Diversified exposure to emerging markets, capturing value and growth

The Fund normally invests at least 80% of its total assets in equity securities of companies located in emerging markets and investments that are tied economically to emerging markets, such as common stock, preferred and preference stock, depositary receipts, including American Depositary Receipts, Global Depositary Receipts, European Depositary Receipts, Swedish Depositary Receipts and other types of depositary receipts, real estate investment trusts (“REITs”) and exchange-traded funds (“ETFs”) that invest in emerging markets securities. The Investment Manager primarily invests in common stock, but will use those other security types referred to above if, for example, they provide greater liquidity, the Fund cannot access common stock through a local market, or the yield rate of preferred or preference stock is deemed favourable. Typically, less than 10% of the Fund’s Net Asset Value will be invested in ETFs, and investment in ETFs will be limited to 15% of the Fund’s Net Asset Value.

The Fund generally invests in companies with market capitalisations of US$500 million or greater at the time of investment. However, the Fund may invest in smaller market capitalisation companies if, based on the quantitative investment approach described below, it finds an attractive investment with a lower market capitalisation and sufficient liquidity. The Fund may invest in any industry or sector, but generally will not invest more than 25% of its total assets in the equity securities of companies in a single industry. Typically, the Fund will hold a diversified portfolio of over 80 equity securities.

The Investment Manager uses a quantitative investment approach to purchase and sell equity securities and those other investments as detailed above for the Fund. The Investment Manager’s quantitative investment approach uses a proprietary computer model that analyses historical financial data, or “factors,” to assist in selecting investments as detailed above. The model currently analyses factors relating to valuation, earnings growth, technical indicators (such as stock price momentum), macroeconomics, currency, countries and economic sectors, ranking companies within each factor and combining these rankings to select investments. As the Investment Manager is continually seeking to improve model performance, the factors and their weightings in the model may change over time. By ranking companies based on a combination of these factors, the Investment Manager seeks to identify a portfolio of investments that will outperform the MSCI Emerging Markets Index. In addition to its quantitative research, the Investment Manager’s fundamental research analysts review the quantitative outputs to attempt to identify and address special issues, such as significant corporate actions or management changes, which are difficult to detect quantitatively.

Please see the Prospectus and Supplement for more information. Please contact [email protected] for a Fund Application.

Nav*
€ 14.31
Inception
February 10, 2016
ISIN
IE00BWT3P209
Benchmark
MSCI Emerging Markets in EUR
Minimum investment
€1,000,000
Total expense ratio
1.24%
*As of July 02, 2020
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Strategy overview

The portfolio managers discuss our Emerging Markets strategy.

Portfolio managers

Head of Quantitative Research
Quantitative Portfolio Manager
Quantitative Portfolio Manager
Quantitative Portfolio Manager

Performance

QTD YTD 1 year3 years Since inception
Fund 8.3%-15.4%-4.5%-2.0%6.8%
MSCI Emerging Markets in EUR 8.5%-15.1%-3.9%0.6%8.9%
QTD YTD 1 year3 years Since inception
Fund 8.3%-15.4%-4.5%-2.0%6.8%
MSCI Emerging Markets in EUR 8.5%-15.1%-3.9%0.6%8.9%
20182017
Fund -18.3%38.1%
MSCI Emerging Markets in EUR -14.6%37.3%
20182017
Fund -18.3%38.1%
MSCI Emerging Markets in EUR -14.6%37.3%

Portfolio (as of May 31, 2020)

Benchmark:
Asset Allocation
Fund
Stocks 96.1%
Cash 3.9%
Fund Characteristics
Fund Benchmark
Holdings 121 1402
Weighted avg. market cap (US $MM) $100,704 $84,517
NTM price/earnings 9.4 11.4
Price/book value 1.3 1.5
NTM EPS revision (wtd. avg.)
Net assets $1,139,429.89 -
TOP 10 ACTIVE HOLDINGS
Security Country Active weight*
Samsung Electronics Co., Ltd. South Korea 2.0%
China Construction Bank Corp. China 1.9%
Tencent Holdings Ltd. China 1.8%
Anhui Conch Cement Co., Ltd. China 1.6%
Lukoil Russia 1.1%
Jd.com China 1.1%
JBS SA Brazil 1.1%
Ping An Insurance Group Co Of China 1.1%
Investimentos Itau Brazil 0.9%
Accton Technology Corp. Taiwan 0.8%

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. “Earnings-per-share” is the portion of a company’s profit allocated to each outstanding share of common stock. “Earnings-per-share year-over-year estimate growth (next 12 months)” is the average next-12-months earnings-per-share estimate from one year ago for an individual company compared with that estimate today; note that this calculation is done on a company-by-company basis and is aggregated through a weighted average based on the individual company’s weight in the corresponding index. Also note that this characteristic is supplied directly by MSCI.

*Active defined as Fund weight minus MSCI EM Index weight. Holdings are subject to change.

SECTOR WEIGHTS
Sector Fund Benchmark
Information Technology 20.5% 16.7%
Financials 18.2% 20.2%
Communication Services 15.0% 13.0%
Consumer Discretionary 13.6% 15.9%
Energy 7.4% 6.4%
Consumer Staples 6.4% 6.7%
Materials 6.2% 7.1%
Industrials 3.2% 5.0%
Health Care 2.7% 3.8%
Real Estate 2.1% 2.7%
Utilities 0.7% 2.5%
TOP 10 COUNTRIES
Country Strategy Benchmark
China 39.9% 39.1%
South Korea 13.4% 11.9%
Taiwan 13.3% 12.5%
India 7.9% 8.1%
Brazil 6.8% 5.1%
Russia 6.5% 3.6%
Thailand 1.7% 2.4%
Mexico 1.5% 1.9%
South Africa 1.2% 3.8%
Malaysia 1.0% 1.9%
Regional Allocation
  • Emerging Asia 77.6%
  • Emerging Europe, Middle East, Africa 9.8%
  • Emerging Latin America 8.7%
  • UNKNOWN 0.3%

Commentary (As of May 31, 2020)

Highlights

  • While posting positive returns in May, emerging market (“EM”) equities underperformed developed market equities during the month.
  • 2020 economic growth estimates for EM countries have continued to decline due to the economic shutdown stemming from the COVID-19 pandemic. Growth may continue to deteriorate as some major EM countries, including India and Brazil, remain locked down or are just beginning to loosen restrictions. Moreover, most EM countries have limited ability to enact fiscal and monetary stimulus.
  • The MSCI Emerging Markets Value Index is trading at a sizable discount based on both price-to-earnings and price-to-book value ratios. We continue to emphasize value factors in our investment process and we believe that value’s relative performance should improve once COVID-19 uncertainty abates, especially given the discount offered by value stocks currently.

Portfolio Attribution

Causeway Emerging Markets UCITS Fund - EUR share class ("Fund") modestly underperformed the Index in May 2020. 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. As April’s rebound continued into May, price momentum was our strongest bottom-upindicator during the month. Our earnings growth factor was modestly negative. Our value factor was the weakest bottom-up indicator in May, and has also trailed earnings growth and price momentum over most longer time periods. Of our top-down factors, sector was a positive indicator. Macroeconomic, currency, and country factors were negative indicators in May.

Investment Outlook

Compared to developed markets, earnings growth prospects for EM companies have been relatively resilient over the past three months. Communication services experienced net positive earnings growth upgrades as internet companies have navigated the COVID-19 lockdown relatively well. Additionally, telecommunications stocks benefitted from their more defensive profiles. Consumer discretionary companies have also been resilient, buoyed by significant exposure to the online economy. Cyclical sectors including energy, financials, and real estate have been the most challenged. The earnings growth expectations for information technology companies, our largest sector overweight in the Fund, were negatively impacted by increased restrictions against selling to, and manufacturing semiconductor chips for, Huawei, the Chinese telecom equipment and smartphone manufacturing giant. From a country perspective, China has experienced modest net positive upgrades over the last three months. This reflects the significant presence of online stocks, the market’s expectation of supportive fiscal and monetary stimulus, and China’s relative success in controlling the COVID-19 pandemic and re-opening its economy. Net downgrades increased in Taiwan due to the Huawei issue noted above. India, Russia, and Brazil have experienced more net downgrades than average as these countries have been less successful in controlling their COVID-19 outbreaks.

The MSCI Emerging Markets Value Index underperformed the MSCI Emerging Markets Growth Index in May and has lagged every month this year. Following a poor 2019, the MSCI Emerging Markets Value Index has underperformed the MSCI Emerging Markets Growth Index by 12.7% over the year-to-date period in local currency terms. The MSCI Emerging Markets Value Index is trading at a sizable discount based on both price-to-earnings and price-to-book value ratios. We continue to emphasize value factors in our investment process and we believe that value’s relative performance should improve once COVID-19 uncertainty abates, especially given the discount offered by value stocks currently.

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 Fund holdings and characteristics are subject to change. There is no guarantee that any forecasts made will come to pass. Any securities identified and described in this report 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. Diversification does not protect against market loss. Current and future holdings are subject to risk.

Documents

Fund information: