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*
$13.18, +0.10
October 20, 2014
MSCI ACWI ex USA Small Cap
Minimum Investment
Sales Charge
Net Expense Ratio
Gross Expense Ratio
*As of October 15, 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


QTD YTD 1 year3 years5 years Since inception
Fund -5.3%15.8%30.3%5.3%8.1%7.4%
MSCI ACWI ex USA Small Cap 0.1%12.6%33.6%10.8%10.7%9.4%
QTD YTD 1 year3 years5 years Since inception
Fund -5.3%15.8%30.3%5.3%8.1%7.4%
MSCI ACWI ex USA Small Cap 0.1%12.6%33.6%10.8%10.7%9.4%
QTD YTD 1 year3 years5 years Since inception
Fund -5.3%15.8%30.3%5.3%7.4%
MSCI ACWI ex USA Small Cap 0.1%12.6%33.6%10.8%9.4%
QTD YTD 1 year3 years5 years Since inception
Fund -5.3%15.8%30.3%5.3%7.4%
MSCI ACWI ex USA Small Cap 0.1%12.6%33.6%10.8%9.4%
Fund 2.5%18.5%-21.3%34.5%3.1%4.4%
MSCI ACWI ex USA Small Cap 14.7%22.9%-17.9%32.1%4.3%3.0%
MSCI ACWI ex USA Small Cap

Portfolio (as of September 30, 2021)

Benchmark: MSCI ACWI ex USA Small Cap
Asset Allocation
Stocks 100.1%
Cash -0.1%
Fund Characteristics
Fund Benchmark
No. of holdings 144 4391
Weighted avg. market cap (US $MM) $2,071 $2,234
FY2 price/earnings 7.4 14.2
Price/book value 1.1 1.6
Net assets $9,007,712 -
Security Country Active weight*
ASR Nederland NV Netherlands 2.0%
Ssab Svenskt Stal Sweden 1.9%
Canfor Canada 1.8%
EVRAZ Plc United Kingdom 1.8%
Interfor Canada 1.8%
Gigabyte Technology Co., Ltd. Taiwan 1.7%
Power Finance Corp. Ltd. India 1.7%
SITC International Holdings Co., Ltd. Hong Kong 1.7%
Kawasaki Kisen Kaisha, Ltd. Japan 1.7%
SHIMAMURA Co., Ltd. Japan 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 Fund Benchmark
Industrials 20.3% 21.2%
Consumer Discretionary 15.8% 12.2%
Financials 15.2% 10.6%
Information Technology 14.3% 11.9%
Materials 11.4% 10.6%
Real Estate 6.0% 10.3%
Health Care 4.1% 7.4%
Communication Services 3.3% 4.2%
Energy 3.2% 2.7%
Consumer Staples 3.0% 5.6%
Equity Funds 2.2% 0.0%
Utilities 1.4% 3.3%
Country Fund Benchmark
Japan 19.6% 19.9%
South Korea 8.9% 4.3%
Taiwan 8.6% 5.2%
United Kingdom 7.9% 11.8%
Canada 7.6% 6.5%
Sweden 6.5% 5.1%
India 5.1% 5.0%
Netherlands 4.8% 1.7%
Australia 4.2% 6.2%
Hong Kong 3.6% 1.2%
Regional Allocation
  • Europe – other 29.8%
  • Pacific 29.0%
  • Emerging Asia 28.6%
  • North America 7.6%
  • Multi Region All Country 2.2%
  • Emerging Latin America 1.3%
  • Developed Middle East 0.9%
  • Emerging Europe, Middle East, Africa 0.8%

Commentary (As of September 30, 2021)


  • Equities declined in September amid concerns over a moderation in economic growth rates, supply chain disruptions, and rising inflation.
  • Global economic data in September revealed a modest loss of momentum in the recovery, including headwinds from China. Virtually all companies we queried reported rising input costs across geographies as supply chain disruptions exacerbated inflationary pressures.
  • We believe that many of the, in our view, world class companies in aviation, travel, leisure, and hospitality that we added to our clients’ portfolios in prior months should continue to outperform markets. With a turnaround in cash flows, many of these companies should be well positioned for a return to normalcy.

Portfolio attribution

The Causeway International Small Cap Fund (“Fund”) underperformed 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. Our value factors were flat in the month of September, though they posted positive returns in Q3 thanks to a strong July. Value has also been our best-performing alpha factor group over the last twelve months. The strategy’s earnings growth alpha factors delivered positive returns in September and Q3, and they are the best-performing factor group year-to-date in 2021. Our technical factors also delivered positive returns in September and the full quarter. Our competitive strength factor category delivered negative returns for the month and for Q3 as a whole. These factors have a quality tilt to them but offer good diversification to other bottom-up factors, particularly value. Our macroeconomic factors delivered negative returns in September and Q3 as countries exhibiting weaker metrics (such as Indonesia and Poland) outperformed those with relatively superior macroeconomic characteristics (such as Taiwan and China). However, returns to our country aggregate factors were positive for the month and Q3. All factor group returns remain positive from inception of the Fund (10/20/14) to the end of September.

Investment outlook

Though we analyze many different stock selection factors in our alpha model, value factors receive the largest weight on average. As of September 30, the Small Cap Growth Index traded at a 21.7x forward price-to-earnings multiple compared to 12.1x for the Small Cap Value Index, an 80% premium. At 12.1x forward earnings, the Value Index is also trading below its 10-year average which makes it an exception in today’s high-valuation backdrop.

Based on the Federal Open Market Committee’s (FOMC’s) September policy statement, it seems increasingly likely that the U.S. Federal Reserve (“Fed”) will begin tapering its bond purchases later this year. The U.S. 10-year has recently moved back up above 1.5%, and higher interest rates should continue to pressure growth stocks. Coupled with the current valuation mismatch, we believe there is far more “catching up” to come for value stocks.

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.


Dividends Short-term capital gains Long-term capital gains
2020 $0.3870 $0.0000 $0.0000
2019 $0.4079 $0.0000 $0.0000
2018 $0.2903 $0.0000 $0.0000
2017 $0.3588 $0.2375 $0.4794
2016 $0.2619 $0.0000 $0.0000
2015 $0.2095 $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).


Fund information: