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 “stock specific” factors relating to valuation, growth, technical indicators (such as stock price momentum), competitive strength, and “top-down” factors relating to macroeconomics, currency, country and economic sector. Currently, the valuation factor category receives the highest overall weight in the model and stock-specific factors comprise approximately 75% of the score for a company. For each stock, the relative weight assigned to each stock-specific factor differs depending on its classification (for example, value, growth, momentum, capitalisation or other classifications). The relative weights of these stock-specific factors are sometimes referred to as “contextual weights.”. As the Investment Manager is continually seeking to improve model performance, the factors and their weightings in the model may change over time, or if the classification of a stock changes. 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 EM 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*
$0.00
Inception
October 19, 2016
ISIN
IE00BWT3P316
Benchmark
MSCI Emerging Markets in USD
Minimum investment
$1,000,000
Total expense ratio
1.24%
*As of August 05, 2022
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Strategy overview

The portfolio managers discuss our Emerging Markets strategy.

Portfolio managers

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

Performance

QTD YTD 1 year3 years Since inception
Fund -5.1%-11.6%-20.1%0.0%3.8%
MSCI Emerging Markets in USD -11.3%-17.5%-25.0%0.9%4.4%
QTD YTD 1 year3 years Since inception
Fund -5.1%-11.6%-20.1%0.0%3.8%
MSCI Emerging Markets in USD -11.3%-17.5%-25.0%0.9%4.4%
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 June 30, 2022)

Benchmark:
Asset Allocation
Fund
Stocks 97.9%
Cash 2.1%
Fund Characteristics
Fund Benchmark
Holdings 176 1382
Weighted avg. market cap (US $MM) $67,144 $67,746
NTM price/earnings 6.3 10.2
Price/book value 1.0 1.7
NTM EPS revision (wtd. avg.) -1.08 -5.3
Net assets $2,325,451.61 -
TOP 10 ACTIVE HOLDINGS
Security Country Active weight*
China Construction Bank Corp. China 2.1%
PICC Property & Casualty Co., Ltd. China 1.3%
Banco do Brasil SA Brazil 1.2%
PetroChina Co., Ltd. China 1.2%
Samsung Electronics Co., Ltd. South Korea 1.2%
Tongwei Co China 1.2%
JBS SA Brazil 1.2%
Daqo New Energy China 1.2%
Kia Corp. South Korea 1.1%
Hon Hai Precision Industry Co., Ltd. Taiwan 1.1%

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 22.5% 19.2%
Financials 21.5% 21.2%
Materials 11.6% 8.4%
Industrials 10.4% 5.6%
Energy 9.1% 5.0%
Consumer Staples 6.6% 6.1%
Consumer Discretionary 6.4% 14.9%
Communication Services 6.0% 10.6%
Health Care 2.4% 4.0%
Utilities 1.2% 2.9%
Real Estate 0.2% 2.1%
TOP 10 COUNTRIES
Country Strategy Benchmark
China 33.0% 35.4%
Taiwan 15.7% 14.5%
South Korea 14.5% 11.2%
India 11.9% 12.7%
Brazil 5.6% 4.9%
Saudi Arabia 3.6% 4.3%
South Africa 2.9% 3.5%
Thailand 2.8% 1.9%
Indonesia 2.2% 1.8%
United Arab Emirates 1.8% 1.3%
Regional Allocation
  • Emerging Asia 80.6%
  • Emerging Europe, Middle East, Africa 10.0%
  • Emerging Latin America 7.3%

Commentary (As of April 30, 2022)

Highlights

  • The ongoing war in Ukraine and Covid-19 lockdowns in China weighed on emerging market (“EM”) assets in April.
  • While Fed interest rate increases can also weigh on EM currencies, many EM central banks have been raising interest rates in anticipation of the Fed’s actions. In April, the Bank of Korea raised its policy rate by 0.25% to 1.5%, the highest level since 2019. We are overweight South Korean equities in the Fund, due in part to attractive valuation, growth, and top-down characteristics. Other EM central banks that have recently raised interest rates include Brazil, Mexico, South Africa, and Taiwan.
  • While we incorporate growth expectations into our multi-factor investment process, we continue to emphasize valuation in our approach. With a balance of favorable valuation, growth, and price momentum characteristics relative to the Index, we believe the portfolio provides outperformance potential looking forward.

Portfolio Attribution

The Causeway Emerging Markets UCITS Fund (“Fund”) performed in-line with the Index in April 2022. 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 price momentum factors were positive indicators during the month while growth and competitive strength were negative. Of our top-down factors, our macroeconomic and currency factors were positive. Our country and sector factors were negative indicators in April.

Investment Outlook

Earnings growth upgrades for EM equities continue to lag those in developed markets. EM sectors with the weakest earnings upgrades were communication services, consumer discretionary, and real estate. All three of these sectors are dominated by Chinese stocks, which were impacted by the Covid-19 lockdowns. The sectors with the strongest earnings upgrades were energy, information technology, and financials. Energy benefitted from strong oil prices and information technology benefitted from positive revisions for a few larger capitalization stocks. Financials benefitted from rising interest rates. The countries with the weakest net upgrades include China, India, and Thailand. While Covid-19 containment policies have weighed on Chinese stocks, rising commodity prices have dampened the growth outlook for Indian equities. The countries with the strongest net upgrades include Taiwan, Turkey, and Mexico. Positive revisions for larger capitalization companies drove strength in Taiwan. We are overweight Taiwanese stocks in the Fund due to attractive bottom-up and top-down characteristics. Mexican stocks have benefitted from economic linkages with the US. While we incorporate growth expectations into our multi-factor investment process, we continue to emphasize valuation in our approach. With a balance of favorable valuation, growth, and price momentum characteristics relative to the Index, we believe the portfolio provides outperformance potential looking forward.

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: