Emerging Markets UCITS Fund – EUR

Portfolio Attribution

The Causeway Emerging Markets UCITS Fund (“Fund”) outperformed the Index in June 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 growth and price momentum factors were positive indicators in June. Our valuation and competitive strength factors were negative indicators during the month. Of our top-down factors, sector was a negative indicator while macroeconomic, country, and currency were positive.

Investment Outlook

Within EM, earnings upgrades have been strongest in materials, energy, and industrials. The improving expectations for these cyclical sectors reflect analyst optimism that economies will continue to reopen as vaccine distribution progresses. The materials sector represents one of the Fund’s largest overweight positions due to attractive growth and price momentum characteristics. Information technology, the Fund’s largest sector overweight, also includes stocks with compelling growth and price momentum attributes. From a country perspective, growth upgrades were particularly strong in Poland, Russia, and Saudi Arabia. South Africa, Indonesia, and China had the weakest net upgrades. The Chinese government is paring back stimulus measures and some of the country’s largest companies are facing elevated regulatory risks as well as increasing spending needs to fund new growth drivers.

We continue to emphasize value factors in our multi-factor investment process. The largest potential headwind for EM value stocks relates to Covid-19 vaccine distribution challenges or efficacy issues against developing virus variants. However, with the MSCI EM Value Index trading at a 52% discount to the MSCI EM Growth Index on a next-twelve-month price-to-earnings basis, we believe that value stocks offer compelling risk-adjusted return potential.

Emerging Markets UCITS Fund

Portfolio Attribution

The Causeway Emerging Markets UCITS Fund (“Fund”) outperformed the Index in June 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 growth and price momentum factors were positive indicators in June. Our valuation and competitive strength factors were negative indicators during the month. Of our top-down factors, sector was a negative indicator while macroeconomic, country, and currency were positive.

Investment Outlook

Within EM, earnings upgrades have been strongest in materials, energy, and industrials. The improving expectations for these cyclical sectors reflect analyst optimism that economies will continue to reopen as vaccine distribution progresses. The materials sector represents one of the Fund’s largest overweight positions due to attractive growth and price momentum characteristics. Information technology, the Fund’s largest sector overweight, also includes stocks with compelling growth and price momentum attributes. From a country perspective, growth upgrades were particularly strong in Poland, Russia, and Saudi Arabia. South Africa, Indonesia, and China had the weakest net upgrades. The Chinese government is paring back stimulus measures and some of the country’s largest companies are facing elevated regulatory risks as well as increasing spending needs to fund new growth drivers.

We continue to emphasize value factors in our multi-factor investment process. The largest potential headwind for EM value stocks relates to Covid-19 vaccine distribution challenges or efficacy issues against developing virus variants. However, with the MSCI EM Value Index trading at a 52% discount to the MSCI EM Growth Index on a next-twelve-month price-to-earnings basis, we believe that value stocks offer 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. Fund holdings in the software & services, consumer services, technology hardware & equipment, and materials industry groups, along with an overweight position in the capital goods industry group, detracted from relative performance. Holdings in the energy industry group, as well as an underweight position in the telecommunication services, food beverage & tobacco, household & personal products, and health care equipment & services industry groups, offset some of the underperformance compared to the Index. The largest detractor was jet engine manufacturer, Rolls-Royce Holdings Plc (United Kingdom). Additional notable detractors included travel & tourism technology company, Sabre Corp. (United States), specialty chemicals manufacturer, Ashland Global Holdings, Inc. (United States), banking & financial services company, UniCredit S.p.A. (Italy), and online travel agency, Booking Holdings, Inc. (United States). The top contributor to return was technology conglomerate, Alphabet Inc. (United States). Other notable contributors included pharmaceuticals & biotechnology company, Roche Holding AG (Switzerland), pharmaceutical producer, Novartis AG (Switzerland), business services provider, Concentrix Corp. (United States), and HVAC manufacturer, Carrier Global Corp. (United States).

Investment Outlook

Despite the past 15-month surge in equity markets, amplified by the recovery in cyclical stocks from November 2020 vaccine announcements, we believe attractive valuations remain. With delayed and uneven opening of economies globally, several of the, in our view, high quality aerospace, aviation, travel, and hospitality-oriented stocks have only partially reflected the recovery ahead. We observe significant pent up demand for such services, yet travelers still face uncertainty in certain locations and face burdensome Covid-19-related protocols. As vaccinations proliferate, we believe even the most cautious of governments will likely open their respective borders, compelled by economic necessity. In addition to late-stage pandemic stocks, we are also finding what we believe is market underpricing in companies undergoing operational restructuring and in some traditionally defensive sectors such as utilities (those in transition to renewable energy) and healthcare (European pharmaceutical giants with potentially valuable drug pipelines). Companies in the defensive categories tend to generate cash flows surplus to their operating and investment needs (free cash flow), and thus can pay shareholders to wait for prices to reflect what we estimate will be good news. We believe companies less dependent on earnings realization far out in the future should provide a natural hedge in the portfolio to the prospect of rising interest rates, a function of bond markets reflecting economic growth and inflation. If history is any guide, the side effect of higher discount rates and bond market competition should translate into compression of the most speculative of market multiples.

Terms and Conditions of Use:

Please read the following before proceeding, as it explains certain restrictions imposed by law on the distribution of this information and the countries in which Causeway Funds plc is authorised for sale.

Causeway Funds plc (the "Fund") is authorised by the Central Bank of Ireland as an Undertaking for Collective Investment in Transferable Securities pursuant to the European Communities (Undertaking for Collective Investment in Transferable Securities) Regulations 2011 (S.I. 352 of 2011) of Ireland, as amended.

The Fund and its sub-funds are only authorised in certain jurisdictions.

This website is not aimed at any US person (as defined by Regulations S of the US Securities Act of 1933) and is not for distribution and does not constitute an offer to or solicitation to buy any securities in the United States. Purchase orders from US investors or other ineligible investors will not be accepted. This site is not intended for US persons. If you are trying to find information about the Causeway Funds registered for sale in the United States, please go to our Funds page . Restrictions may also apply to residents of other countries.

Subscriptions will only be received and shares issued on the basis of the current prospectus for the Fund and relevant supplement for a sub-fund. It is your responsibility to use such prospectus and supplement, and by making an application you will be deemed to represent that you have read such prospectus and supplement and agree to be bound by its contents. Copies of the prospectus, supplements and, when available, other reports can be obtained from this website. The Fund prices contained in this website are indicative only and should not be relied upon for dealing. No warranty or representation is made with respect to the information contained in this website, including, without limitation, that the information is accurate, complete or timely. None of the information, whether in part or full, should be copied, reproduced or redistributed in any form. Past performance is not indicative of future results.

The information on this website is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any security that may be referenced on or through this website. Unless otherwise specified, it is not intended to be directed to any person(s) in particular. Information from this website must not be used in any jurisdiction where prohibited by law and must not be used in a way that would be contrary to local law or legislation. You should not access this site or information on this site if you know that your access would contravene applicable local, national or international laws. No investment advice, tax advice, or legal advice is provided through this website, and you agree that this website will not be used by you for these purposes. No representation is given that shares, products, or services identified on, or accessible through, this website are suitable for any particular investor.

By clicking the box below, you confirm and represent that you are from an eligible jurisdiction to review material relating to the Fund, or that you are authorised to conduct investment business in the jurisdiction within which you are resident and, under the law of that jurisdiction, you are authorised to view material relating to collective investment schemes). It is critical that the information you provide is accurate and a failure to provide accurate information will be a material breach of these terms and conditions.

If you are a resident of any other country please view our strategies.