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*
£ 15.53
Inception
October 19, 2016
ISIN
IE00BWT3P316
Benchmark
MSCI Emerging Markets in USD
Minimum investment
$1,000,000
Total expense ratio
1.24%
*As of June 14, 2021
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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 2.6%7.2%48.2%6.9%9.7%
MSCI Emerging Markets in USD 4.9%7.4%51.5%10.0%12.1%
QTD YTD 1 year3 years Since inception
Fund 2.6%7.2%48.2%6.9%9.7%
MSCI Emerging Markets in USD 4.9%7.4%51.5%10.0%12.1%
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 May 31, 2021)

Benchmark:
Asset Allocation
Fund
Stocks 98.4%
Cash 1.6%
Fund Characteristics
Fund Benchmark
Holdings 117 1424
Weighted avg. market cap (US $MM) $139,848 $113,899
NTM price/earnings 10.2 13.0
Price/book value 1.7 2.1
NTM EPS revision (wtd. avg.) 10.39 2.18
Net assets $3,079,273.73 -
TOP 10 ACTIVE HOLDINGS
Security Country Active weight*
Tencent Holdings Ltd. China 2.0%
China Construction Bank Corp. China 2.0%
Hindalco Industries India 1.2%
Samsung Electronics Co., Ltd. South Korea 1.2%
Kia Corp. South Korea 1.1%
POSCO South Korea 1.1%
Hon Hai Precision Industry Co., Ltd. Taiwan 1.0%
MediaTek, Inc. Taiwan 1.0%
Fubon Financial Holding Co., Ltd. Taiwan 0.9%
Vale SA Brazil 0.9%

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 25.5% 20.4%
Financials 18.5% 18.3%
Consumer Discretionary 13.8% 16.8%
Communication Services 11.7% 11.4%
Materials 10.9% 8.7%
Consumer Staples 6.2% 5.7%
Energy 4.6% 4.9%
Industrials 3.3% 4.7%
Health Care 3.0% 5.0%
Real Estate 0.9% 2.1%
Utilities 0.0% 2.0%
TOP 10 COUNTRIES
Country Strategy Benchmark
China 33.4% 37.6%
South Korea 17.6% 13.0%
Taiwan 17.4% 13.9%
India 10.4% 10.0%
Brazil 5.3% 5.0%
Russia 4.0% 3.2%
South Africa 2.6% 3.8%
Mexico 2.3% 1.8%
Thailand 1.9% 1.7%
Saudi Arabia 1.4% 2.8%
Regional Allocation
  • Emerging Asia 81.9%
  • Emerging Europe, Middle East, Africa 8.9%
  • Emerging Latin America 7.6%

Commentary (As of April 30, 2021)

Highlights

  • With contributions from each of the major region groups, emerging markets (“EM”) equities posted positive returns in April.
  • Flattening yield curves and the pause in the reopening trade weighed on value stocks during the month. However, we believe the global vaccine rollout should progress and most economies should continue to reopen, putting upward pressure on interest rates.
  • We emphasize value factors in our multi-factor investment process and we believe the outlook for value stocks is favorable as many economies continue to rebound from the Covid-19 crisis.

Portfolio Attribution

The Causeway Emerging Markets UCITS Fund (“Fund”) outperformed the Index in April 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 growth factor was the strongest indicator in April. Our valuation, price momentum and competitive strength factors were also positive indicators during the month. Of our top-down factors, macroeconomic and currency were negative indicators while country and sector were positive.

Investment Outlook

Within EM, earnings growth upgrades have generally been strongest in cyclical sectors, particularly materials, energy, and information technology, according to analyst estimates. Growth upgrades for these sectors reflect analysts’ optimism that economies continue to reopen and economic activity will accelerate. We are overweight materials and information technology stocks in the Fund due to attractive growth and price momentum characteristics. We are underweight energy stocks due to valuation considerations. Earnings growth upgrades have been weakest for stocks in the consumer discretionary, communication services, and real estate sectors. From a country perspective, net upgrades were particularly strong in Russia, Taiwan, and Saudi Arabia. Chinese stocks experienced the most net downgrades on a float-weighted basis. China’s economy fared relatively well during the pandemic and Chinese companies are not experiencing the cyclical rebound from a low base to the same extent as stocks in some other countries. Additionally, the Chinese government is paring back stimulus measures and consequently providing less support for its economy. We are underweight Chinese stocks in the Fund due to bottom-up and top-down considerations. After outperforming during the first quarter, the MSCI EM Value Index underperformed the MSCI EM Growth Index in April. Flattening yield curves and the pause in the reopening trade weighed on value stocks during the month. However, we believe the global vaccine rollout should progress and most economies should continue to reopen, putting upward pressure on interest rates. This would provide a positive backdrop for value stocks, which trade at a sizable discount to growth stocks. We emphasize value factors in our multi-factor investment process and we believe the outlook for value stocks is favorable as many economies continue to rebound from the Covid-19 crisis.

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: