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*
$ 15.76
Inception
October 19, 2016
ISIN
IE00BWT3P316
Benchmark
MSCI Emerging Markets in USD
Minimum investment
$1,000,000
Total expense ratio
1.24%
*As of January 22, 2021
Download Fact Sheet Download Prospectus
Contact Us

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 19.7%15.9%15.9%3.1%8.9%
MSCI Emerging Markets in USD 19.8%18.7%18.7%6.6%11.5%
QTD YTD 1 year3 years Since inception
Fund 19.7%15.9%15.9%3.1%8.9%
MSCI Emerging Markets in USD 19.8%18.7%18.7%6.6%11.5%
20182017
Fund -14.4%21.1%
MSCI Emerging Markets in USD -14.2%37.8%
20182017
Fund -14.4%21.1%
MSCI Emerging Markets in USD -14.2%37.8%

Portfolio (as of December 31, 2020)

Benchmark:
Asset Allocation
Fund
Stocks 98.2%
Cash 1.8%
Fund Characteristics
Fund Benchmark
Holdings 116 1396
Weighted avg. market cap (US $MM) $154,554 $124,202
NTM price/earnings 12.1 14.7
Price/book value 1.8 2.0
NTM EPS revision (wtd. avg.)
Net assets $2,339,556.68 -
TOP 10 ACTIVE HOLDINGS
Security Country Active weight*
Samsung Electronics Co., Ltd. South Korea 2.3%
China Construction Bank Corp. China 2.0%
Tencent Holdings Ltd. China 1.8%
Taiwan Semiconductor Manufacturing Co., Ltd. Taiwan 1.4%
Kweichow Moutai Co China 1.4%
Baidu China 1.0%
Kia Motors Corp. South Korea 1.0%
Anhui Conch Cement Co., Ltd. China 0.9%
Vale SA Brazil 0.9%
Wuliangye Yibin Co China 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 25.4% 20.5%
Financials 17.0% 18.0%
Consumer Discretionary 15.8% 18.3%
Communication Services 12.2% 11.6%
Materials 8.4% 7.6%
Consumer Staples 7.0% 5.9%
Energy 4.5% 5.0%
Health Care 3.3% 4.7%
Industrials 2.8% 4.3%
Real Estate 1.5% 2.1%
Utilities 0.3% 2.0%
TOP 10 COUNTRIES
Country Strategy Benchmark
China 35.0% 39.1%
South Korea 18.1% 13.5%
Taiwan 15.7% 12.8%
India 9.7% 9.2%
Brazil 6.6% 5.1%
Russia 4.1% 3.0%
South Africa 2.5% 3.5%
Mexico 1.9% 1.7%
Malaysia 1.0% 1.5%
Thailand 1.0% 1.8%
Regional Allocation
  • Emerging Asia 81.3%
  • Emerging Latin America 8.9%
  • Emerging Europe, Middle East, Africa 8.0%

Commentary (As of November 30, 2020)

Highlights

  • Global equities delivered strong returns in November as multiple pharmaceutical companies announced highly successful COVID-19 vaccine trials during the month.
  • Joe Biden won the US presidential election in November and most swing states have certified the election results. Democrats did not fare as well in down-ballot voting as the party lost seats in the House of Representatives and were unable to secure a majority in the Senate, subject to two runoff elections in Georgia scheduled for January 5th. The US political backdrop is positive for EM equities as some fiscal stimulus appears likely and the US monetary policy should continue to be accommodative.
  • We continue to emphasize value factors in our multi-factor investment process. Looking forward, we believe that EM value stocks are poised to rebound given the valuation discount, the anticipated resumption of global growth in 2021, and the upcoming rollout of highly effective COVID-19 vaccines.

Portfolio Attribution

Causeway Emerging Markets Fund (“Fund”) underperformed the Index in November 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 many stock prices sharply reversed course following the vaccine announcements, our bottom-up price momentum factor was the poorest performing indicator during the month. Our bottom-up earnings growth and valuation factors were also negative indicators in November. Of our top-down factors, sector, currency, and macroeconomic were negative indicators while country was positive.

Investment Outlook

Earnings growth prospects have continued to improve for many EM companies. Earnings growth upgrades have exceeded downgrades in all but two sectors. The information technology, communication services, and consumer discretionary sectors have experienced the strongest net upgrades. Information technology companies continue to benefit from increased technological adoption during the pandemic as well as strong demand related to 5G. Communication services, which is dominated by the internet giants, is also benefitting from stay-at-home activities. Consumer discretionary has been buoyed the resumption of global growth and significant exposure to e-commerce. From a country perspective, Taiwan experienced the strongest net upgrades, primarily driven by information technology companies. Prospects for Malaysian companies have also improved as analysts have upgraded the outlook for banks, which were heavily downgraded earlier in the year. Earnings growth prospects for companies in the commodity-orientedeconomies of South Africa and Brazil were also severely impacted in the early months of the COVID-19 pandemic and have since rebounded.

While our value factor underperformed in November, the MSCI Emerging Markets Value Index outperformed the MSCI Emerging Markets Growth Index by 6.2% in local currency terms during the month. Much of the performance differential was attributable to one Chinese consumer discretionary company, which underperformed as mentioned above and has a large weight in the MSCI Emerging Markets Growth Index. This effect was less pronouncedin our value factor, which is measured on an equal-weighted basis. Sector effects also explained some of the discrepancy between the MSCI indices and our value factor. Financials, which comprise a large portion of the MSCI Emerging Markets Value Index, performed well in November. Our value factor is sector neutral so the financials performance was less impactful. We continue to emphasize value factors in our multi-factor investment process. Looking forward, we believe that EM value stocks are poised to rebound given the valuation discount, the anticipated resumption of global growth in 2021, and the upcoming rollout of highly effective COVID-19 vaccines.

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: