Seeking value primarily in the non-US developed markets

The international value portfolio is constructed from an equity universe composed of companies with market capitalizations typically greater than $1 billion located throughout the non-US 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 EAFE
Inception
June 11, 2001
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Strategy overview

The portfolio managers discuss our International Value strategy.

Portfolio managers

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

Performance

QTD YTD 1 year3 years5 years10 years Since inception
Strategy (gross) -6.8%7.1%12.5%11.3%9.4%6.4%7.9%
Strategy (net) -6.9%6.7%12.1%10.9%9.0%6.0%7.4%
MSCI EAFE -5.9%6.8%12.4%4.7%6.4%5.6%5.7%
QTD YTD 1 year3 years5 years10 years Since inception
Strategy (gross) -6.8%7.1%12.5%11.3%9.4%6.4%7.9%
Strategy (net) -6.9%6.7%12.1%10.9%9.0%6.0%7.4%
MSCI EAFE -5.9%6.8%12.4%4.7%6.4%5.6%5.7%
QTD YTD 1 year3 years5 years10 years Since inception
Strategy (gross) 10.0%14.9%26.2%11.6%12.5%7.1%8.3%
Strategy (net) 9.9%14.6%25.7%11.2%12.1%6.7%7.8%
MSCI EAFE 7.3%13.5%25.4%6.0%8.7%6.2%6.0%
QTD YTD 1 year3 years5 years10 years Since inception
Strategy (gross) 10.0%14.9%26.2%11.6%12.5%7.1%8.3%
Strategy (net) 9.9%14.6%25.7%11.2%12.1%6.7%7.8%
MSCI EAFE 7.3%13.5%25.4%6.0%8.7%6.2%6.0%
Fund 2023202220212020201920182017201620152014201320122011201020092008200720062005200420032002
Strategy (gross) 29.0%-7.2%10.5%6.1%22.5%-18.0%28.6%1.1%-1.9%-4.6%27.6%24.6%-10.2%13.9%37.7%-43.0%9.8%27.5%9.0%29.5%48.4%-8.9%
Strategy (net) 28.5%-7.6%10.1%5.6%22.0%-18.4%28.0%0.7%-2.3%-5.0%27.1%24.1%-10.5%13.4%37.1%-43.2%9.4%27.0%8.5%29.0%47.8%-9.2%
MSCI EAFE 18.9%-14.0%11.8%8.3%22.7%-13.4%25.6%1.5%-0.4%-4.5%23.3%17.9%-11.7%8.2%32.5%-43.1%11.6%26.9%14.0%20.7%39.2%-15.7%
Strategy (gross)
Strategy (net)
MSCI EAFE
2023202220212020201920182017201620152014201320122011201020092008200720062005200420032002
29.0%-7.2%10.5%6.1%22.5%-18.0%28.6%1.1%-1.9%-4.6%27.6%24.6%-10.2%13.9%37.7%-43.0%9.8%27.5%9.0%29.5%48.4%-8.9%
28.5%-7.6%10.1%5.6%22.0%-18.4%28.0%0.7%-2.3%-5.0%27.1%24.1%-10.5%13.4%37.1%-43.2%9.4%27.0%8.5%29.0%47.8%-9.2%
18.9%-14.0%11.8%8.3%22.7%-13.4%25.6%1.5%-0.4%-4.5%23.3%17.9%-11.7%8.2%32.5%-43.1%11.6%26.9%14.0%20.7%39.2%-15.7%

Portfolio (as of October 31, 2024)

Benchmark: MSCI EAFE
Asset Allocation
Strategy
Stocks 98.5%
Cash 1.5%
Strategy Characteristics
Strategy Benchmark
No. of holdings 70 731
Weighted avg. market cap (US $MM) $64,537 $77,733
FY2 price/earnings 11.5 13.5
Price/book value 1.5 1.9
Dividend yield (%) 3.1 3.1
TOP 10 HOLDINGS
Security Country Percent
Alstom SA France 4.7%
Rolls-Royce Holdings Plc United Kingdom 4.3%
Barclays PLC United Kingdom 3.5%
Samsung Electronics Co., Ltd. South Korea 3.4%
Kering SA France 3.2%
Reckitt Benckiser Group Plc United Kingdom 3.0%
Roche Holding AG Switzerland 2.6%
Akzo Nobel Netherlands 2.6%
Renesas Electronics Corp. Japan 2.5%
Enel SpA Italy 2.3%

