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. Through rigorous, bottom-up company analysis, we seek to identify undervalued stocks with upside potential. The investment process comprises three stages: quantitative screening and initial analysis, fundamental research and portfolio construction.
- Benchmark
- MSCI ACWI
- Inception
- September 30, 2001
Portfolio managers
Brian Woonhyung Cho
Mr. Cho is a fundamental portfolio manager at Causeway. He joined the firm in September 2013 and has been a portfolio manager since January 2021. His current responsibilities include coverage of companies in the technology and communication services sectors.
From 2011 to 2013, Mr. Cho was a vice president at BofA-ML Equity Research, covering the IT hardware and supply chain sector. From 2007 to 2011, he worked as an associate at Goldman Sachs Equity Research covering the same sector. From 2006 to 2007, he worked as an analyst at Morgan Stanley Equity Research covering the internet and interactive software sector. Prior to that, he worked as an analyst at PA Consulting Group in the financial services practice.
Mr. Cho earned a BSc in management science from Massachusetts Institute of Technology.
Read our interview with Brian about value investing in the technology sector.
Jonathan Eng
Mr. Eng is a director and fundamental portfolio manager at Causeway and is responsible for investment research in the global consumer discretionary, industrials, and energy sectors. He joined the firm in July 2001 and has been a portfolio manager since February 2002.
From 1997 to 2001, Mr. Eng was an equity research associate for the Hotchkis and Wiley division of Merrill Lynch Investment Managers (HW-MLIM). In 1996, Mr. Eng worked as a summer research associate for Hotchkis and Wiley, performing U.K. and European equity research. From 1993 to 1995, Mr. Eng analyzed merger and acquisition candidates at Slusser Associates. From 1990 to 1993, Mr. Eng worked as a middle market corporate lender for Bank of Boston.
Mr. Eng earned a BA in history and economics from Brandeis University and an MBA from the UCLA Anderson Graduate School of Management
Harry Hartford
Head of Fundamental Research
Fundamental Portfolio Manager
Mr. Hartford is the president at Causeway, fundamental portfolio manager, and head of fundamental research. Mr. Hartford co-founded the firm in June 2001 and is a member of the operating committee.
From 1996 to June 2001, Mr. Hartford was a managing director for the Hotchkis & Wiley division of Merrill Lynch Investment Managers (HW-MLIM) and co-head of the firm's HW-MLIM international and global value team. From 1994 to 1996, Mr. Hartford was a portfolio manager for Hotchkis and Wiley. From 1984 to 1994, Mr. Hartford was with The Investment Bank of Ireland, where he gained ten years’ experience in both international and global equity management. During this time, Mr. Hartford also managed the Irish Investment Fund, a closed-end country fund quoted on the NYSE. Before entering the investment business, Mr. Hartford lectured in micro and macroeconomics at Oklahoma State University.
Mr. Hartford earned a BA, with honors, in economics from the University of Dublin, Trinity College, an MSc in economics from Oklahoma State University, and is a Phi Kappa Phi member. Mr. Hartford is a member of The Ireland Funds America Board of Directors.
Sarah Ketterer
Fundamental Portfolio Manager
Ms. Ketterer is the chief executive officer at Causeway, fundamental portfolio manager, and is responsible for investment research across all sectors. Ms. Ketterer co-founded the firm in June 2001 and is a member of the operating committee.
From 1996 to 2001, Ms. Ketterer worked for the Hotchkis & Wiley division of Merrill Lynch Investment Managers (HW-MLIM). At HW-MLIM, she was a managing director and co-head of the firm's HW-MLIM International and Global Value team. From 1990 to 1996, Ms. Ketterer was a portfolio manager at Hotchkis & Wiley, where she founded the International Equity product.
Ms. Ketterer earned a BA in economics and political science from Stanford University and an MBA from the Tuck School, Dartmouth College. Ms. Ketterer serves on the Stanford University Board of Trustees, is a member of UT Southwestern President’s Advisory Board, is on the advisory board of Portal Schools, and is a supporter of Girls Who Invest. She previously served as a board member and chair of the Los Angeles World Affairs Council and Town Hall and chair of the investment committee of the Music Center Foundation.
Ellen Lee
Ms. Lee is a director and fundamental portfolio manager at Causeway and is responsible for investment research in the global consumer and utilities sectors. Prior to the current role, she also covered transportation and autos. She joined the firm in August 2007 and has been a portfolio manager since January 2015.
During the summer of 2006, Ms. Lee interned at Tiger Asia, a long short equity hedge fund focused on China, Japan, and Korea. From 2001 to 2004, Ms. Lee was an associate in the mergers and acquisitions division of Credit Suisse First Boston in Seoul, where she advised Korean corporates and multinational corporations. From 1999 to 2000, she was an analyst in the mergers and acquisitions division of Credit Suisse First Boston in Hong Kong.
Ms. Lee earned a BA in business administration from Seoul National University and an MBA from the Stanford Graduate School of Business. She currently serves on the audit and investment committee at the Center for Early Education in West Hollywood.
Read our profile of Ellen .
