12.3%
Health Care 9.6% 10.8%
Materials 9.2% 7.5%
Consumer Staples 6.1% 10.2%
Communication Services 4.3% 7.3%
Energy 3.8% 5.1%
Utilities 1.2% 3.6%
Real Estate 0.8% 2.9%
TOP 10 COUNTRIES
Country Fund Benchmark
Germany 18.2% 5.8%
United Kingdom 15.7% 9.6%
China 12.3% 10.7%
Japan 8.9% 17.4%
Switzerland 7.4% 6.8%
France 6.4% 7.0%
Taiwan 4.5% 3.4%
South Korea 4.2% 3.3%
Netherlands 3.4% 2.9%
Italy 3.0% 1.4%
Regional Allocation
  • Europe – other 59.5%
  • Emerging Asia 24.5%
  • Pacific 8.9%
  • Emerging Europe, Middle East, Africa 2.8%
  • Emerging Latin America 2.4%
  • North America 0.5%

Commentary (As of May 31, 2020)

Highlights

  • Equity markets continued to rally in May, likely responding to massive monetary and fiscal stimulus. We anticipate a pickup in global economic activity as countries gradually relax COVID-19 pandemic lockdown measures.
  • Though global fiscal and monetary authorities’ quick action to cushion the economic blow is encouraging, stimulus should end later this year. In the next several months, we expect the private sector in most regions to resume hiring, tap bank credit for resumption of operations, and boost capital expenditures. We believe these actions are likely to push up prices, potentially mitigating the deflationary impact of the lockdowns and lower oil prices.
  • The intense market dislocation resulting from the pandemic afforded us the rare opportunity to purchase developed market portfolio companies exhibiting, in our view, extreme undervaluation. We believe these companies have recovery potential in earnings and cash flow growth, and quality characteristics such as talented management, defensible market position, and financial strength.

Portfolio attribution

Causeway International Opportunities Fund (“Fund”) outperformed the Index during the month, due primarily to country allocation (a byproduct of our bottom-up stock selection process). Fund holdings in the banks, transportation, telecommunication services, and semiconductors & semi equipment industry groups, as well as an underweight position in the real estate industry group, contributed to relative performance. Holdings in the capital goods, software & services, consumer services, and retailing industry groups, along with an underweight position in the health care equipment & services industry group, offset some of the outperformance versus the Index. The top contributor to return was industrial conglomerate, Siemens AG (Germany). Other notable contributors included banking & financial services company, UniCredit S.p.A. (Italy), financial services provider, ING Groep NV (Netherlands), semiconductor company, Infineon Technologies AG (Germany), and low-budget airline, Ryanair Holdings - ADR (Ireland). The largest detractor was jet engine manufacturer, Rolls-Royce Holdings Plc (United Kingdom). Additional notable detractors included life insurer, Prudential Plc (United Kingdom), integrated circuit manufacturer, Taiwan Semiconductor Manufacturing Co., Ltd. - ADR (Taiwan), enterprise infrastructure software company, Micro Focus International Plc (United Kingdom), and passenger & cargo airline company, Air France-KLM 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 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 positive for emerging markets in our model. Our quality metrics, which include such measures as profit margins and return on equity, are positive. Our earnings growth factor is positive, while our macroeconomic factor is negative for emerging markets. Lastly, our risk aversion factor is positive in our model.

Investment outlook

The speed and magnitude of stimulus from global central banks and governments has likely allowed investors to anticipate the recovery. Market volatility remains high (relative to early February, before the acceleration of the pandemic), as the path to widely available COVID-19 therapies and vaccines remains unclear. Against this backdrop, we have increased our exposure to developed market companies in the most severely impacted segments of the market—such as banks, transportation, and capital goods—that we believe boast superior balance sheet strength and liquidity positions with the potential to withstand the downturn in revenues. We also deployed capital to growth-oriented cyclical stocks—largely in the technology sector—that currently trade at undemanding valuations. The intense market dislocation resulting from the pandemic afforded us the rare opportunity to purchase developed market portfolio companies exhibiting, in our view, extreme undervaluation, recovery potential in earnings and cash flow growth, and quality characteristics such as talented management, defensible market position, and financial strength. Based on the last three market cycles, and the recent recovery in markets from the late March 2020 lows, we are convinced that cyclical sectors will-once again-outperform the more defensive areas of the market. We believe that this crisis has brought the extraordinary occasion to own some of the best positioned developed market cyclical companies in materials, consumer discretionary, industrials (especially capital goods), and financials. The potential for a resumption in dividend payout for a wide array of companies we believe, should add another important component to total return.

Regarding the EM portion of the Fund, value stocks continue to underperform growth stocks. The MSCI Emerging Markets Value Index underperformed the MSCI Emerging Markets Growth Index in May and has lagged every month this year. The MSCI Emerging Markets Value Index is trading at a sizable discount based on both price-to-earnings and price-to-book value ratios. We continue to emphasize value factors in our investment process and we believe that value’s relative performance should improve once COVID-19 uncertainty abates, especially given the discount offered by value stocks currently.

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 $0.3193 $0.0000 $0.0327
2018 $0.2580 $0.0000 $0.0327
2017 $0.1923 $0.0000 $0.0000
2016 $0.4245 $0.0000 $0.0000
2015 $0.1357 $0.0107 $0.0199
2014 $0.0000 $0.0000 $0.4943
2013 $0.0958 $0.0001 $0.0739
2012 $0.2215 $0.0000 $0.0190
2011 $0.2487 $0.0000 $0.0303
2010 $0.1712 $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: