Combining our time-tested abilities in developed and emerging international markets

The Causeway International Opportunities strategy is a blend of Causeway’s best skills, combining our international value (bottom-up, fundamental, developed international markets, excluding the US) and emerging markets (quantitatively managed with a targeted tracking error of 5%) equity strategies. Tracking error is a measurement of dispersion from a benchmark index. Our quantitative research team developed a proprietary multi-factor model that measures the relative attractiveness of emerging markets, and guides the portfolio managers in tactically allocating between the developed and emerging portfolio segments.

June 30, 2007
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Strategy overview

The portfolio managers discuss our International Opportunities strategy.

Portfolio managers

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


QTD YTD 1 year3 years5 years10 years Since inception
Strategy (gross) -10.7%-15.7%-17.1%2.1%2.4%5.7%3.1%
Strategy (net) -10.8%-15.9%-17.4%1.7%2.0%5.3%2.7%
MSCI ACWI ex US -13.5%-18.2%-19.0%1.8%3.0%5.3%2.0%
QTD YTD 1 year3 years5 years10 years Since inception
Strategy (gross) -10.7%-15.7%-17.1%2.1%2.4%5.7%3.1%
Strategy (net) -10.8%-15.9%-17.4%1.7%2.0%5.3%2.7%
MSCI ACWI ex US -13.5%-18.2%-19.0%1.8%3.0%5.3%2.0%
QTD YTD 1 year3 years5 years10 years Since inception
Strategy (gross) -10.7%-15.7%-17.1%2.1%2.4%5.7%3.1%
Strategy (net) -10.8%-15.9%-17.4%1.7%2.0%5.3%2.7%
MSCI ACWI ex US -13.5%-18.2%-19.0%1.8%3.0%5.3%2.0%
QTD YTD 1 year3 years5 years10 years Since inception
Strategy (gross) -10.7%-15.7%-17.1%2.1%2.4%5.7%3.1%
Strategy (net) -10.8%-15.9%-17.4%1.7%2.0%5.3%2.7%
MSCI ACWI ex US -13.5%-18.2%-19.0%1.8%3.0%5.3%2.0%
Fund 20212020201920182017201620152014201320122011
Strategy (gross) 8.0%6.5%23.4%-17.9%31.8%1.9%-4.0%-3.9%22.2%26.0%-11.7%
Strategy (net) 7.6%6.1%22.9%-18.2%31.3%1.5%-4.4%-4.2%21.7%25.5%-12.0%
MSCI ACWI ex US 8.3%11.1%22.1%-13.8%27.8%5.0%-5.3%-3.4%15.8%17.4%-13.3%
Strategy (gross)
Strategy (net)

Portfolio (as of June 30, 2022)

Benchmark: MSCI ACWI ex US
Asset Allocation
Stocks 98.3%
Cash 1.7%
Strategy Characteristics
Strategy Benchmark
No. of holdings 196 2269
Weighted avg. market cap (US $MM) $62,524 $63,319
FY2 price/earnings 8.8 11.0
Price/book value 1.3 1.7
Dividend yield (%) 3.8 3.2
Security Country Percent
Rolls-Royce Holdings Plc United Kingdom 2.8%
UniCredit S.p.A. Italy 2.6%
FANUC Corp. Japan 2.4%
Prudential Plc United Kingdom 2.4%
Unilever United Kingdom 2.2%
Amadeus IT Group SA Spain 2.2%
Novartis AG Switzerland 2.2%
Enel SpA Italy 2.2%
SAP SE Germany 2.1%
Reckitt Benckiser Group United Kingdom 2.1%

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 Strategy Benchmark
Financials 20.9% 20.3%
Industrials 16.4% 11.8%
Health Care 13.4% 9.8%
Information Technology 11.8% 11.0%
Consumer Staples 10.4% 8.9%
Consumer Discretionary 6.2% 11.7%
Materials 5.6% 8.0%
Energy 5.5% 6.0%
Utilities 4.4% 3.4%
Communication Services 2.5% 6.5%
Equity Funds 1.1% 0.0%
Real Estate 0.1% 2.5%
Country Strategy Benchmark
United Kingdom 21.0% 9.9%
France 12.6% 7.0%
China 9.1% 10.5%
Spain 6.2% 1.5%
Switzerland 6.2% 6.5%
Japan 6.0% 13.8%
Germany 5.5% 4.8%
Italy 4.8% 1.4%
Taiwan 4.6% 4.3%
South Korea 4.1% 3.3%
Regional Allocation
  • Europe – other 62.1%
  • Emerging Asia 22.9%
  • Pacific 6.0%
  • Emerging Europe, Middle East, Africa 3.0%
  • North America 2.1%
  • Emerging Latin America 2.1%

Commentary (As of June 30, 2022)


  • Equity prices continued to decline in June as accelerated central bank tightening and recession fears weighed on the outlook for economic growth.
  • Exacerbated by Russia’s weaponization of energy and agricultural products, fuel and food costs are rising in most regions globally, placing upward pressure on wages. Short-term interest rates may need to rise substantially—with the median US Federal Reserve Board member expecting to raise rates to 3.8% by the end of next year—to quell inflationary pressures, even with some alleviation of supply chain disruptions. Monetary tightening typically impacts the global economy with a lag; however, signs of economic softening have already emerged.
  • Some of the portfolio’s most promising companies have not yet fully recovered from the pandemic’s suppression of global travel, leisure, and hospitality. We believe pent-up demand for these services bodes well for a future recovery in their share prices.

Portfolio attribution

The Portfolio underperformed the Index during the month, due primarily to stock selection. Portfolio holdings in the transportation, utilities, retailing, banks, and technology hardware & equipment industry groups detracted from relative performance. Holdings in the semiconductors & semi equipment, capital goods, commercial & professional services, and energy industry groups, as well as an overweight position in the household & personal products industry group, offset some of the underperformance compared to the Index. The largest detractor was banking & financial services company, UniCredit S.p.A. (Italy). Additional notable detractors included electric, gas & renewables power generation & distribution company, Enel SpA (Italy), integrated circuit manufacturer, Taiwan Semiconductor Manufacturing Co., Ltd. (Taiwan), rolling stock, signaling, & services provider for the rail industry, Alstom SA (France), and paints & coatings producer, Akzo Nobel (Netherlands). The top contributor to return was polysilicon manufacturer, Daqo New Energy - ADR (China). Other notable contributors included internet commerce company, Alibaba Group Holding Ltd. (Hong Kong), solar panel manufacturer, Tongwei Co (China), insurance provider, PICC Property & Casualty Co., Ltd. (China), and e-commerce company,, Inc. (Hong Kong).

Investment outlook

As monetary authorities raise interest rates and accelerate quantitative tightening, we believe consumer and industrial demand will soften and corporate earnings forecasts will decline. In a notable departure from the post-GFC years, massive excess developed market private sector bank reserves suggest, in our view, that the Fed will need to tighten monetary policy considerably more than market participants are currently expecting to combat inflation. As recession looms, we believe companies in sectors such as healthcare, consumer staples, and utilities may prove defensive. These are likely areas we will use to fund more cyclical portfolio exposure as economies weaken and valuations of high-quality developed market cyclicals become more compelling. Some of the portfolio’s most promising developed market companies have not yet fully recovered from the pandemic’s suppression of global travel, leisure, and hospitality. We believe pent-up demand for these services bodes well for a future recovery in their share prices. The Russian invasion of Ukraine also precipitated a sell-off in many European banks. Historically, bank stocks weaken in advance of economic slowing and recover sharply in advance of economic recovery. We believe several of these banks are well-capitalized and are attractively valued, implying compelling upside potential. While we wait for the market to discount the recovery, these banks may be positioned to return capital to shareholders in the form of share buybacks and dividends, which are particularly attractive in an environment where rising bond yields are weighing heavily on asset prices.

Within the EM portion of the Portfolio, we remain overweight South Korean and Taiwanese stocks due to compelling valuations and top-down considerations. We are closely monitoring corporate earnings growth forecasts and price momentum as these countries are export-oriented and therefore linked to global growth. Given China’s large economy, the country’s companies tend to be more domestically oriented and relatively insulated from a global economic slowdown compared to peers in the region. From a sector perspective, our largest overweights include energy companies, due in part to valuation, growth, and price momentum considerations. We are also overweight industrial companies in the Portfolio due to favorable growth and price momentum characteristics. While these sectors outperformed the MSCI EM Index during the second quarter, fears of a global slowdown weighed on them in June. We believe the global growth concerns are already reflected in the share prices of many EM energy and industrial companies and we continue to identify investment opportunities with attractive risk-adjusted return potential in these sectors.

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].