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.

Benchmark
MSCI ACWI ex US
Inception
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
President
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

Performance

Table Header QTD YTD 1 year3 years5 years10 years Since inception
Strategy (gross) 12.3%20.3%22.6%20.3%15.2%7.7%5.8%
Strategy (net) 12.2%20.1%22.1%19.8%14.8%7.3%5.4%
MSCI ACWI ex US 12.3%18.3%18.4%14.6%10.7%6.6%4.0%
Table Header QTD YTD 1 year3 years5 years10 years Since inception
Strategy (gross) 12.3%20.3%22.6%20.3%15.2%7.7%5.8%
Strategy (net) 12.2%20.1%22.1%19.8%14.8%7.3%5.4%
MSCI ACWI ex US 12.3%18.3%18.4%14.6%10.7%6.6%4.0%
Table Header QTD YTD 1 year3 years5 years10 years Since inception
Strategy (gross) 12.3%20.3%22.6%20.3%15.2%7.7%5.8%
Strategy (net) 12.2%20.1%22.1%19.8%14.8%7.3%5.4%
MSCI ACWI ex US 12.3%18.3%18.4%14.6%10.7%6.6%4.0%
Table Header QTD YTD 1 year3 years5 years10 years Since inception
Strategy (gross) 12.3%20.3%22.6%20.3%15.2%7.7%5.8%
Strategy (net) 12.2%20.1%22.1%19.8%14.8%7.3%5.4%
MSCI ACWI ex US 12.3%18.3%18.4%14.6%10.7%6.6%4.0%
Fund 20242023202220212020201920182017201620152014201320122011
Strategy (gross) 10.0%24.8%-11.1%8.0%6.5%23.4%-17.9%31.8%1.9%-4.0%-3.9%22.2%26.0%-11.7%
Strategy (net) 9.5%24.3%-11.4%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 6.1%16.2%-15.6%8.3%11.1%22.1%-13.8%27.8%5.0%-5.3%-3.4%15.8%17.4%-13.3%
Table Header
Strategy (gross)
Strategy (net)
MSCI ACWI ex US
20242023202220212020201920182017201620152014201320122011
10.0%24.8%-11.1%8.0%6.5%23.4%-17.9%31.8%1.9%-4.0%-3.9%22.2%26.0%-11.7%
9.5%24.3%-11.4%7.6%6.1%22.9%-18.2%31.3%1.5%-4.4%-4.2%21.7%25.5%-12.0%
6.1%16.2%-15.6%8.3%11.1%22.1%-13.8%27.8%5.0%-5.3%-3.4%15.8%17.4%-13.3%

Portfolio (as of May 31, 2025)

Benchmark: MSCI ACWI ex US
Asset Allocation
Table Header Strategy
Stocks 98.4%
Cash 1.6%
Strategy Characteristics
Table Header Strategy Benchmark
No. of holdings 249 1983
Weighted avg. market cap (US $MM) $84,245 $94,402
FY2 price/earnings 10.7 13.1
Price/book value 1.6 1.9
Dividend yield (%) 2.7 2.9
TOP 10 HOLDINGS
Security Country Percent
Rolls-Royce Holdings Plc United Kingdom 3.0%
Alstom SA France 2.8%
Barclays PLC United Kingdom 2.8%
Kering SA France 2.8%
Reckitt Benckiser Group Plc United Kingdom 2.7%
Renesas Electronics Corp. Japan 2.4%
AstraZeneca PLC United Kingdom 2.3%
Canadian Pacific Kansas City Ltd. Canada 2.0%
Akzo Nobel Netherlands 2.0%
Roche Holding AG Switzerland 1.9%

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
Financials 19.8% 25.0%
Industrials 16.3% 14.6%
Information Technology 15.0% 12.8%
Health Care 11.0% 8.3%
Consumer Discretionary 10.8% 10.4%
Consumer Staples 8.2% 7.0%
Communication Services 5.8% 6.3%
Materials 5.4% 6.2%
Utilities 2.4% 3.2%
Real Estate 1.3% 1.8%
Equity Funds 0.9% 0.0%
Energy 0.8% 4.5%
TOP 10 COUNTRIES
Country Strategy Benchmark
United Kingdom 23.0% 9.4%
France 13.4% 7.1%
China 9.4% 8.4%
Japan 9.1% 13.9%
Germany 6.7% 6.6%
Taiwan 5.3% 5.3%
Netherlands 5.3% 2.9%
India 4.6% 5.3%
South Korea 4.2% 2.8%
Italy 2.8% 2.0%
Regional Allocation
  • Euro 30.2%
  • Europe - Other 26.5%
  • Emerging Asia 24.2%
  • Pacific 10.2%
  • Emerging Europe, Middle East, Africa 2.7%
  • North America 2.6%
  • Emerging Latin America 1.4%
  • Multi-National Emerging 0.0%

Commentary (As of May 31, 2025)

Highlights

  • International equity markets rallied in May, with most country markets and sectors posting local currency gains.
  • De-globalization and tariffs appear likely to dampen real growth, increase inflationary pressures, and create sector-level dislocations. However, these disruptions can generate mispricing and opportunities for active investors.
  • The era of ultra-low interest rates is over, making near-term cash flows more attractive than speculative growth. This recent period of market dislocation provides an opportunity to add to positions in companies we believe can navigate tariff induced instability and produce attractive multi-year returns. Companies with few competitors and strong pricing power have become especially valuable in this environment.

Portfolio Attribution

The Portfolio outperformed the Index during the month, due primarily to stock selection. Portfolio holdings in the consumer services, banks, and transportation industry groups contributed to relative performance. Holdings in the capital goods and consumer durables & apparel industry groups, along with an overweight position in the health care equipment & services industry group, offset some of the outperformance compared to the Index. The top contributor to return was jet engine manufacturer, Rolls-Royce Holdings Plc (United Kingdom). Other notable contributors included banking & financial services company, Barclays PLC (United Kingdom), and semiconductor company, Infineon Technologies AG (Germany). The largest detractor was rolling stock, signaling, and services provider for the rail industry, Alstom SA (France). Additional notable detractors included healthcare equipment & services provider, Koninklijke Philips NV (Netherlands), and pharmaceutical giant, Sanofi (France).

Investment Outlook

The global trade war has introduced significant economic and geopolitical uncertainty. During the quarter, the US placed record-high punitive tariffs on China. China reciprocated, making all but essential (or tariff-exempt) trade between the two countries cost-prohibitive. A subsequent trade truce in May buys time for the two sides to strike a longer-term deal. China is prioritizing economic stability, technological advancement, and domestic consumption to meet its ambitious growth targets. The Portfolio was overweight Chinese stocks as of quarter-end, with most of the Chinese exposure in communication services and consumption-oriented businesses, which tend to be more domestically-focused and continue to, in our view, look attractive on both self-relative valuation and growth characteristics. Within EM, Taiwan and South Korea are two of the most externally-exposed economies and therefore vulnerable to trade disruption. As of quarter-end, we were overweight South Korean stocks in the Portfolio due in part to bottom-up valuation and top-down considerations.

In developed markets, EU fiscal integration is accelerating, with growing urgency to launch a unified capital market. Recognizing the need for greater security self-reliance, European leaders have committed to military and economic revitalization. Just weeks after its February election, Germany approved major defense and infrastructure spending, potentially boosting defense outlays from 2% to 5% of gross domestic product. In contrast, the UK faces stagflation, with the Bank of England cautiously navigating persistent inflation and gilt market volatility amid slowing growth.

De-globalization and tariffs appear likely to reduce global gross domestic product growth, increase inflationary pressures, and create sector-level dislocations. However, these disruptions can generate mispricing and opportunities for active investors. In the developed markets portion of the portfolio, we focus on identifying undervalued stocks rather than positioning around macroeconomic trends. Non-US developed markets continue to trade at a significant discount to the US, where indices remain driven by a handful of AI-focused companies. The era of ultra-low interest rates is over, making near-term cash flows more attractive than speculative growth. This recent period of market dislocation provides an opportunity to add to positions in companies we believe can navigate tariff induced instability and produce attractive multi-year returns. Companies with few competitors and strong pricing power have become especially valuable in this environment. Certain cyclical stocks now offer some of the lowest valuations since 2020 and are rising in our risk-adjusted return rankings. We also are focusing on companies providing mission-critical products and services, which should see robust order growth regardless of tariff volatility. Across sectors, Causeway targets companies improving efficiency, driving earnings, and boosting cash flow.

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].