Emerging Markets UCITS Fund – EUR

Portfolio Attribution

The Causeway Emerging Markets UCITS Fund (“Fund”) underperformed the Index in November 2021. We use both bottom-up “stock-specific” and top-down factor categories to seek to forecast alpha for the stocks in the Fund’s investable universe. Our bottom-up valuation factor was a negative indicator during the month but it has produced positive performance year-to-date. Our bottom-up growth, price momentum, and competitive strength factors were positive indicators in November. Of our top-down factors, macroeconomic, country, and sector were negative indicators while currency was positive.

Investment Outlook

Earnings upgrades in emerging markets have lagged developed markets. Within emerging markets, the strongest sectors were energy, financials, and information technology. All three cyclical sectors reflect analyst optimism that global growth will continue to improve. Communication services, real estate, and consumer discretionary experienced the weakest earnings revisions. The markets with the strongest net upgrades were Russia, Turkey, UAE, and Saudi Arabia. Russia, UAE, and Saudi Arabia are oil-linked economies that have benefitted from strong oil prices. In the Fund, we are overweight Russian stocks due to favorable bottom-up and top-down characteristics and we have increased exposure to UAE and Saudi Arabia. We do not hold any Turkish stocks in the Fund due in part to unfavorable macroeconomic and currency characteristics. Earnings revisions have been weakest in Malaysia, China, and Brazil. The Central Bank of Brazil has raised its Selic rate six times this year to address inflation and currency depreciation. In the Fund, our exposure to Brazilian stocks is neutral relative to the Index and several of our largest Brazilian holdings derive a substantial portion of their revenues from outside of the country.

We continue to emphasize valuation in our multi-factor investment process. In November, our holdings in undervalued metals and mining companies underperformed due in part to slowing Chinese demand. We remain overweight select metals and mining companies in the Fund due to favorable valuation, growth, and price momentum characteristics. The MSCI EM Value Index trades at a 53% discount relative to the MSCI EM Growth Index on a next-twelve-month price-to-earnings basis. Offering substantial discounts and attractive dividend yields, we believe select emerging market value stocks provide compelling risk-adjusted return potential.

Emerging Markets UCITS Fund

Portfolio Attribution

The Causeway Emerging Markets UCITS Fund (“Fund”) underperformed the Index in November 2021. We use both bottom-up “stock-specific” and top-down factor categories to seek to forecast alpha for the stocks in the Fund’s investable universe. Our bottom-up valuation factor was a negative indicator during the month but it has produced positive performance year-to-date. Our bottom-up growth, price momentum, and competitive strength factors were positive indicators in November. Of our top-down factors, macroeconomic, country, and sector were negative indicators while currency was positive.

Investment Outlook

Earnings upgrades in emerging markets have lagged developed markets. Within emerging markets, the strongest sectors were energy, financials, and information technology. All three cyclical sectors reflect analyst optimism that global growth will continue to improve. Communication services, real estate, and consumer discretionary experienced the weakest earnings revisions. The markets with the strongest net upgrades were Russia, Turkey, UAE, and Saudi Arabia. Russia, UAE, and Saudi Arabia are oil-linked economies that have benefitted from strong oil prices. In the Fund, we are overweight Russian stocks due to favorable bottom-up and top-down characteristics and we have increased exposure to UAE and Saudi Arabia. We do not hold any Turkish stocks in the Fund due in part to unfavorable macroeconomic and currency characteristics. Earnings revisions have been weakest in Malaysia, China, and Brazil. The Central Bank of Brazil has raised its Selic rate six times this year to address inflation and currency depreciation. In the Fund, our exposure to Brazilian stocks is neutral relative to the Index and several of our largest Brazilian holdings derive a substantial portion of their revenues from outside of the country.

We continue to emphasize valuation in our multi-factor investment process. In November, our holdings in undervalued metals and mining companies underperformed due in part to slowing Chinese demand. We remain overweight select metals and mining companies in the Fund due to favorable valuation, growth, and price momentum characteristics. The MSCI EM Value Index trades at a 53% discount relative to the MSCI EM Growth Index on a next-twelve-month price-to-earnings basis. Offering substantial discounts and attractive dividend yields, we believe select emerging market value stocks provide compelling risk-adjusted return potential.

Global Value UCITS Fund

Portfolio Attribution

The Causeway Global Value UCITS Fund (“Fund”) underperformed the Index during the month, due primarily to stock selection, and in particular the portion of the portfolio exposed to travel and leisure. Fund holdings in the software & services, consumer services, technology hardware & equipment, and insurance industry groups, along with an underweight position in the semiconductors & semi equipment industry group, detracted from relative performance. Holdings in the consumer durables & apparel, materials, and commercial & professional services industry groups, as well as an underweight position in the health care equipment & services and diversified financials industry groups, offset some of the underperformance compared to the Index. The largest detractor was travel & tourism technology company, Sabre Corp. (United States). Additional notable detractors included jet engine manufacturer, Rolls-Royce Holdings Plc (United Kingdom), online travel agency, Booking Holdings, Inc. (United States), media & entertainment conglomerate, The Walt Disney Co. (United States), and mortgage insurance provider, Essent Group (United States). The top contributor to return was luxury goods manufacturer & retailer, Compagnie Financière Richemont SA (Switzerland). Other notable contributors included plastic packaging manufacturer, Berry Global Group (United States), specialty chemicals manufacturer, Ashland Global Holdings, Inc. (United States), semiconductor manufacturer, Broadcom Corp. (United States), and products & services provider for the electronic components industry, SK hynix, Inc. (South Korea).

Investment Outlook

In our view, the world is significantly better prepared to weather the latest Covid wave. Major vaccine producers have indicated that they have mechanisms to develop boosters targeting a new variant in as little as three months. The emergence of Omicron, however, does highlight that progress against Covid proceeds in fits and starts. Market jitters and short-termism by investors may bring us investment opportunities in companies facing growth headwinds from lockdowns. Those companies that used 2020 and 2021 to enhance liquidity and financial strength should be well-positioned to ride economic expansion associated with the reopening of geographic borders and associated economic activity. Our experience over the last 21 months of the pandemic has reinforced our emphasis on financial strength and prospects for companies growing free cash flow. While investors digest news of more pandemic-induced disruptions, we remain focused on, in our view, well-managed companies with the potential to thrive as economies reopen, and on those firms we believe are well-placed to pass on cost inflation through higher prices. We expect many of our portfolio companies to meaningfully increase capital returns to shareholders via dividends and share buybacks. As central banks remove excess liquidity, stocks offering income and near-term earnings may regain popularity and enjoy a valuation upswing.