Conor Muldoon, CFA
Mr. Muldoon is a director and fundamental portfolio manager at Causeway and is responsible for investment research in the global financials and materials sectors. He joined the firm in August 2003 and has been a portfolio manager since September 2010. He is also a member of the operating committee.
From 1995 to 2003, Mr. Muldoon was an investment consultant for Fidelity Investments where he served as a liaison between institutional clients and investment managers within Fidelity. He was responsible for communicating current information on the financial markets, the economy and investment performance.
Mr. Muldoon earned a BSc and an MA from the University of Dublin, Trinity College and an MBA, with high honors, from the University of Chicago. Mr. Muldoon was inducted into the Beta Gamma Sigma honors society and is also a CFA charterholder.
Steven Nguyen, CFA
Mr. Nguyen is a director and fundamental portfolio manager at Causeway and is responsible for investment research in utilities & renewables, healthcare, and business services. He joined the firm in April 2012 and has been a portfolio manager since January 2019.
From 2006 to 2012, Mr. Nguyen was a senior credit analyst at Bradford & Marzec covering high yield and investment grade companies in the telecommunication services, cable, media, gaming, insurance, and REIT industries. From 2003 to 2006, Mr. Nguyen was a credit analyst/portfolio manager in the corporate bond department of Allegiance Capital.
Mr. Nguyen earned a BA in business economics from Brown University and an MBA, with honors, from the UCLA Anderson School of Management. Mr. Nguyen was the president of the Anderson Student Asset Management association. Mr. Nguyen is a CFA charterholder and has completed the CFA Institute Certificate in ESG Investing program.
Alessandro Valentini, CFA
Mr. Valentini is a director and fundamental portfolio manager at Causeway and is responsible for investment research in the global healthcare, financials, and real estate sectors. He joined the firm in July 2006 and has been a portfolio manager since April 2013.
During the summer of 2005, Mr. Valentini worked as a research analyst at Thornburg Investment Management, where he conducted fundamental research for the International Value Fund and the Value Fund, focusing on the European telecommunication and Canadian oil sectors. From 2000 to 2004, Mr. Valentini worked as a financial analyst at Goldman Sachs in the European equities research-sales division in New York.
Mr. Valentini earned an MBA from Columbia Business School, with honors, an MA in economics from Georgetown University and a BS, magna cum laude, from Georgetown University. Mr. Valentini was inducted into the Beta Gamma Sigma honors society, is a Phi Beta Kappa member, and is a CFA charterholder.
Performance
Account returns for the Causeway Global Value Equity Composite (“Global Composite”) are calculated daily. Monthly account returns are calculated by geometrically linking the daily returns. The return of the Global Composite is calculated monthly by weighting monthly account returns by the beginning market values. Valuations and returns are computed and stated in US dollars. Returns include the reinvestment of interest, dividends and any capital gains. Returns are calculated gross of withholding taxes on dividends, interest income, and capital gains. Past performance is no guarantee of future performance. Gross-of-fees returns are presented before management, performance and custody fees but after trading expenses. Net-of-fees returns are presented after the deduction of actual management fees, performance-based fees, and all trading expenses, but before custody fees. Causeway’s basic management fee schedules are described in its firm brochure pursuant to Part 2 of Form ADV. A complete list and description of firm composites is available upon request. This information supplements the composite presentation at Composite Performance. Effective October 1, 2018, the Global Value Equity Composite’s benchmark changed from the MSCI World Index to the MSCI ACWI Index. The MSCI ACWI Index is a free float-adjusted market capitalization index, designed to measure the equity market performance of developed and emerging markets, consisting of 23 developed country indices, including the U.S, and 24 emerging market country indices. Prior to October 1, 2018, the benchmark index for the Global Value Equity Composite was the MSCI World Index. This Index is a free float-adjusted market capitalization weighted index, designed to measure developed market equity performance, consisting of 23 developed country indices, including the US The Indices are gross of withholding taxes, assume reinvestment of dividends and capital gains, and assume no management, custody, transaction or other expenses. It is not possible to invest directly in an index. Investing involves risk including loss of principal. In addition to the normal risks associated with investing, international investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles or from economic or political instability in other nations. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume. Diversification does not prevent all investment losses.
