Seeking value primarily in the non-US developed markets

The Fund invests primarily in common stocks of companies in developed countries outside the US. Normally, the Fund invests at least 80% of its total assets in stocks of companies in a number of foreign countries and invests the majority of its total assets in companies that pay dividends or repurchase their shares. The Fund may invest up to 15% of its total assets in companies in emerging (less developed) markets.

YTD Return*
-15.04%
Nav*
$13.27, -0.11
Inception
October 26, 2001
Cusip
14949P208
Benchmark
MSCI EAFE
Minimum Investment
$1,000,000
Sales Charge
None
Net Expense Ratio
0.85%
Gross Expense Ratio
0.90%
*As of October 21, 2020
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Strategy overview

The portfolio managers discuss our International Value strategy.

Portfolio managers

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

Performance

QTD YTD 1 year3 years5 years10 years Since inception
Fund 1.0%-17.2%-7.8%-5.2%1.2%3.4%5.8%
MSCI EAFE 4.9%-6.7%0.9%1.1%5.8%5.1%5.8%
QTD YTD 1 year3 years5 years10 years Since inception
Fund 1.0%-17.2%-7.8%-5.2%1.2%3.4%5.8%
MSCI EAFE 4.9%-6.7%0.9%1.1%5.8%5.1%5.8%
QTD YTD 1 year3 years5 years10 years Since inception
Fund 1.0%-17.2%-7.8%-5.2%1.2%3.4%5.8%
MSCI EAFE 4.9%-6.7%0.9%1.1%5.8%5.1%5.8%
QTD YTD 1 year3 years5 years10 years Since inception
Fund 1.0%-17.2%-7.8%-5.2%1.2%3.4%5.8%
MSCI EAFE 4.9%-6.7%0.9%1.1%5.8%5.1%5.8%
201920182017201620152014201320122011201020092008200720062005200420032002
Fund 20.1%-18.6%27.2%0.4%-3.0%-6.2%24.2%24.5%-10.6%12.3%32.3%-41.9%7.9%26.1%8.1%26.6%45.9%-10.9%
MSCI EAFE 22.7%-13.4%25.6%1.5%-0.4%-4.5%23.3%17.9%-11.7%8.2%32.5%-43.1%11.6%26.9%14.0%20.7%39.2%-15.7%
Fund
MSCI EAFE
201920182017201620152014201320122011201020092008200720062005200420032002
20.1%-18.6%27.2%0.4%-3.0%-6.2%24.2%24.5%-10.6%12.3%32.3%-41.9%7.9%26.1%8.1%26.6%45.9%-10.9%
22.7%-13.4%25.6%1.5%-0.4%-4.5%23.3%17.9%-11.7%8.2%32.5%-43.1%11.6%26.9%14.0%20.7%39.2%-15.7%

Portfolio (as of September 30, 2020)

Benchmark: MSCI EAFE
Asset Allocation
Fund
Stocks 99.1%
Cash 0.9%
Fund Characteristics
Fund Benchmark
No. of holdings 64 902
Weighted avg. market cap (US $MM) $55,065 $54,610
FY2 price/earnings 11.7 15.4
Price/book value 1.1 1.6
Net assets $4,582,298,851 -
TOP 10 HOLDINGS
Security Country Percent
Volkswagen AG Germany 4.4%
BASF SE Germany 3.7%
UniCredit S.p.A. Italy 3.6%
Samsung Electronics Co., Ltd. South Korea 3.3%
ING Groep NV Netherlands 3.1%
FANUC Corp. Japan 3.0%
Novartis AG Switzerland 3.0%
Takeda Pharmaceutical Co., Ltd. Japan 2.8%
ABB Ltd. Switzerland 2.7%
British American Tobacco plc United Kingdom 2.6%

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.

Holdings are subject to change.

SECTOR WEIGHTS
Sector Fund Benchmark
Financials 22.9% 15.1%
Industrials 22.2% 15.2%
Information Technology 12.7% 8.6%
Health Care 10.7% 14.4%
Consumer Discretionary 10.0% 11.9%
Materials 8.0% 7.6%
Consumer Staples 6.2% 11.9%
Energy 2.5% 2.8%
Utilities 2.1% 4.0%
Communication Services 1.8% 5.5%
Real Estate 0.0% 3.1%
TOP 10 COUNTRIES
Country Fund Benchmark
Germany 19.3% 9.6%
United Kingdom 15.1% 13.3%
France 14.2% 10.7%
Switzerland 10.9% 10.4%
Japan 10.0% 25.8%
Spain 6.0% 2.2%
Netherlands 5.9% 4.4%
Italy 5.1% 2.2%
South Korea 4.6% 0.0%
China 2.3% 0.0%
Regional Allocation
  • Europe – other 79.8%
  • Pacific 10.8%
  • Emerging Asia 6.9%
  • North America 1.0%
  • Emerging Latin America 0.6%

Commentary (As of September 30, 2020)

Highlights

  • Equities declined in September—the first month of negative returns since the market shock in March at the onset of the coronavirus pandemic. Value stocks underperformed growth stocks.
  • Until a vaccine, therapies, and widespread testing are available and economies fully reopen, we believe further stimulus packages will be needed to bolster the recovery in most regions.
  • In our view, the most compelling companies in the value universe are those engaged in operational restructuring, using the disruption of the pandemic to lean out their cost bases and shed non-core assets. This ensuing boost in operating leverage may position these forward-thinkers well for an upturn in revenues as recovery develops.