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
Industrials 17.5% 17.5%
Financials 17.0% 21.1%
Information Technology 13.3% 8.6%
Consumer Staples 12.8% 8.5%
Health Care 11.5% 13.3%
Materials 7.7% 6.5%
Consumer Discretionary 7.2% 10.9%
Communication Services 3.7% 4.4%
Utilities 3.5% 3.4%
Energy 3.3% 3.7%
Real Estate 1.1% 2.1%
TOP 10 COUNTRIES
Country Strategy Benchmark
United Kingdom 31.6% 14.7%
France 19.2% 11.3%
Japan 11.3% 22.7%
Germany 8.7% 9.1%
Netherlands 6.5% 4.5%
Italy 4.1% 2.8%
South Korea 3.9% 0.0%
Switzerland 3.4% 9.9%
Canada 2.0% 0.0%
Belgium 1.7% 1.0%
Regional Allocation
  • Europe – other 76.7%
  • Pacific 12.7%
  • North America 3.0%
  • Emerging Asia 5.3%
  • Developed Middle East 0.4%
  • Emerging Latin America 0.4%

Commentary (As of October 31, 2024)

Highlights

  • After months of gains, global equity markets retreated in October.
  • Chinese authorities, recognizing the inadequacy of recent efforts, have introduced aggressive measures to stimulate their economy. Whether China can avoid prolonged stagnation remains uncertain, but its stock market should see bursts of enthusiasm.
  • We believe it is essential to remain valuation-focused and disciplined amid market gyrations. We aim to construct well-balanced Causeway client portfolios with structural winners, cyclical beneficiaries, and unique operational restructuring opportunities.

Portfolio Attribution

The Portfolio performed in-line with the Index during the month, due primarily to currency allocation (a byproduct of our bottom-up stock selection process). Portfolio holdings in the capital goods, materials, and household & personal products industry groups contributed to relative performance. Holdings in the health care equipment & services, pharmaceuticals & biotechnology, and technology hardware & equipment industry groups offset some of the outperformance compared to the Index. The top contributor to return was rolling stock, signaling, & services provider for the rail industry, Alstom SA (France). Other notable contributors included bank, Standard Chartered Plc (United Kingdom), and corrugated and paper packaging manufacturer, Smurfit WestRock Plc (United States). The largest detractor was healthcare equipment & services provider, Koninklijke Philips NV (Netherlands). Additional notable detractors included multinational luxury conglomerate, Kering SA (France), and electronic equipment manufacturer, Samsung Electronics Co., Ltd. (South Korea).

Quarterly Investment Outlook

Chinese authorities, recognizing the inadequacy of recent efforts, have introduced aggressive measures to stimulate their economy. Whether China can avoid prolonged stagnation remains uncertain, but its stock market should see bursts of enthusiasm. The European Central Bank cut rates by 25 basis points in September, after a June reduction, and the Federal Reserve followed with a 50 basis point cut. In France, an uneasy coalition is poised to address fiscal imbalances, including reversing some of President Macron's 2017 corporate tax cuts. The US presidential election will be important for global markets, given the differing policy prescriptions of both candidates. Despite escalating conflict in the Middle East, energy markets have thus far remained stable, likely due to China's economic weakness.

We believe it is essential to remain valuation-focused and disciplined amid market gyrations. We aim to construct well-balanced Causeway client portfolios with structural winners, cyclical beneficiaries, and unique operational restructuring opportunities. These characteristics typically result in portfolio companies capable of reaccelerating earnings and cash flow growth. We designed our investment process to produce long-term performance independent of market noise, election outcomes, or short-term sentiment. We believe our ability to generate alpha over full market cycles comes from identifying valuation gaps and strong industry fundamentals, and assessing how companies adapt to changing market conditions. As long-long-term investors we remain committed to these tenets of fundamental value investing.

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].