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International Opportunities

Strategy Profile

The Causeway International Opportunities strategy is a blend of Causeway’s best skills, combining our international value (bottom-up, fundamental, developed international markets) 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 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.

Inception Date30 June 2007
Benchmark MSCI ACWI ex US

Performance

Fund Quarter to Date Year to Date 1 Year3 Year5 Year10 Year Since Inception
Gross % 10.8%10.8%-6.9%8.1%2.4%11.4%3.3%
Net % 10.7%10.7%-7.3%7.8%2.0%11.0%2.9%
MSCI ACWI ex US 10.4%10.4%-3.7%8.6%3.0%9.3%1.9%

Portfolio

Asset Allocation as of 31 Mar 2019

Stocks 97.9%
Cash 2.1%

Characteristics as of 31 Mar 2019

Causeway MSCI ACWI ex US
No. of Holdings 197 2147
Wtd. Avg. Market Cap (Mn $US)$52,252$51,040
FY2 Price/Earnings9.812.3
Price/Book Value1.21.6
Dividend Yield (%)3.93.2

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.

SECTOR WEIGHTS as of 31 Mar 2019

Financials22.91%
Industrials15.24%
Materials11.30%
Energy9.76%
Health Care9.26%
Consumer Discretionary7.98%
Information Technology7.72%
Communication Services5.74%
Consumer Staples4.82%
Utilities2.29%
Real Estate0.92%

(VS. Benchmark)

Financials21.60%
Industrials11.68%
Materials7.63%
Energy7.42%
Health Care8.38%
Consumer Discretionary11.13%
Information Technology8.39%
Communication Services7.05%
Consumer Staples9.92%
Utilities3.33%
Real Estate3.47%
Financials
Industrials
Materials
Energy
Health Care
Consumer Discretionary
Information Technology
Communication Services
Consumer Staples
Utilities
Real Estate
Other

TOP 10 COUNTRIES as of 31 Mar 2019

United Kingdom27.14%
Germany11.95%
Japan11.81%
China7.59%
Switzerland7.40%
Canada5.35%
South Korea3.78%
France3.47%
India3.05%
Italy3.03%
Taiwan2.95%
Netherlands2.65%
Brazil2.33%
Russia1.39%
Thailand0.97%
Spain0.63%
South Africa0.49%
Peru0.38%
Turkey0.32%
Mexico0.27%
Malaysia0.27%
Ireland0.19%
Poland0.17%
Qatar0.12%
United Arab Emirates0.12%
Czech Republic0.09%
Indonesia0.04%
Israel0.00%
Portugal0.00%
Philippines0.00%
New Zealand0.00%
Norway0.00%
Pakistan0.00%
Denmark0.00%
Egypt0.00%
Finland0.00%
Chile0.00%
Australia0.00%
Austria0.00%
Belgium0.00%
Colombia0.00%
Greece0.00%
Hong Kong0.00%
Hungary0.00%
Singapore0.00%
Sweden0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%

(VS. Benchmark)

United Kingdom11.46%
Germany5.75%
Japan16.08%
China8.62%
Switzerland5.97%
Canada6.78%
South Korea3.40%
France7.55%
India2.39%
Italy1.58%
Taiwan2.96%
Netherlands2.40%
Brazil1.89%
Russia0.98%
Thailand0.61%
Spain2.01%
South Africa1.54%
Peru0.11%
Turkey0.14%
Mexico0.69%
Malaysia0.57%
Ireland0.36%
Poland0.30%
Qatar0.24%
United Arab Emirates0.19%
Czech Republic0.04%
Indonesia0.57%
Israel0.36%
Portugal0.11%
Philippines0.29%
New Zealand0.16%
Norway0.48%
Pakistan0.01%
Denmark1.20%
Egypt0.03%
Finland0.69%
Chile0.27%
Australia4.66%
Austria0.16%
Belgium0.68%
Colombia0.12%
Greece0.06%
Hong Kong2.76%
Hungary0.08%
Singapore0.90%
Sweden1.77%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
United Kingdom
Germany
Japan
China
Switzerland
Canada
South Korea
France
India
Italy
Taiwan
Netherlands
Brazil
Russia
Thailand
Spain
South Africa
Peru
Turkey
Mexico
Malaysia
Ireland
Poland
Qatar
United Arab Emirates
Czech Republic
Indonesia
Israel
Portugal
Philippines
New Zealand
Norway
Pakistan
Denmark
Egypt
Finland
Chile
Australia
Austria
Belgium
Colombia
Greece
Hong Kong
Hungary
Singapore
Sweden
Other

TOP 10 HOLDINGS as of 31 Mar 2019

Security Country Industry % of Total
Volkswagen AG Germany Automobiles & Components 3.3
Takeda Pharmaceutical Co., Ltd. Japan Pharmaceuticals & Biotechnology 3.3
UniCredit S.p.A. Italy Banks 3.0
Linde Plc Germany Materials 2.8
Prudential Plc United Kingdom Insurance 2.8
British American Tobacco plc United Kingdom Food Beverage & Tobacco 2.6
BASF SE Germany Materials 2.5
ABB Ltd. Switzerland Capital Goods 2.4
Royal Dutch Shell Plc United Kingdom Energy 2.3
Barclays Plc United Kingdom Banks 2.2

Holdings are subject to change.

Approach

The Causeway International Opportunities strategy is a blend of Causeway’s best skills, combining our international value (bottom-up, fundamental, developed international markets) 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 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.

Our developed markets exposure aims to add value through intensive fundamental research implemented via a disciplined value approach.

Our emerging markets exposure is the result of a quantitative strategy tailored to the unique growth, momentum, and risk characteristics of developing markets. Our proprietary tactical allocation model is designed to add additional value.

The Causeway International Opportunities portfolio is a fully invested, typically 120-200 stock portfolio. Allocation between developed and emerging markets can range from 0-2x the allocation of the MSCI All Country World Index ex-US, but is scalable to clients’ desired parameters.

Commentary

PERFORMANCE REVIEW for the month ended 31 Mar 2019


Increasingly dovish commentary from the US Federal Reserve (“Fed”) and the European Central Bank ("ECB"), along with progress on US-China trade negotiations, supported developed and emerging equity markets in March. The top performing markets in our investable universe were India, New Zealand, Colombia, Denmark, and Belgium. The worst performing markets were Turkey, Chile, Brazil, South Korea, and Austria. The best performing sectors in the MSCI ACWI ex US Index (“Index”) were real estate, consumer staples, and information technology. The worst performing sectors were financials, consumer discretionary, and industrials.

The Portfolio underperformed the Index during the month, due primarily to stock selection. Portfolio holdings in the capital goods, banks, telecommunication services, materials, and automobiles & components industry groups detracted from relative performance. Holdings in the pharmaceuticals & biotechnology, food beverage & tobacco, software & services, and media & entertainment industry groups, as well as an underweight position in the diversified financials industry group, offset some of the underperformance. The largest detractor was automobile manufacturer, Volkswagen AG (Germany). Additional notable detractors included banking & financial services company, UniCredit S.p.A. (Italy), banking & financial services company, Barclays Plc (United Kingdom), telecommunication services provider, KDDI Corp.(Japan), and jet engine manufacturer, Rolls-Royce Holdings Plc (United Kingdom). The top contributor to return was British American Tobacco plc (United Kingdom). Other notable contributors included pharmaceutical & consumer healthcare products producer, Novartis AG (Switzerland), Takeda Pharmaceutical Co., Ltd. (Japan), business software & services provider, SAP SE (Germany), and mail, express & logistics services provider, Deutsche Post AG (Germany).*

*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.

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