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*
- $ 12.10
- Inception
- October 19, 2016
- ISIN
- IE00BWT3P316
- Benchmark
- MSCI Emerging Markets in USD
- Minimum investment
- $1,000,000
- Total expense ratio
- 1.25%
Portfolio managers
Arjun Jayaraman, PhD, CFA
Quantitative Portfolio Manager
Dr. Jayaraman is a director, quantitative portfolio manager and head of the quantitative research at Causeway and has been with the firm since January 2006. Dr. Jayaraman’s responsibilities and research include stock selection, asset allocation, risk model development, and portfolio construction.
From 2004 to 2005, Dr. Jayaraman was a portfolio manager at PanAgora Asset Management. He was the lead portfolio manager on the non-U.S. large cap core equity portfolios and was the co-portfolio manager on the global large cap core equity portfolios. From 2000 to 2004, Dr. Jayaraman managed the same portfolios at Putnam Investments, in addition to working closely with the teams that managed Putnam's traditional non-U.S. strategies. From 1998 to 2000, Dr. Jayaraman worked as a quantitative analyst at Harborview Trading Associates.
Dr. Jayaraman earned a PhD from New York University at the Stern School of Business and a BA in economics from Columbia University. Dr. Jayaraman is a CFA charterholder.
MacDuff Kuhnert, CFA
Mr. Kuhnert is a director and a quantitative portfolio manager at Causeway and has been with the firm since its inception in June 2001. Mr. Kuhnert’s responsibilities and research include stock selection, asset allocation, risk model development, and portfolio construction.
From 1996 to 2001, Mr. Kuhnert worked for the international team of the Hotchkis & Wiley division of Merrill Lynch Investment Managers (HW-MLIM) as a quantitative research associate. During his tenure at HW-MLIM, Mr. Kuhnert created and developed advanced quantitative models used in the international value investment process. He also helped develop the team’s first equity risk model.
Mr. Kuhnert earned a BA in chemistry from Dartmouth College. He is a CFA charterholder, a member of the CFA Society of Los Angeles, and a member of the Chicago Quantitative Alliance. Mr. Kuhnert co-authored “To Hedge or Not to Hedge: Factor Dependence and Skill among Hedge Funds” published in The Journal of Alternative Investments.
Joe Gubler, CFA
Mr. Gubler is a quantitative portfolio manager at Causeway. He joined the firm in 2005 and has been a portfolio manager since January 2014. In addition to managing quantitative portfolios and conducting alpha research, Mr. Gubler also leads the efforts to maintain and enhance Causeway’s proprietary risk models. He is also a member of the operating committee.
From 1999 to 2005, Mr. Gubler worked as a software engineer, with employers ranging from startups to established businesses such as Monster.com. From 1998 to 1999, Mr. Gubler worked as a staff scientist for News Corporation, conducting studies on the RF propagation of broadcast signals. While studying astrophysics at UC San Diego, Mr. Gubler worked as a graduate research assistant in the Jet Propulsion Laboratory's stellar interferometry group.
Mr. Gubler earned a BS, cum laude, in physics from UC Irvine, an MS in physics from UC San Diego, and an MBA from the UCLA Anderson Graduate School of Management. Mr. Gubler is a CFA charterholder.
Performance
The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth less than their original cost and current performance may be lower than the performance quoted. Returns greater than one year are average annual total returns. All information is as of the date shown. Investment performance reflects the Investment Manager’s voluntary undertaking to limit ongoing charges during certain periods. In the absence of such voluntary undertaking, total return would be reduced. MSCI has not approved, reviewed or produced this report, makes no express or implied warranties or representations and is not liable whatsoever for any data in the report. You may not redistribute the MSCI data or use it as a basis for other indices or investment products.
Portfolio (as of January 31, 2020)
Asset Allocation
| Fund | |
|---|---|
| Stocks | 97.9% |
| Cash | 2.1% |
Fund Characteristics
| Fund | Benchmark | |
|---|---|---|
| Holdings | 130 | |
| Weighted avg. market cap (US $MM) | $92,088 | $0 |
| NTM price/earnings | 9.4 | 0.0 |
| Price/book value | 1.4 | 0.0 |
| NTM EPS revision (wtd. avg.) | ||
| Net assets | $1,557,043.90 | - |
TOP 10 ACTIVE HOLDINGS
| Security | Country | Active weight* |
|---|---|---|
| Samsung Electronics Co., Ltd. | South Korea | 1.9% |
| China Construction Bank Corp. | China | 1.9% |
| Lukoil | Russia | 1.6% |
| Investimentos Itau | Brazil | 1.5% |
| JBS SA | Brazil | 1.4% |
| Tencent Holdings Ltd. | China | 1.3% |
| Anhui Conch Cement Co., Ltd. | China | 1.2% |
| Gazprom PJSC | Russia | 1.2% |
| Sberbank | Russia | 1.1% |
| Ping An Insurance Group Co Of | China | 1.0% |
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 |
|---|---|---|
| Financials | 23.0% | 23.8% |
| Information Technology | 20.0% | 16.1% |
| Consumer Discretionary | 12.9% | 14.3% |
| Communication Services | 11.8% | 11.4% |
| Energy | 9.2% | 7.1% |
| Consumer Staples | 6.2% | 6.5% |
| Materials | 5.6% | 7.3% |
| Industrials | 3.7% | 5.2% |
| Real Estate | 2.3% | 2.8% |
| Health Care | 2.1% | 3.0% |
| Utilities | 1.1% | 2.7% |
TOP 10 COUNTRIES
| Country | Strategy | Benchmark |
|---|---|---|
| China | 35.0% | 34.2% |
| South Korea | 13.4% | 11.6% |
| Taiwan | 13.0% | 11.7% |
| Brazil | 10.3% | 7.3% |
| India | 8.6% | 9.0% |
| Russia | 8.1% | 4.0% |
| Thailand | 2.3% | 2.5% |
| Mexico | 1.8% | 2.4% |
| South Africa | 1.2% | 4.5% |
| Turkey | 1.0% | 0.5% |
Regional Allocation
- Emerging Asia 73.2%
- Emerging Latin America 12.9%
- Emerging Europe, Middle East, Africa 11.8%
Documents
Fund information:
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Consent to electronic delivery
By clicking Submit, you consent to the electronic delivery, via download from this website, of the Causeway Fund's prospectuses, privacy policies, account applications, IRA Disclosure Statement(s), IRA Custodial Agreement(s) and any other materials that may be required in connection with the information you requested, on the terms set forth below. You also agree to read these documents before investing, and agree to the terms contained in these documents, particularly the prospectus.
ACCESS TO ONLINE DOCUMENTS
To view and print the documents, you will need Adobe Acrobat Reader. If you do not have Acrobat Reader, you can download it for free at www.adobe.com. If you are unable to download, view, or print the documents, contact Causeway Funds at 866-947-7000 for assistance or to request a free paper copy of any of these documents.
Commentary (As of December 31, 2019)
Highlights
Portfolio Attribution
Causeway Emerging Markets UCITS Fund - USD Share Class (“Fund”) underperformed the Index in December 2019. 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 value factor was our strongest performing bottom-up indicator in December, but it has been the weakest indicator over the year-to-date (“YTD”) period. Our bottom-up price momentum and earnings growth factors were both positive indicators in December and the YTD period. Of our top-down factors, macroeconomic and sector were positive indicators during the month. While our country and currency factors were negative during the month, our four top-down factors were all positive indicators in 2019.
Investment Outlook
MSCI EM small capitalization (“cap”) stocks underperformed their large cap peers in 2019, continuing their multi-year underperformance since 2016. Our overweight to mid-and small cap stocks in the Fund has detracted from relative performance. Despite rebounding late in the year,our contextual weighting scheme also underperformed in 2019. When calculating a stock’s expected alpha, our model assigns the relative weight to each bottom-up stock-specific factor for a particular company depending on its classification. We remain confident in this approach, which we believe has benefitted the strategy compared to a uniform weighting scheme since the strategy's inception in 2007.
While our value factor lagged in 2019, it has outperformed in recent months. Interestingly, the MSCI Emerging Markets Value Index underperformed the MSCI Emerging Markets Growth Index during the fourth quarter. The return differential between our value factor and the MSCI indices can be attributed in part to the strong performance of a few large cap growth stocks. While the Index is capitalization-weighted, we use equally-weighted returns for our factor in order to avoid assigning a handful of stocks a disproportionate weight. Secondly, our value factor has a sector-relative component while MSCI’s style classification schemes do not include sector adjustments. We continue to emphasize value factors in our investment process, and the Fund’s three largest country underweights – South Africa, Saudi Arabia, and Indonesia –are all attributable in part to valuation considerations.
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.