Portfolio attribution

Causeway International Value Fund (“Fund”) underperformed the Index during the month, due primarily to stock selection. Fund holdings in the capital goods, transportation, retailing, and pharmaceuticals & biotechnology industry groups, along with an overweight position in the banks industry group, detracted from performance relative to the Index. Holdings in the technology hardware & equipment, food beverage & tobacco, and materials industry groups, as well as an overweight position in the semiconductors & semi equipment industry group and an underweight position in the diversified financials industry group, offset some of the underperformance versus the Index. The largest detractor from performance was jet engine manufacturer, Rolls-Royce Plc (United Kingdom). Additional notable detractors included four banking & financial services companies: UniCredit S.p.A. (Italy), BNP Paribas SA (France), ING Groep NV (Netherlands), and Barclays Plc (United Kingdom). The top contributor to return was electronic equipment manufacturer, Samsung Electronics Co., Ltd. (South Korea). Other notable contributors included robotics manufacturer, FANUC Corp. (Japan), electronic components manufacturer, Murata Manufacturing Co. Ltd. (Japan), British American Tobacco Plc (United Kingdom), and luxury goods manufacturer & retailer, Compagnie Financiere Richemont (Switzerland).

Investment outlook

This year’s dominance of growth and momentum stocks over value stocks has surpassed the peak reached during the technology, media, and telecommunications (“TMT”) bubble in the early 2000s. The biggest winners in this bifurcated market are companies exhibiting top-line growth, regardless of whether this translates to near-term profitability.The trends of passive investing and algorithmic trading have exacerbated a concentration of performance—the bulk of equity returns in a number of region-based indices during the year-to-date period derive from just five companies, with the effect most pronounced in the US and emerging markets. Growth stock valuations are so stretched relative to history that we believe any abatement of pandemic-related uncertainty—namely efficacious vaccines or therapies that facilitate economic reopening—could spark a shift in investor sentiment towards economically cyclical companies. We believe that the cyclical component of value should also benefit from further fiscal spending by Western governments in infrastructure. In our view, the most compelling companies in the value universe are those engaged in operational restructuring, using the disruption of the pandemic to lean out their cost bases and shed non-core assets. This ensuing boost in operating leverage may position these forward-thinkers well for an upturn in revenues as recovery develops. We continue to engage with portfolio company management teams to hold them accountable to meet their earnings and cash flow goals. For example, in a lower-for-longer interest rate environment, we expect certain bank stock managements to grow fee-based and trading-based franchises that are not reliant on a rise in rates. While much of our fundamental research is dominated by cyclical stocks, we also seek opportunities in defensive sectors that have also been impacted by the coronavirus lockdowns. The considerable undervaluation in stocks across a range of industries has led us to experience far more investment opportunities than we have capital to deploy. We believe that, by mid-2021, the earnings, cash flow, and dividend prognosis for many of these undervalued stocks should improve demonstrably. Markets anticipate events well in advance. In our view, this should translate into better performance, perhaps amplified by valuation multiple upgrades as confidence in these companies rises post-pandemic.

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. A company may reduce or eliminate its dividend, causing losses to a fund. 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
2019 $0.4953 $0.0497 $0.1781
2018 $0.3750 $0.0000 $0.1083
2017 $0.3165 $0.0000 $0.0000
2016 $0.2901 $0.0000 $0.0000
2015 $0.2750 $0.0000 $0.0000
2014 $0.3788 $0.0000 $0.0000
2013 $0.1645 $0.0000 $0.0000
2012 $0.2757 $0.0000 $0.0000
2011 $0.3813 $0.0000 $0.0000
2010 $0.1939 $0.0000 $0.0000
2009 $0.1875 $0.0000 $0.0000
2008 $0.5135 $0.0000 $0.4558
2007 $0.4536 $0.6606 $3.3443
2006 $0.2289 $0.0222 $0.8650
2005 $0.3718 $0.1962 $0.3833
2004 $0.2647 $0.1379 $0.3093
2003 $0.1813 $0.0037 $0.0550
2002 $0.1196 $0.0000 $0.0000
2001 $0.0000 $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

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