Seeking diversified exposure to international small cap companies

The Fund invests primarily in common stocks of companies with smaller market capitalizations located in developed and emerging markets outside the US. The Fund normally invests at least 80% of its total assets in equity securities of companies with smaller market capitalizations. Smaller market capitalization companies are companies with market capitalizations that do not exceed the highest market capitalization of a company within the Fund’s benchmark, the MSCI ACWI ex USA Small Cap Index (Gross), at the time of purchase. Some of these companies, although small by US standards, might be large companies in their local markets. The Fund may continue to hold securities of a portfolio company that appreciate above the smaller market capitalization threshold and thus may from time to time hold less than 80% of its total assets in equity securities of companies with smaller market capitalizations. The Fund may invest in a wide range of industries. The Fund’s investment objective is to seek long-term growth of capital.

YTD Return*
-11.03%
Nav*
$11.78, +0.03
Inception
October 20, 2014
Cusip
14949P703
Benchmark
MSCI ACWI ex USA Small Cap
Minimum Investment
$1,000,000
Sales Charge
None
Net Expense Ratio
1.13%
Gross Expense Ratio
1.51%
*As of December 01, 2022
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Strategy overview

The portfolio managers discuss our International Small Cap strategy.

Portfolio managers

Quantitative Portfolio Manager
Head of Quantitative Research
Quantitative Portfolio Manager
Quantitative Portfolio Manager
Quantitative Portfolio Manager

Performance

QTD YTD 1 year3 years5 years Since inception
Fund 3.9%-20.1%-17.3%1.8%-0.6%4.2%
MSCI ACWI ex USA Small Cap 3.3%-26.8%-27.4%0.5%0.1%4.1%
QTD YTD 1 year3 years5 years Since inception
Fund 3.9%-20.1%-17.3%1.8%-0.6%4.2%
MSCI ACWI ex USA Small Cap 3.3%-26.8%-27.4%0.5%0.1%4.1%
QTD YTD 1 year3 years5 years Since inception
Fund -7.1%-23.1%-19.4%1.9%-1.2%3.8%
MSCI ACWI ex USA Small Cap -8.2%-29.1%-28.6%0.8%-0.2%3.7%
QTD YTD 1 year3 years5 years Since inception
Fund -7.1%-23.1%-19.4%1.9%-1.2%3.8%
MSCI ACWI ex USA Small Cap -8.2%-29.1%-28.6%0.8%-0.2%3.7%
2021202020192018201720162015
Fund 21.6%2.7%18.8%-21.1%34.7%3.3%4.7%
MSCI ACWI ex USA Small Cap 13.4%14.7%22.9%-17.9%32.1%4.3%3.0%
Fund
MSCI ACWI ex USA Small Cap
2021202020192018201720162015
21.6%2.7%18.8%-21.1%34.7%3.3%4.7%
13.4%14.7%22.9%-17.9%32.1%4.3%3.0%

Portfolio (as of October 31, 2022)

Benchmark: MSCI ACWI ex USA Small Cap
Asset Allocation
Fund
Stocks 97.1%
Cash 2.9%
Fund Characteristics
Fund Benchmark
No. of holdings 4387
Weighted avg. market cap (US $MM) $0 $1,581
FY2 price/earnings 0.0 10.8
Price/book value 0.0 1.3
Net assets $93,222,619 -
TOP 10 ACTIVE HOLDINGS
Security Country Active weight*
ASR Nederland NV Netherlands 2.0%
Electric Power Development Co., Ltd. Japan 1.8%
SSAB Sweden 1.8%
Sojitz Corp. Japan 1.8%
KPIT Technologies Ltd. India 1.8%
POSCO INTERNATIONAL Corp. South Korea 1.8%
SHIMAMURA Co., Ltd. Japan 1.8%
Companhia Paranaense de Energia Brazil 1.7%
Accelleron Industries Switzerland 1.7%
JB Hi-Fi Ltd. Australia 1.7%

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.

*Active defined as Fund weight minus MSCI ACWI ex USA Small Cap Index weight. Holdings are subject to change.

SECTOR WEIGHTS
Sector Fund Benchmark
Industrials 17.7% 19.9%
Financials 13.2% 11.4%
Information Technology 13.0% 10.6%
Materials 11.5% 11.7%
Consumer Discretionary 8.5% 11.5%
Energy 8.3% 4.5%
Consumer Staples 6.8% 6.2%
Utilities 6.0% 3.7%
Real Estate 5.2% 9.9%
Health Care 4.2% 7.0%
Communication Services 2.0% 3.6%
Equity Funds 0.5% 0.0%
TOP 10 COUNTRIES
Country Fund Benchmark
Japan 21.9% 20.5%
Australia 8.7% 7.2%
Canada 8.6% 8.0%
Taiwan 6.7% 4.9%
South Korea 6.0% 3.4%
United Kingdom 5.8% 10.0%
India 5.2% 6.7%
Brazil 4.3% 2.0%
Netherlands 3.7% 1.2%
Thailand 2.8% 1.0%
Regional Allocation
  • Pacific 34.2%
  • Emerging Asia 25.2%
  • Europe – other 19.9%
  • North America 8.6%
  • Emerging Europe, Middle East, Africa 4.3%
  • Emerging Latin America 4.3%
  • Multi Region All Country 0.5%

Commentary (As of October 31, 2022)

Highlights

  • Equity markets rose in October, likely reflecting expectations of a potentially slower future pace of interest rate increases and in more modest magnitudes.
  • Persistently high inflation and strong labor markets compelled further hawkish monetary policy actions from many developed market central banks. The European Central Bank (“ECB”) announced an additional 75 basis point hike in October, with the US Federal Reserve (“Fed”) following suit in early November.
  • Though we analyze many different stock selection factors in our alpha model, value factors receive the largest weight on average.

Portfolio attribution

The Causeway International Small Cap Fund (“Fund”) outperformed the Index during the month. To evaluate stocks in our investable universe, our multi-factor quantitative model employs four bottom-up factor categories – valuation, earnings growth, technical indicators, and competitive strength – and two top-down factor categories assessing macroeconomic and country aggregate characteristics. In October, the strategy’s value factors delivered the highest returns among our alpha categories. The strategy’s earnings growth and technical alpha factors also had positive monthly returns. All three factor categories have generated strongly positive returns YTD and over the past twelve months. Our competitive strength factor category delivered slightly negative returns for the month. These factors have a quality tilt and we expect them to help us identify stocks that can perform well in inflationary and/or recessionary environments, among others. Our country aggregate factors and macroeconomic factors were negative indicators in October as countries exhibiting superior top-down metrics outperformed those with relatively weaker characteristics. All factor group returns remain positive from inception of the Fund (10/20/14) to the end of October.

Investment outlook

Though we analyze many different stock selection factors in our alpha model, value factors receive the largest weight on average. As of the end of October, the MSCI ACWI ex USA Small Cap Growth Index traded at a 15.7x forward P/E multiple compared to 9.1x for the MSCI ACWI ex USA Small Cap Value Index, a 72% premium. As of 10/31/2022, the Causeway ISC portfolio traded at just 5.4x forward (NTM) earnings despite exhibiting higher embedded momentum and revisions characteristics relative to both the MSCI ACWI ex-USA Small Cap Index and the Value version of the Index.

International small caps exhibit greater valuation dispersion than large caps on both a forward earnings yield and B/P basis, indicating more information content in the valuation ratios of small caps. In addition to exhibiting greater valuation dispersion, small caps exhibit a higher long-term EPS growth trend.

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 will be subject to 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
2021 $0.4823 $0.0000 $0.0000
2020 $0.4107 $0.0000 $0.0000
2019 $0.4390 $0.0000 $0.0000
2018 $0.3165 $0.0000 $0.0000
2017 $0.3792 $0.2375 $0.4794
2016 $0.2901 $0.0000 $0.0000
2015 $0.2407 $0.0000 $0.0000

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: