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

Strategy overview

The portfolio managers discuss our International Opportunities strategy.

Portfolio managers

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


QTDYTD1 year3 years5 years10 yearsSince inception
Strategy (gross)-1.7%10.7%-6.3%7.3%2.2%7.4%3.1%
Strategy (net)-1.7%10.4%-6.6%6.9%1.8%7.0%2.8%
MSCI ACWI ex US-1.2%12.7%-1.8%7.7%2.6%5.9%2.0%
QTDYTD1 year3 years5 years10 yearsSince inception
Strategy (gross)-1.7%10.7%-6.3%7.3%2.2%7.4%3.1%
Strategy (net)-1.7%10.4%-6.6%6.9%1.8%7.0%2.8%
MSCI ACWI ex US-1.2%12.7%-1.8%7.7%2.6%5.9%2.0%
QTDYTD1 year3 years5 years10 yearsSince inception
Strategy (gross)1.5%12.6%-2.1%9.5%2.1%8.8%3.3%
Strategy (net)1.4%12.4%-2.4%9.1%1.8%8.4%3.0%
MSCI ACWI ex US3.2%14.0%1.8%9.9%2.6%7.0%2.1%
QTDYTD1 year3 years5 years10 yearsSince inception
Strategy (gross)1.5%12.6%-2.1%9.5%2.1%8.8%3.3%
Strategy (net)1.4%12.4%-2.4%9.1%1.8%8.4%3.0%
MSCI ACWI ex US3.2%14.0%1.8%9.9%2.6%7.0%2.1%
Strategy (gross)-18.0%31.8%2.2%-4.3%-4.1%21.7%25.9%-11.9%
Strategy (net)-18.7%30.8%1.4%-5.1%-4.8%20.8%24.9%-12.6%
MSCI ACWI ex US-13.8%27.8%5.0%-5.3%-3.4%15.8%17.4%-13.3%
Strategy (gross)
Strategy (net)

Portfolio (as of July 31, 2019)

Benchmark: MSCI ACWI ex US
Asset Allocation
Strategy Characteristics
No. of holdings 201 2204
Weighted avg. market cap (US $MM)$52,911$52,538
FY2 price/earnings9.812.6
Price/book value1.21.6
Dividend yield (%)4.03.2
Security Country Percent
Volkswagen AGGermany3.6%
Takeda Pharmaceutical Co., Ltd.Japan3.0%
BASF SEGermany2.9%
UniCredit S.p.A.Italy2.7%
Prudential PlcUnited Kingdom2.6%
ABB Ltd.Switzerland2.6%
Linde PlcGermany2.5%
KDDI Corp.Japan2.5%
AstraZeneca PlcUnited Kingdom2.4%
British American Tobacco plcUnited Kingdom2.4%

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 Strategy Benchmark
Health Care9.8%8.4%
Consumer Discretionary8.2%11.4%
Information Technology7.8%8.7%
Communication Services6.6%7.0%
Consumer Staples5.7%10.0%
Real Estate0.8%3.2%
Country Strategy Benchmark
United Kingdom26.2%11.1%
South Korea3.3%3.1%
Regional Allocation
  • Europe – other 58.0%
  • Emerging Asia 18.2%
  • Pacific 11.9%
  • North America 4.1%
  • Emerging Latin America 2.9%
  • Emerging Europe, Middle East, Africa 2.8%

Commentary (As of June 30, 2019)


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

Portfolio attribution

The Portfolio modestly underperformed the Index during the month, due primarily to industry group allocation (a byproduct of our bottom-up stock selection process). Portfolio holdings in the capital goods, telecommunication services, transportation, consumer services, and consumer durables & apparel industry groups detracted from relative performance. Holdings in the materials, software & services, and automobiles & components industry groups, as well as an underweight position in the real estate and household & personal products industry groups, contributed to relative performance. The largest detractor was cruise ship operator, Carnival Plc (United Kingdom). Additional notable detractors included retail bank, Caixabank SA (Spain), oil & natural gas producer, Encana (Canada), mortgage lender, Indiabulls Housing Finance Ltd. (India), and major passenger railway operator,East Japan Railway Co.(Japan). The top contributor to return was industrial gas company, Linde Plc (Germany). Other notable contributors included automobile manufacturer, Volkswagen AG (Germany), diversified chemicals manufacturer, BASF SE (Germany), pharmaceutical company, AstraZeneca Plc (United Kingdom), and power & automation technology company, ABB Ltd.(Switzerland).

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 developed markets 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.

In the EM portion of the Portfolio, our price momentum factor continued its resurgence in June and was our strongest performing factor in the second quarter. Heightened uncertainty in financial markets contributed to momentum’s underperformance in prior quarters. While uncertainty remains elevated, we believe that momentum’s recent strong performance is primarily attributable to compelling valuations as the momentum factor had, in our view, become oversold.


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