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International Opportunities Fund
Combining our proven abilities in developed and emerging international markets
NAV (as of 15 Feb 2019)
$12.51, +0.16
YTD
+8.78%
INCEPTION
31 Dec 2009
TICKER/CUSIP
CIOVX/14949Q206
International Opportunities Fund
Fund Profile
The Fund invests primarily in companies located both in developed markets — excluding the United States (the “international value portfolio”) — and in emerging markets (the “emerging markets portfolio”). The Investment Adviser allocates substantially all of the Fund’s assets between the international value portfolio and the emerging markets portfolio using a proprietary asset allocation model. Normally, the Fund will invest in companies located in at least ten foreign countries.
International Value Portfolio: The international value portfolio consists primarily of common stocks of companies located in developed countries outside the U.S. 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.
| Minimum Investment | $5,000 |
| Sales Charge | None |
| Net Expense Ratio | 1.30% |
| Dividend Frequency | Annual |
| Capital Gain Frequency | Annual |
| Benchmark | MSCI ACWI ex US |
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 reflects fee waivers in effect. 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 Investor Class shares are 1.44% and 1.30% after adviser fee waiver. The expense ratios for Institutional Class shares are 1.23% and 1.05% after adviser fee waiver. There is a 2% redemption fee on shares held less than 60 days to protect shareholders from short-term investors. If your account incurred a redemption fee, your performance will be lower than the performance quoted. If you invest through a financial intermediary, it may apply the Fund’s redemption fee or other frequent trading restrictions.
Portfolio
Asset Allocation as of 31 Jan 2019
| Stocks | 98.1% |
| Cash | 1.9% |
Characteristics as of 31 Jan 2019
| Causeway | MSCI ACWI ex US | |
|---|---|---|
| No. of Holdings | 190 | 2135 |
| Wtd. Avg. Market Cap (Mn $US) | $49,839 | $48,558 |
| FY2 Price/Earnings | 9.8 | 12.3 |
| Price/Book Value | 1.2 | 1.6 |
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.
SECTOR WEIGHTS as of 31 Jan 2019
| Financials | 24.72% |
| Industrials | 14.42% |
| Materials | 11.85% |
| Health Care | 8.97% |
| Energy | 8.85% |
| Consumer Discretionary | 8.71% |
| Information Technology | 7.32% |
| Communication Services | 5.55% |
| Consumer Staples | 4.20% |
| Utilities | 2.67% |
| Real Estate | 0.84% |
(VS. Benchmark)
| Financials | 22.14% |
| Industrials | 11.67% |
| Materials | 7.65% |
| Health Care | 8.20% |
| Energy | 7.44% |
| Consumer Discretionary | 10.71% |
| Information Technology | 8.13% |
| Communication Services | 7.64% |
| Consumer Staples | 9.62% |
| Utilities | 3.37% |
| Real Estate | 3.43% |
Financials
Industrials
Materials
Health Care
Energy
Consumer Discretionary
Information Technology
Communication Services
Consumer Staples
Utilities
Real Estate
Other
TOP 10 COUNTRIES as of 31 Jan 2019
| United Kingdom | 27.56% |
| Germany | 11.70% |
| Japan | 11.63% |
| Switzerland | 7.97% |
| China | 7.12% |
| Canada | 5.95% |
| South Korea | 4.68% |
| Netherlands | 3.07% |
| Taiwan | 2.78% |
| India | 2.77% |
| Italy | 2.58% |
| France | 2.07% |
| Brazil | 2.06% |
| Russia | 1.40% |
| Thailand | 1.32% |
| Spain | 0.81% |
| South Africa | 0.54% |
| Turkey | 0.47% |
| Peru | 0.38% |
| Malaysia | 0.30% |
| Mexico | 0.30% |
| Poland | 0.20% |
| Qatar | 0.14% |
| United Arab Emirates | 0.12% |
| Czech Republic | 0.10% |
| Indonesia | 0.07% |
| New Zealand | 0.00% |
| Singapore | 0.00% |
| Egypt | 0.00% |
| Greece | 0.00% |
| Hungary | 0.00% |
| Pakistan | 0.00% |
| Philippines | 0.00% |
| Sweden | 0.00% |
| Norway | 0.00% |
| Portugal | 0.00% |
| Australia | 0.00% |
| Hong Kong | 0.00% |
| Ireland | 0.00% |
| Israel | 0.00% |
| Austria | 0.00% |
| Belgium | 0.00% |
| Denmark | 0.00% |
| Finland | 0.00% |
| Chile | 0.00% |
| Colombia | 0.00% |
(VS. Benchmark)
| United Kingdom | 11.37% |
| Germany | 5.89% |
| Japan | 16.51% |
| Switzerland | 5.77% |
| China | 8.16% |
| Canada | 6.78% |
| South Korea | 3.67% |
| Netherlands | 2.30% |
| Taiwan | 2.80% |
| India | 2.22% |
| Italy | 1.53% |
| France | 7.38% |
| Brazil | 2.11% |
| Russia | 1.02% |
| Thailand | 0.64% |
| Spain | 2.07% |
| South Africa | 1.69% |
| Turkey | 0.18% |
| Peru | 0.11% |
| Malaysia | 0.60% |
| Mexico | 0.74% |
| Poland | 0.32% |
| Qatar | 0.27% |
| United Arab Emirates | 0.19% |
| Czech Republic | 0.04% |
| Indonesia | 0.61% |
| New Zealand | 0.15% |
| Singapore | 0.91% |
| Egypt | 0.03% |
| Greece | 0.06% |
| Hungary | 0.08% |
| Pakistan | 0.01% |
| Philippines | 0.29% |
| Sweden | 1.80% |
| Norway | 0.49% |
| Portugal | 0.10% |
| Australia | 4.64% |
| Hong Kong | 2.64% |
| Ireland | 0.36% |
| Israel | 0.38% |
| Austria | 0.16% |
| Belgium | 0.65% |
| Denmark | 1.14% |
| Finland | 0.71% |
| Chile | 0.29% |
| Colombia | 0.11% |
United Kingdom
Germany
Japan
Switzerland
China
Canada
South Korea
Netherlands
Taiwan
India
Italy
France
Brazil
Russia
Thailand
Spain
South Africa
Turkey
Peru
Malaysia
Mexico
Poland
Qatar
United Arab Emirates
Czech Republic
Indonesia
New Zealand
Singapore
Egypt
Greece
Hungary
Pakistan
Philippines
Sweden
Norway
Portugal
Australia
Hong Kong
Ireland
Israel
Austria
Belgium
Denmark
Finland
Chile
Colombia
Other
TOP 10 HOLDINGS as of 31 Jan 2019
| Security | Country | Industry | % of Total |
|---|---|---|---|
| Volkswagen AG | Germany | Automobiles & Components | 3.3 |
| Takeda Pharmaceutical Co., Ltd. | Japan | Pharmaceuticals & Biotechnology | 3.1 |
| Prudential Plc | United Kingdom | Insurance | 2.9 |
| Linde Plc | United States | Materials | 2.8 |
| British American Tobacco plc | United Kingdom | Food Beverage & Tobacco | 2.8 |
| UniCredit S.p.A. | Italy | Banks | 2.6 |
| BASF SE | Germany | Materials | 2.6 |
| ABB Ltd. | Switzerland | Capital Goods | 2.5 |
| Barclays Plc | United Kingdom | Banks | 2.4 |
| Akzo Nobel | Netherlands | Materials | 2.2 |
Holdings are subject to change.
Approach
Causeway International Opportunities Fund is a blend of Causeway’s best skills, combining our bottom-up, fundamental research with our quantitatively managed, emerging markets, research. Our quantitative research team has developed a multi-factor model that gauges the relative attractiveness of emerging markets, and guides the portfolio managers in tactically allocating between developed and emerging market countries.
Our developed markets exposure aims to add value through intensive fundamental research implemented via a disciplined value approach. Our emerging markets exposure is the result of a quantitative strategy tailored to the unique growth, momentum, and risk characteristics of developing markets. Our proprietary tactical allocation model is designed to add additional value.
The Causeway International Opportunities Fund is a fully invested portfolio, typically with 150-220 underlying holdings. Allocation between developed and emerging markets can range from 0-2x the allocation of the MSCI All Country World Index ex-US.
Commentary
PERFORMANCE REVIEW for the month ended 31 Jan 2019
Developed and emerging equity markets rebounded in January, boosted by more dovish signals from the US Federal Reserve on future interest rate hikes and improving rhetoric on US-China trade tensions. The top performing markets in our investable universe were Turkey, Brazil, Pakistan, Russia, and Colombia. The worst performing markets were India, Malaysia, Taiwan, the United Arab Emirates, and Denmark. The best performing sectors in the MSCI ACWI ex US Index (“Index”) were real estate, energy, and information technology. The worst performing sectors were consumer staples, health care, and communication services. Every major currency except the Swiss franc appreciated versus the US dollar during the period, thus amplifying overall returns on overseas assets for US dollar-based investors.
Causeway International Opportunities Fund (“Fund”) modestly underperformed the Index during the month. Fund holdings in the materials, transportation, software & services, and telecommunication services industry groups, along with an underweight position in the retailing industry group, detracted from relative performance. Holdings in the insurance, food beverage & tobacco, pharmaceuticals & biotechnology, banks, and utilities offset some of the underperformance. The largest detractor was telecommunication services provider, Vodafone Group (United Kingdom). Additional notable detractors included pharmaceutical company, AstraZeneca Plc (United Kingdom), graphite electrode manufacturer, HEG Ltd. (India), health food & skin care product manufacturer, TCI Co. Ltd. (Taiwan), and car manufacturer, Mahindra & Mahindra Ltd. (India). The top contributor to return was Takeda Pharmaceutical Co., Ltd.(Japan). Other notable contributors included global life insurer, Manulife Financial (Canada), British American Tobacco Plc (United Kingdom), life insurer, Prudential Plc (United Kingdom), and utilities provider, SSE Plc (United Kingdom).
Equity Allocation Model Update
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 underweight. We identify five primary factors as most indicative of the ideal allocation target: valuation, quality, earnings growth, macroeconomic, and risk aversion. Valuation is currently negative 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 negative for emerging markets. Our macroeconomic factor is currently neutral. Lastly, our risk aversion factor concludes that investors’ appetite for risk is low, a positive indicator for our model.
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.
Dividends
| 2018 | $0.2580 |
| 2017 | $0.1923 |
| 2016 | $0.4245 |
| 2015 | $0.1357 |
| 2014 | $0.0000 |
| 2013 | $0.0958 |
| 2012 | $0.2215 |
| 2011 | $0.2487 |
| 2010 | $0.1712 |
Short-term Capital Gains
| 2018 | $0.0000 |
| 2017 | $0.0000 |
| 2016 | $0.0000 |
| 2015 | $0.0107 |
| 2014 | $0.0000 |
| 2013 | $0.0001 |
| 2012 | $0.0000 |
| 2011 | $0.0000 |
| 2010 | $0.0000 |
Long-term Capital Gains
| 2018 | $0.0327 |
| 2017 | $0.0000 |
| 2016 | $0.0000 |
| 2015 | $0.0199 |
| 2014 | $0.4943 |
| 2013 | $0.0739 |
| 2012 | $0.0190 |
| 2011 | $0.0303 |
| 2010 | $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). During 2014, the Fund restructured from a “fund of funds” to a fund making direct investments in securities.
