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*
+13.75%
Nav*
$14.64, -0.04
Inception
December 31, 2009
Cusip
14949Q206
Benchmark
MSCI ACWI ex US
Minimum Investment
$5,000
Sales Charge
None
Net Expense Ratio
1.23%
Gross Expense Ratio
1.25%
*As of June 05, 2023
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Strategy overview

The portfolio managers discuss our International Opportunities strategy.

Portfolio managers

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

Performance

QTD YTD 1 year3 years5 years10 years Since inception
Fund -0.6%11.0%5.5%11.9%2.5%3.8%4.9%
MSCI ACWI ex US -1.8%5.1%-0.9%7.8%2.7%4.3%4.5%
QTD YTD 1 year3 years5 years10 years Since inception
Fund -0.6%11.0%5.5%11.9%2.5%3.8%4.9%
MSCI ACWI ex US -1.8%5.1%-0.9%7.8%2.7%4.3%4.5%
QTD YTD 1 year3 years5 years10 years Since inception
Fund 11.7%11.7%5.4%17.0%2.3%4.2%5.0%
MSCI ACWI ex US 7.0%7.0%-4.6%12.3%3.0%4.7%4.7%
QTD YTD 1 year3 years5 years10 years Since inception
Fund 11.7%11.7%5.4%17.0%2.3%4.2%5.0%
MSCI ACWI ex US 7.0%7.0%-4.6%12.3%3.0%4.7%4.7%
2022202120202019201820172016201520142013201220112010
Fund -11.3%6.3%5.2%21.4%-18.6%29.4%1.7%-6.3%-4.0%17.5%24.4%-12.8%15.1%
MSCI ACWI ex US -15.6%8.3%11.1%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
2022202120202019201820172016201520142013201220112010
-11.3%6.3%5.2%21.4%-18.6%29.4%1.7%-6.3%-4.0%17.5%24.4%-12.8%15.1%
-15.6%8.3%11.1%22.1%-13.8%27.8%5.0%-5.3%-3.4%15.8%17.4%-13.3%11.6%

Portfolio (as of April 30, 2023)

Benchmark: MSCI ACWI ex US
Asset Allocation
Fund
Stocks 98.5%
Cash 1.5%
Fund Characteristics
Fund Benchmark
No. of holdings 225 2258
Weighted avg. market cap (US $MM) $63,832 $70,080
FY2 price/earnings 10.0 12.0
Price/book value 1.6 1.7
Net assets $18,798,240 -
TOP 10 HOLDINGS
Security Country Percent
Rolls-Royce Holdings Plc United Kingdom 3.8
Enel SpA Italy 2.8
Reckitt Benckiser Group United Kingdom 2.4
UniCredit S.p.A. Italy 2.3
SAP SE Germany 2.3
Roche Holding AG Switzerland 2.3
Prudential Plc United Kingdom 2.2
Danone France 2.2
Ryanair Holdings Plc - ADR Ireland 1.9
Akzo Nobel Netherlands 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 18.7% 20.3%
Industrials 17.5% 12.8%
Health Care 13.1% 9.9%
Consumer Staples 11.6% 9.1%
Information Technology 11.4% 11.2%
Consumer Discretionary 7.8% 11.7%
Materials 5.5% 8.1%
Utilities 5.3% 3.3%
Communication Services 3.9% 5.8%
Energy 3.4% 5.7%
Real Estate 0.3% 2.1%
TOP 10 COUNTRIES
Country Fund Benchmark
United Kingdom 22.4% 9.9%
France 11.3% 8.3%
China 9.0% 8.5%
Germany 7.3% 5.7%
Japan 6.3% 13.8%
Switzerland 5.5% 6.7%
Italy 5.1% 1.6%
Spain 5.1% 1.7%
Netherlands 5.0% 2.9%
Taiwan 4.2% 4.0%
Regional Allocation
  • Europe – other 64.8%
  • Emerging Asia 21.2%
  • Pacific 6.9%
  • North America 2.3%
  • Emerging Latin America 1.9%
  • Emerging Europe, Middle East, Africa 1.4%

Commentary (As of April 30, 2023)

Highlights

  • Global equity markets continued to rise in April, with international developed markets outpacing US and emerging markets.
  • Our team continues to value and vet industrials companies through our research process; we should be prepared to build exposure to select firms on share price pullbacks. Amid signs of slowing economic activity, we seek to identify economically resilient companies at attractive valuations and avoid companies at cyclical earnings peaks.
  • By year’s end, we expect some of the most significant returns in excess of the Index should be delivered by companies able to withstand the effects of credit contraction, manage cost pressures, and improve productivity. We believe financial strength remains essential, especially in this higher-for-longer interest rate environment. Many of our portfolio companies are engaged in operational restructuring to improve earnings and cash flow.

Portfolio Attribution

The Causeway International Opportunities Fund (“Fund”) on a net asset value basis, outperformed the Index during the month. On a gross return basis, fund holdings in the banks, materials, and utilities industry groups contributed to relative performance. Holdings in the capital goods, consumer durables & apparel, and financial services industry groups detracted from relative performance. The top individual contributors to absolute return were electric, gas & renewables power generation & distribution company, Enel SpA (Italy), banking & financial services company, UniCredit S.p.A. (Italy), and insurer, Prudential Plc (United Kingdom). The largest individual detractors from absolute return were integrated circuit manufacturer, Taiwan Semiconductor Manufacturing Co., Ltd. (Taiwan), robotics manufacturer, FANUC Corp. (Japan), 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 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 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, macroeconomic, and risk aversion factors are negative for emerging markets.

Economic outlook

The US economy may have already entered a stagflation period, likely exacerbated by tightening credit conditions and price rises embedded in wages, goods, and services. Despite headline-generating layoff announcements, payroll figures have been resilient, and the nationwide unemployment rate is a low 3.4%. Employers who suffered labor shortages during the pandemic may be reluctant to reduce staff, even as demand weakens. In contrast, data suggests the European Central Bank may have flexibility to slow its tightening policy. Although headline Eurozone inflation rose to 7% in April, the rate of core inflation—which removes the volatile food and energy price categories—declined for the first time in ten months, to 5.6%. In both the US and Europe, credit appears to be contracting after recent banking system shocks. As Europe and the US potentially near the end of their rate hike cycles, the Bank of Japan has yet to begin. We expect the Japanese central bank to continue its policy of monetary easing, conducted through yield curve control.

Macroeconomic data in China, the largest country within the EM universe, have been mixed. On the negative side, after a robust reopening from Covid lockdowns, Chinese manufacturing contracted in April; China's official purchasing managers' index (“PMI”) declined to 49.2. However, the country’s first quarter gross domestic product growth was 4.5%, exceeding most analyst estimates. Additionally, muted inflation near 2% should allow the Chinese government to engage in sufficient stimulus in order to meet its 5% growth target for 2023.

Investment Outlook

For the developed markets sleeve of the portfolio, our team continues to value and vet industrials companies through our research process; we should be prepared to build exposure to select firms on share price pullbacks. Amid signs of slowing economic activity, we seek to identify economically resilient companies at attractive valuations and avoid companies at cyclical earnings peaks. Consistent across industries is our preference for companies we see generating high levels of free cash flow and for managements willing to return excess capital to shareholders. Given the likelihood of recession, we want to see managements apply conservative financial approaches: paying down leverage, controlling expenses, and abstaining from shareholder-dilutive acquisitions. Although portfolio weights in more economically insulated sectors—consumer staples and utilities, for example—are toward the upper bounds of their historical ranges, we remain flexible in our positioning and aim to continue to exploit the full global equity opportunity set.

A valuation “margin of safety” may support international equities’ continued outperformance versus the US as investors, anticipating multiple compression, grow increasingly wary of expensive stocks. Developed international stocks have only been cheaper than they are today for about 5% of the past fifty years, as measured by the nearly two standard deviation discount of the MSCI World ex-USA Index trailing price-to-earnings multiple versus the MSCI USA Index.

By year’s end, we expect some of the most significant returns in excess of the Index should be delivered by companies able to withstand the effects of credit contraction, manage cost pressures, and improve productivity. We believe financial strength remains essential, especially in this higher-for-longer interest rate environment. Many of our portfolio companies are engaged in operational restructuring to improve earnings and cash flow. This implies these companies can deliver good news on a recovery in their growth, even as economic conditions remain sluggish. To identify investment candidates, our analysts are collaborating across their sectors to identify attractively valued portfolio candidates. Recent examples include Causeway consumer, industrials, and chemicals analysts valuing an ingredients company; and materials analysts studying a rare earth elements producer with input from automobile and technology analysts and members of our China research subsidiary. We believe understanding a company from multiple industry perspectives provides depth and rigor essential to determining its valuation.

Within emerging markets, earnings growth upgrades for EM equities continue to lag those in the ex-US developed markets. The EM countries with the weakest net upgrades in earnings forecasts included the externally-oriented economy of Taiwan, reflecting concerns that global growth is slowing. Net upgrades in Saudi Arabia and Qatar were also negative, reflecting falling energy prices. The smaller countries of Poland, Indonesia, and Turkey had positive net upgrades as they tend to be less impacted by slowing global growth than some of their EM peers. The sectors with the strongest net upgrades were communication services and consumer discretionary. Both sectors are dominated by Chinese stocks, which are benefitting from the country’s easing Covid-19 restrictions and solid growth outlook. The sectors with negative net upgrades included information technology and materials, both reflecting global growth pessimism.

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
2022 $0.3242 $0.0000 $0.0000
2021 $0.2058 $0.0000 $0.0000
2020 $0.1696 $0.0000 $0.0000
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: