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*
+21.24%
Nav*
$13.70, +0.16
Inception
October 20, 2014
Cusip
14949P703
Benchmark
MSCI ACWI ex USA Small Cap
Minimum Investment
$1,000,000
Sales Charge
None
Net Expense Ratio
1.10%
Gross Expense Ratio
1.46%
*As of July 29, 2021
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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 9.1%22.5%53.6%7.6%10.7%8.8%
MSCI ACWI ex USA Small Cap 6.5%12.5%47.6%10.2%12.4%9.7%
QTD YTD 1 year3 years5 years Since inception
Fund 9.1%22.5%53.6%7.6%10.7%8.8%
MSCI ACWI ex USA Small Cap 6.5%12.5%47.6%10.2%12.4%9.7%
QTD YTD 1 year3 years5 years Since inception
Fund 9.1%22.5%53.6%7.6%8.8%
MSCI ACWI ex USA Small Cap 6.5%12.5%47.6%10.2%9.7%
QTD YTD 1 year3 years5 years Since inception
Fund 9.1%22.5%53.6%7.6%8.8%
MSCI ACWI ex USA Small Cap 6.5%12.5%47.6%10.2%9.7%
202020192018201720162015
Fund 2.7%18.8%-21.1%34.7%3.3%4.7%
MSCI ACWI ex USA Small Cap 14.7%22.9%-17.9%32.1%4.3%3.0%
Fund
MSCI ACWI ex USA Small Cap
202020192018201720162015
2.7%18.8%-21.1%34.7%3.3%4.7%
14.7%22.9%-17.9%32.1%4.3%3.0%

Portfolio (as of June 30, 2021)

Benchmark: MSCI ACWI ex USA Small Cap
Asset Allocation
Fund
Stocks 95.4%
Cash 4.6%
Fund Characteristics
Fund Benchmark
No. of holdings 131 4413
Weighted avg. market cap (US $MM) $2,173 $2,172
FY2 price/earnings 8.0 14.6
Price/book value 1.2 1.6
Net assets $62,958,338 -
TOP 10 ACTIVE HOLDINGS
Security Country Active weight*
Yang Ming Marine Transport Corp. Taiwan 2.1%
Hyosung TNC Corp. South Korea 2.1%
SITC International Holdings Co., Ltd. Hong Kong 2.0%
Interfor Canada 2.0%
Canfor Canada 2.0%
Mineral Resources Ltd. Australia 2.0%
FinVolution Group China 1.9%
Royal Mail Plc United Kingdom 1.9%
Kindred Group Plc Sweden 1.8%
BE Semiconductor Industries NV Netherlands 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.

*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 19.9% 20.8%
Consumer Discretionary 15.5% 12.6%
Financials 14.3% 10.2%
Materials 14.1% 10.8%
Information Technology 12.4% 11.9%
Real Estate 5.4% 10.3%
Consumer Staples 4.2% 5.7%
Health Care 3.5% 7.7%
Communication Services 2.9% 4.2%
Energy 1.9% 2.5%
Utilities 1.3% 3.3%
Equity Funds 0.0% 0.0%
TOP 10 COUNTRIES
Country Fund Benchmark
Japan 13.6% 19.1%
Taiwan 9.6% 5.4%
South Korea 8.9% 4.5%
Canada 7.4% 6.5%
United Kingdom 7.4% 12.0%
Australia 6.3% 6.2%
Netherlands 5.8% 1.7%
China 5.0% 2.6%
Hong Kong 4.5% 1.5%
Sweden 4.5% 5.1%
Regional Allocation
  • Emerging Asia 31.4%
  • Europe – other 28.2%
  • Pacific 25.8%
  • North America 7.4%
  • Emerging Latin America 2.6%

Commentary (As of June 30, 2021)

Portfolio attribution

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.

From a sector perspective, Fund holdings in industrials, financials, and information technology contributed the most to performance relative to the Index. Fund holdings in health care, real estate, and utilities offset a portion of the performance. Relative performance for the month can be mostly attributed to stock selection. The top contributor to performance was marine transportation services provider, Yang Ming Marine Transport Corp. (Taiwan). Additional top contributors included fiber products manufacturer, Hyosung TNC Corp. (South Korea), online consumer finance platform, FinVolution Group (China), marine transportation and logistics solutions provider, SITC International Holdings Co., Ltd. (Hong Kong), and mining industry crushing service provider, Mineral Resources Ltd. (Australia). The largest detractor from performance was online gambling company Kindred Group Plc (Sweden). Additional top detractors included insurance group, ASR Nederland NV (Netherlands), steel & iron distribution company, EVRAZ Plc (United Kingdom), rubber products company, Kossan Rubber Industries Bhd. (Malaysia), and forest products company, Canfor (Canada).

Investment outlook

Though we analyze many different stock selection factors in our alpha model, value factors receive the largest weight on average. As of June 30, the Small Cap Growth Index traded at a 23.5x forward price-to-earnings multiple compared to 13.1x for the Small Cap Value Index, a 79% premium. This stands just a shade below the all-time high premium of 83% at the end of 2020. Especially following value’s poor performance in June, we believe there is far more “catching up” to come.

While value receives the largest weight on average, the sheer breadth of the international small cap universe means that the typical tradeoffs in portfolio characteristics do not necessarily apply. In addition to value, we look for favorable growth, momentum, and quality characteristics. We believe that, at many points in time, our portfolio has exhibited more attractive metrics relative to the Index across all factor categories simultaneously.

International smaller cap equities have historically exhibited greater valuation dispersion than larger cap equities on both a forward-earnings-yield basis and a price-to-book value basis, indicating more information content in valuation ratios for these equities. In addition to exhibiting greater valuation dispersion, small caps exhibit a higher long-term EPS growth trend. In the near-term, FY1 and FY2 estimates show expected earnings growth of 22% for the MSCI ACWI ex USA Small Cap Index vs. 9%for the MSCI ACWI ex USA Large Cap Index, following stronger small cap projected earnings growth from FY0 to FY1 as well.

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
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: