Seeking value primarily in developed markets worldwide

The global value portfolio is constructed from an equity universe composed of companies with market capitalizations typically greater than $1 billion located throughout the global developed and emerging market countries. The investment process comprises three stages: quantitative screening and initial analysis, fundamental research and portfolio construction.

Benchmark
MSCI ACWI
Inception
September 30, 2001

Strategy overview

The portfolio managers discuss our Global 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
Fundamental Portfolio Manager

Performance

QTDYTD1 year3 years5 years10 yearsSince inception
Strategy (gross)-1.2%10.7%-4.6%7.7%4.3%10.9%10.3%
Strategy (net)-1.3%10.4%-5.0%7.2%3.9%10.3%9.6%
MSCI ACWI0.3%17.0%3.5%10.8%7.1%9.8%7.6%
QTDYTD1 year3 years5 years10 yearsSince inception
Strategy (gross)-1.2%10.7%-4.6%7.7%4.3%10.9%10.3%
Strategy (net)-1.3%10.4%-5.0%7.2%3.9%10.3%9.6%
MSCI ACWI0.3%17.0%3.5%10.8%7.1%9.8%7.6%
QTDYTD1 year3 years5 years10 yearsSince inception
Strategy (gross)0.6%12.1%0.7%9.7%4.4%12.4%10.4%
Strategy (net)0.5%11.8%0.3%9.2%3.9%11.8%9.7%
MSCI ACWI3.8%16.6%6.3%12.2%6.7%10.7%7.7%
QTDYTD1 year3 years5 years10 yearsSince inception
Strategy (gross)0.6%12.1%0.7%9.7%4.4%12.4%10.4%
Strategy (net)0.5%11.8%0.3%9.2%3.9%11.8%9.7%
MSCI ACWI3.8%16.6%6.3%12.2%6.7%10.7%7.7%
Fund2018201720162015201420132012201120102009
Strategy (gross)-10.2%19.2%8.8%-5.3%6.5%30.6%17.8%-0.2%19.8%41.7%
Strategy (net)-10.1%19.2%8.8%-5.4%6.5%30.7%17.7%0.0%0.0%0.0%
MSCI ACWI-11.1%17.9%7.7%-6.3%5.4%29.2%16.5%-1.3%18.5%40.1%
Strategy (gross)
Strategy (net)
MSCI ACWI
2018201720162015201420132012201120102009
-10.2%19.2%8.8%-5.3%6.5%30.6%17.8%-0.2%19.8%41.7%
-10.1%19.2%8.8%-5.4%6.5%30.7%17.7%0.0%0.0%0.0%
-11.1%17.9%7.7%-6.3%5.4%29.2%16.5%-1.3%18.5%40.1%

Portfolio (as of July 31, 2019)

Benchmark: MSCI ACWI
Asset Allocation
Strategy
Stocks99.1%
Cash0.9%
Strategy Characteristics
StrategyBenchmark
No. of holdings 51 2843
Weighted avg. market cap (US $MM)$76,074$141,514
FY2 price/earnings11.014.6
Price/book value1.42.3
Dividend yield (%)3.42.5
TOP 10 HOLDINGS
Security Country Percent
Volkswagen AGGermany3.9%
Takeda Pharmaceutical Co., Ltd.Japan3.3%
BASF SEGermany3.3%
UniCredit S.p.A.Italy3.2%
Sabre Corp.United States3.2%
China Mobile Ltd.China3.0%
Alaska Air Group, Inc.United States3.0%
British American Tobacco plcUnited Kingdom2.8%
AstraZeneca PlcUnited Kingdom2.7%
ABB Ltd.Switzerland2.7%

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.

Holdings are subject to change.

SECTOR WEIGHTS
Sector Strategy Benchmark
Information Technology17.0%16.4%
Financials14.7%16.8%
Industrials14.2%10.4%
Communication Services12.1%8.9%
Health Care11.8%11.3%
Energy8.6%5.7%
Materials7.3%4.8%
Consumer Discretionary4.4%10.9%
Consumer Staples4.3%8.4%
Utilities4.0%3.3%
Real Estate0.8%3.2%
TOP 10 COUNTRIES
Country Strategy Benchmark
United States37.4%55.9%
United Kingdom19.4%4.9%
Japan11.6%7.1%
Germany7.8%2.5%
China5.3%3.7%
South Korea4.5%1.4%
Switzerland4.3%2.8%
Italy3.2%0.7%
France2.0%3.3%
Netherlands1.8%1.1%
Regional Allocation
  • North America 38.8%
  • Europe – other 38.6%
  • Pacific 11.6%
  • Emerging Asia 9.9%
  • Emerging Europe, Middle East, Africa 0.3%

Commentary (As of June 30, 2019)

Highlights

  • Bolstered by central bank dovishness, developed equity markets rallied in June and furthered year-to-date gains.

Portfolio attribution

The Portfolio outperformed the Index during the month, due primarily to stock selection. Portfolio holdings in the software & services, materials, banks, and energy industry groups, as well as an underweight position in the real estate industry group, contributed to relative performance. Holdings in the telecommunication services, retailing, and health care equipment & services industry groups, along with an underweight position in the semiconductors & semi equipment and consumer durables & apparel industry groups, detracted from relative performance. The top contributor to return was oil refiner, Marathon Petroleum Corp. (United States). Other notable contributors included automobile manufacturer, Volkswagen AG (Germany), electronic equipment manufacturer, Samsung Electronics Co., Ltd. (South Korea), industrial gas company, Linde Plc (United States), and global financial services giant, Citigroup, Inc. (United States). The largest detractor was oil & natural gas producer, Encana (Canada). Additional notable detractors included jet engine manufacturer, Rolls-Royce Holdings Plc (United Kingdom), specialty retail jeweler, Signet Group (United States), major passenger railway operator, East Japan Railway Co. (Japan), and telecommunication services provider, KDDI Corp. (Japan).

Investment outlook

The 2019 G20 summit struck a tone of geopolitical fragmentation as major relationships worldwide shift and nationalistic sentiment increases. Though we do not believe globalization will reverse, global equity markets appear to disagree with us. Economically defensive stocks have generally reached, in our view, extreme valuation highs, and economically sensitive cyclical stocks have lagged. The decline in bond yields in major economies globally has also dampened investor enthusiasm for cyclicality, and favored long duration growth stocks. When the price of money (aka borrowing) falls to such low levels, investors typically get more desperate to buy growth at increasingly higher valuations. Can central banks, especially the Fed, prolong the post-2008 economic expansion by ultra-accommodative monetary policy? And if they cannot, how deep a recession would the US and other economies endure? Rather than wait for an economic cycle turn that may or may not occur, we seek to build an “all weather” portfolio not entirely dependent on a return of value's dominance over growth. Our research focuses on companies with managements implementing operational improvements that translate to greater efficiency and expansion potential. We believe this operational “self-help” should deliver an improvement in earnings and free cash flow growth. We seek companies returning excess capital to shareholders so that we can reinvest those proceeds. Income (via dividends and share buybacks) has historically been an important component of total return in any interest rate environment.

 

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 portfolio holdings and characteristics are subject to change. There is no guarantee that any forecasts made will come to pass. The securities identified and described above 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. Past performance does not guarantee future results. For a description of our performance attribution methodology, or to obtain a list showing every holding's contribution to the overall account's performance during the quarter, please contact our product manager, Kevin Moutes, at 310-231-6116 or moutes@causewaycap.com.