Diversified exposure to emerging markets, seeking to capture value and growth

The Fund normally invests at least 80% of its total assets in equity securities of companies located in emerging (less developed) markets and other investments that are tied economically to emerging markets. Generally these investments include common stock, preferred and preference stock, American Depositary Receipts, European Depositary Receipts, Global Depositary Receipts, and exchange-traded funds (“ETFs”) that invest in emerging markets securities.

Causeway uses a quantitative investment approach to purchase and sell investments for the Fund. Causeway’s proprietary computer model analyzes a variety of factors to assist in selecting securities. The model currently analyzes factors relating to valuation, earnings growth, technical indicators, macroeconomics, currency, countries and sectors.

YTD Return*
+5.09%
Nav*
$11.98, +0.11
Inception
March 30, 2007
Cusip
149498107
Benchmark
MSCI Emerging Markets
Minimum Investment
$1,000,000
Sales Charge
None
Net Expense Ratio
1.15%
*As of June 10, 2019

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 years5 years10 years Since inception
Fund -5.6%2.5%-12.7%8.5%0.7%6.4%3.5%
MSCI Emerging Markets -5.3%4.2%-8.3%10.3%2.2%5.4%3.4%
QTD YTD 1 year3 years5 years10 years Since inception
Fund -5.6%2.5%-12.7%8.5%0.7%6.4%3.5%
MSCI Emerging Markets -5.3%4.2%-8.3%10.3%2.2%5.4%3.4%
QTD YTD 1 year3 years5 years10 years Since inception
Fund 8.6%8.6%-12.7%9.4%3.0%10.7%4.0%
MSCI Emerging Markets 10.0%10.0%-7.1%11.1%4.1%9.3%3.9%
QTD YTD 1 year3 years5 years10 years Since inception
Fund 8.6%8.6%-12.7%9.4%3.0%10.7%4.0%
MSCI Emerging Markets 10.0%10.0%-7.1%11.1%4.1%9.3%3.9%
20182017201620152014201320122011201020092008
Fund -17.9%39.8%9.2%-16.0%2.1%-2.6%25.8%-18.1%26.3%88.1%-58.4%
MSCI Emerging Markets -14.2%37.8%11.6%-14.6%-1.8%-2.3%18.6%-18.2%19.2%79.0%-53.2%
Fund
MSCI Emerging Markets
20182017201620152014201320122011201020092008
-17.9%39.8%9.2%-16.0%2.1%-2.6%25.8%-18.1%26.3%88.1%-58.4%
-14.2%37.8%11.6%-14.6%-1.8%-2.3%18.6%-18.2%19.2%79.0%-53.2%

Portfolio (as of May 31, 2019)

Benchmark: MSCI Emerging Markets
Asset Allocation
Fund
Stocks 97.8%
Cash 2.2%
Fund Characteristics
Fund Benchmark
No. of holdings 139 1197
Weighted avg. market cap (US $MM) $53,493 $46,668
NTM price/earnings 9.2 11.5
Price/book value 1.3 1.6
NTM EPS revision (wtd. avg) -2.4 -5.1
Net assets $3,564,329,239 -
TOP 10 ACTIVE HOLDINGS
Security Country Active weight*
Tencent Holdings Ltd. China 6.6%
China Construction Bank Corp. China 3.3%
Investimentos Itau Brazil 2.0%
Lukoil Russia 2.0%
Banco do Brasil SA Brazil 1.5%
Gazprom PJSC Russia 1.9%
Samsung Electronics Co., Ltd. South Korea 4.4%
Anhui Conch Cement Co., Ltd. China 1.3%
Ping An Insurance (Group) Co. of China Ltd. China 2.3%
JBS SA Brazil 1.1%

A "weighted average” measures a characteristic by the market capitalization of each stock. Price/book value is the weighted average of the price/book values of all the stocks in a portfolio. The P/B value 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-month 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 25.4% 25.5%
Information Technology 14.9% 13.7%
Communication Services 13.1% 11.6%
Energy 10.4% 8.1%
Consumer Discretionary 8.4% 13.0%
Materials 7.0% 7.6%
Industrials 6.6% 5.4%
Consumer Staples 5.4% 6.7%
Health Care 2.3% 2.7%
Real Estate 2.0% 3.0%
Utilities 1.2% 2.7%
Equity Funds 1.1% 0.0%
TOP 10 COUNTRIES
Country Fund Benchmark
China 33.2% 33.0%
South Korea 15.2% 13.0%
India 10.8% 9.2%
Brazil 9.2% 7.2%
Taiwan 8.9% 11.3%
Russia 5.6% 3.8%
Thailand 3.1% 2.3%
Mexico 2.1% 2.7%
South Africa 1.8% 5.9%
Indonesia 1.2% 2.2%
Regional Allocation
  • Emerging Asia 73.8%
  • Emerging Latin America 12.4%
  • Emerging Europe, Middle East, Africa 11.7%

Commentary (As of April 30, 2019)

Highlights

  • Buoyed by an increasingly dovish US Federal Reserve and optimism surrounding US-China trade negotiations, emerging markets (“EM”) equities posted positive returns in March.

Portfolio attribution

Causeway Emerging Markets Fund (“Fund”) outperformed the Index in March 2019. We use both bottom-up and top-down factor categories to seek to forecast alpha for the stocks in the Fund’s investable universe. Our earnings growth factor was the top performing bottom-up category during the month, rebounding from a weak start to the year. Our value factor category was a neutral indicator during the month while our price momentum category was modestly negative. Our macroeconomic factor was the only top-down category in positive territory during the month. Our country, sector, and currency factors posted negative returns.

Over the month, Fund positioning in the emerging Asia region contributed to performance relative to the Index, primarily driven by positive stock selection in India and South Korea. Within the EMEA region, an overweight position in Turkey detracted from relative performance. Positioning in the emerging Latin America region was neutral for performance. From a sector perspective, the largest contributors to relative performance were real estate, materials, and information technology. Positioning in the industrials, energy, and consumer staples sectors detracted from relative performance. The greatest stock-level contributors to relative performance included overweight positions in mortgage lender, Indiabulls Housing Finance Ltd. (India), real estate developer, Shimao Property Holdings Ltd. (China), and online services company, Tencent Holdings Ltd. (China). The largest stock-level detractors from relative performance included overweight positions in financial and industrial holdings company, Investimentos Itau (Brazil), power generation & construction company, Tekfen Holding AS (Turkey), and mobile phone operator, Turkcell Iletisim Hizmetleri AS (Turkey).

Investment outlook

After underperforming in 2018, our momentum factor has continued to lag this year. We acknowledge that the momentum factor’s performance can be volatile and the current environment may be particularly challenging for this approach. In the late stages of a market and economic cycle characterized by uncertain Fed policy, US-China trade tensions, and Brexit-related issues, trends may be fleeting and overwhelmed by investors’ desires to harvest short-term profits. This has presented a difficult environment for the momentum factor. We are researching momentum’s recent underperformance to determine whether this phenomenon is cyclical, structural, or attributable to natural volatility. However, we continue to believe that adding momentum to a value-based strategy helps minimize value traps and enhances the Fund’s risk-adjusted return profile over the long-term.

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. The Fund may invest in derivatives, which are often more volatile than other investments and may magnify the Fund's gains or losses. Investing in ETFs is subject to the risks of the underlying funds.

Distributions

Dividends Short-term capital gains Long-term capital gains
2018 $0.2296 $0.0000 $0.0000
2017 $0.2232 $0.0000 $0.0000
2016 $0.1597 $0.0000 $0.0000
2015 $0.1620 $0.0000 $0.0000
2014 $0.2775 $0.0000 $0.0000
2013 $0.0825 $0.0000 $0.0000
2012 $0.2526 $0.0000 $0.0000
2011 $0.0778 $0.0000 $0.0000
2010 $0.2451 $0.0000 $0.0000
2009 $0.2830 $0.0000 $0.0000
2008 $0.1186 $0.0000 $0.0000
2007 $0.2002 $0.4003 $0.0000

Distributions are per share. Distribution amounts are based on gains and losses realized and income earned by the Fund through October 31 (or earlier under certain circumstances).

Documents

Fund information:

Forms: