Emerging Markets UCITS Fund – EUR

Portfolio Attribution

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

Investment Outlook

Earnings growth prospects are positive for many EM companies as growth upgrades exceeded downgrades in most sectors over the past three months. All EM sectors experienced net upgrades except for real estate, consumer discretionary, and consumer staples. We are underweight each of these sectors in the Fund due in part to low growth expectations. The materials, information technology, and financials sectors experienced the strongest net upgrades. Growth upgrades for these cyclically-oriented sectors reflect analysts’ optimism that economic activity will continue to normalize. From a country perspective, Taiwan, Saudi Arabia, and India experienced the strongest net upgrades.

The MSCI Emerging Markets Value Index outperformed the MSCI Emerging Markets Growth Index by 3.9% in February. Steepening yield curves, Covid-19 vaccine distribution, and the reopening of many economies globally have created a positive backdrop for EM value stocks. We continue to emphasize value factors in our multi-factor investment process and we believe the value rally is poised to continue as economic activity normalizes.

Emerging Markets UCITS Fund

Portfolio Attribution

The Causeway Emerging Markets UCITS Fund (“Fund”) outperformed the Index in February 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 and growth factors were positive indicators in February while our price momentum and competitive strength factors were negative indicators. Of our top-down factors, macroeconomic and currency were positive indicators while country and sector were negative indicators.Investment Outlook

Investment Outlook

Earnings growth prospects are positive for many EM companies as growth upgrades exceeded downgrades in most sectors over the past three months. All EM sectors experienced net upgrades except for real estate, consumer discretionary, and consumer staples. We are underweight each of these sectors in the Fund due in part to low growth expectations. The materials, information technology, and financials sectors experienced the strongest net upgrades. Growth upgrades for these cyclically-oriented sectors reflect analysts’ optimism that economic activity will continue to normalize. From a country perspective, Taiwan, Saudi Arabia, and India experienced the strongest net upgrades.

The MSCI Emerging Markets Value Index outperformed the MSCI Emerging Markets Growth Index by 3.9% in February. Steepening yield curves, Covid-19 vaccine distribution, and the reopening of many economies globally have created a positive backdrop for EM value stocks. We continue to emphasize value factors in our multi-factor investment process and we believe the value rally is poised to continue as economic activity normalizes.

Global Value UCITS Fund

Portfolio Attribution

Causeway Global Value UCITS Fund – USD share class (“Fund”) underperformed the Index during the month, due primarily to stock selection. Holdings in the energy, media & entertainment, software & services, materials, and automobiles & components industry groups detracted from performance compared to the Index. Fund holdings in the retailing, capital goods, technology hardware & equipment, and food beverage & tobacco industry groups, as well as an underweight position in the consumer durables & apparel industry group, contributed to relative performance. The largest detractor was oil exploration & production company, Ovintiv (Canada). Additional notable detractors included automobile manufacturer, Volkswagen AG (Germany), ViacomCBS, Inc. (United States), diversified chemicals manufacturer, BASF SE (Germany), and banking & financial services company, UniCredit S.p.A. (Italy). The top contributor to return was specialty retail jeweler, Signet Group (United States). Other notable contributors included power & healthcare conglomerate, General Electric Co. (United States), design-to-distribution business process services technology company, SYNNEX Corp. (United States), software giant, Microsoft Corp. (United States), and British American Tobacco plc (United Kingdom).

Investment Outlook

In the prevailing global interest rate environment with the opportunity cost of owning long duration growth stocks low to negative, investors have continued to bid up expensive stocks to even higher valuations. Should these seemingly speculative, currently high valuation stocks fail to live up to their elevated expectations, we anticipate that the stable cash flows of economically sensitive, yet financially robust, companies would attract investor attention. Our fundamental research seeks to identify well-managed companies with strong balance sheets, with company leaders committed to improving earnings. As we wait for these companies to emerge from operational setbacks and reignite growth, they typically generate sufficient cash flow to reward shareholders via dividends and share buybacks. In the current low interest rate environment, we find the income from these undervalued stocks especially compelling as a major component of total return.