Portfolio (as of October 31, 2023)
Asset Allocation
| Strategy | |
|---|---|
| Stocks | 99.3% |
| Cash | 0.7% |
Strategy Characteristics
| Strategy | Benchmark | |
|---|---|---|
| No. of holdings | 55 | |
| Weighted avg. market cap (US $MM) | $91,913 | $0 |
| FY2 price/earnings | 11.3 | 0.0 |
| Price/book value | 1.6 | 0.0 |
| Dividend yield (%) | 2.3 | 0.0 |
TOP 10 HOLDINGS
| Security | Country | Percent |
|---|---|---|
| Rolls-Royce Holdings Plc | United Kingdom | 5.1% |
| Samsung Electronics Co., Ltd. | South Korea | 4.2% |
| The Walt Disney Co. | United States | 3.0% |
| Alphabet, Inc. | United States | 2.9% |
| Fiserv, Inc. | United States | 2.5% |
| Genpact Ltd. | United States | 2.5% |
| Shell | United Kingdom | 2.4% |
| SAP SE | Germany | 2.4% |
| Murata Manufacturing Co. Ltd. | Japan | 2.4% |
| Barclays PLC | United Kingdom | 2.4% |
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 Technology | 22.9% | 22.1% |
| Health Care | 13.7% | 11.7% |
| Industrials | 11.5% | 10.3% |
| Financials | 11.5% | 15.7% |
| Consumer Staples | 8.9% | 7.2% |
| Communication Services | 8.6% | 7.5% |
| Materials | 6.5% | 4.5% |
| Energy | 6.1% | 5.2% |
| Utilities | 4.5% | 2.7% |
| Consumer Discretionary | 3.5% | 11.0% |
| Real Estate | 1.6% | 2.3% |
TOP 10 COUNTRIES
| Country | Strategy | Benchmark |
|---|---|---|
| United States | 45.6% | 62.6% |
| United Kingdom | 19.4% | 3.7% |
| France | 8.7% | 2.9% |
| South Korea | 5.7% | 1.3% |
| Japan | 4.3% | 5.5% |
| Italy | 3.7% | 0.6% |
| Netherlands | 3.5% | 1.1% |
| Germany | 3.3% | 2.0% |
| Switzerland | 2.2% | 2.4% |
| Spain | 1.3% | 0.6% |
Regional Allocation
- North America 45.5%
- Europe – other 42.0%
- Pacific 10.1%
- Emerging Asia 1.1%
- Emerging Latin America 0.6%
Commentary (As of October 31, 2023)
Highlights
Portfolio attribution
The Portfolio underperformed the Index during the month, due primarily to stock selection. Portfolio holdings in the capital goods, technology hardware & equipment, and software & services industry groups detracted from relative performance. Holdings in the energy and utilities industry groups, as well as an underweight position in the automobiles & components industry group, offset some of the underperformance compared to the Index. The largest detractor was rolling stock, signaling, & services provider for the rail industry, Alstom SA (France). Additional notable detractors included banking & financial services company, Barclays PLC (United Kingdom), and pharmaceutical products & services company, Avantor, Inc.(United States). The top contributor to return was property & casualty insurer, The Allstate Corp. (United States). Other notable contributors included health food & beverage producer, Danone (France), and clinical laboratory, Quest Diagnostics, Inc. (United States).
Economic outlook
Excluding Australia, major Developed Market central banks, including the US Federal Reserve Bank, The Bank of England, The European Central Bank and The Bank of Japan, voted to leave rates unchanged at their most recent meetings. The global manufacturing output PMI slipped 0.9 points to 48.9 last month, a level consistent with a 0.5% annual rate contraction in factory output. The standout positive in the October PMIs was the US, with a rise in both the output (+0.5 points) and new orders (+1.4 points) indexes. However, China stepped down and the Euro area PMI remains stuck at a recessionary level.
According to JP Morgan, mainland China’s global PMI slipped to 48.8 likely reflecting the ongoing drags from the real estate sector and domestic demand weakness and raising questions about the resilience of the end-of-third quarter momentum.
Investment outlook
The era of cheap money is behind us, and at a minimum we are entering uncharted territory of public sector deficits and rising debt to GDP. We are careful to avoid making investment decisions based on the interest rate regime of the past 15-20 years. We expect an era of higher long term interest rates, even if global economic activity falters. Large budget deficits an overall public sector debt levels, the capital demands required to fund the transition to a low carbon global economy, along with the costs of ongoing armed conflict and aging demographics in the developed countries plus China, suggest that structurally higher long term interest rates will be required to attract capital.
The "higher for longer" theme, coupled with uncertainty about the path of economic activity, will likely result in continued volatility in global equity markets. Causeway's commitment to detailed and disciplined fundamental research aims to position the team well to identify mispriced securities in this dynamic environment on behalf of our clients.As central banks continue their efforts to control inflation, this will likely lead to an environment of greater equity volatility than in the past 10-15 years. We believe that active management produces superior performance versus passive management in volatile markets. And a greater focus on valuation now that money is not free should favor managers employing a disciplined, value oriented, long term investment approach. Though US stocks—with their overall higher returns on capital—generally deserve to trade at a premium to their non-US peers, the current valuation gaps far exceed long term averages.
Also, the major US indices have become relatively concentrated in a small number of expensive mega-cap stocks. For a passive investor mimicking a market capitalization weighted US index, this creates a level of concentration risk that should be of concern. Using our measure of predicted volatility, broad-based developed market value indices are currently less volatile than growth indices. At a minimum, investors should demand a higher return for owning riskier growth stocks and this is occurring right at the point when long duration (growth) equities are under strain from higher long term interest rates. Relative to history, the portfolio’s valuation characteristics indicate upside potential that, in our view, more than justifies the risk. We anticipate the portfolio’s below benchmark return on equity (ROE) will continue to improve as the earnings of some of the bigger holdings progress through the end of 2024. Our investment teams’ demands of company management—holding managements accountable to improve earnings and cash flow—should help drive portfolio ROE higher in the years ahead.
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 [email protected].