Form N-CSRS CAUSEWAY CAPITAL MANAGEM For: Mar 31
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act File Number 811-10467
Causeway Capital Management Trust
(Exact name of registrant as specified in charter)
11111 Santa Monica Boulevard, 15th Floor
c/o Causeway Capital Management LLC
Los Angeles, CA 90025
(Address of principal executive offices) (Zip code)
The Corporation Trust Company
Corporation Trust Center
1209 Orange Street
Wilmington DE, 19801
(Name and address of agent for service)
Registrants telephone number, including area code: 1-866-947-7000
Date of fiscal year end: September 30, 2021
Date of reporting period: March 31, 2021
Item 1. | Reports to Stockholders. |
The registrants schedules as of the close of the reporting period, pursuant to Rule 30e-1 under the Investment Company Act of 1940, as amended (the Act) (17 CFR § 270.30e-1), are attached hereto.
TABLE OF CONTENTS
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Statement Regarding Basis for Approval of Investment Advisory Agreement |
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25 |
For the period ended March 31, 2021 since inception on December 15, 2020, Causeway Concentrated Equity Funds (the Funds) Institutional Class returned 8.01% and Investor Class returned 7.90% compared to the MSCI ACWI Index (Gross) (Index) return of 6.81%. As of March 31, 2021, the Fund had net assets of $5.5 million.
Performance Review
With the news of effective vaccines in November 2020 portending a light at the end of the tunnel of the Covid-19 pandemic, equity markets experienced a sharp reversal in momentum. Cyclically exposed stocks, particularly those hardest hit by the coronavirus lockdowns (such as companies exposed to air travel), rebounded strongly during the period. The vaccine announcements in the fourth quarter of 2020 and the subsequent vaccine rollouts in the first quarter of 2021 amplified investor sentiment for a normalization in global air traffic and further economic reopening. The March reading of the IHS Markit US Composite Purchasing Managers Index (PMI) signaled the fastest upturn in private sector business activity in over six years, with a notable rebound in the service sector. US President Joe Biden signed a $1.9 trillion stimulus package during March; we estimate the full impact of the Covid-19 relief stimulus packages to flow through to the real economy in the second half of 2021 and into 2022. We believe US 10-Year bond yields may reach 2% by the end of 2021, if not earlier, as market participants price in higher future short-term growth and inflation expectations. However, central banks will likely accelerate bond buying if real long-term interest rates stay above zero, as such a rate rise could hinder economic recovery. The effects of monetary and fiscal stimulus, combined with an end to the most devastating aspects of the pandemic restrictions as vaccination campaigns progress, have brought a longer-term concern into focus: inflation. Wage pressures in most developed markets appear mild, but manufacturing input costs are rising sharply. The rapid reopening of economies and consumers pent up demand could lead to a surge in spending, thereby adding to inflation pressures. However, we believe the long-term deflationary forces of demographics and technological advancement (such as digitization and automation) remain in place. The UKs successful vaccine rollout continued apace, with over 46% of adults receiving at least one dose, a slightly higher percentage than in the US for the same period. Correspondingly, optimism for an end to the pandemic became evident in certain economic data. The UK Services PMI jumped to 56.8 in March, up from 49.5 in February. Service providers were encouraged by signs of consumers pent up demand and business optimism in the UK reached its highest level since early 2004. In the Eurozone, manufacturing output rose in March, driven by a strong rebound in global goods demand. Output and new orders increased at record rates. Nonetheless, a clear link between the pace of vaccine rollouts and a resumption in services activity persisted. The European Unions rollout of vaccinations remains challenging; only 11% of the population have thus far received a dose. This perpetuated the dichotomy between manufacturing and services sector activity, with the March Eurozone services PMI reading of 48.8 indicating contraction. Chinas economy has rapidly recovered from the pandemic lockdowns last year. Authorities announced a moderate tightening of monetary policy measures during the first quarter of 2021, mainly to address the risk of overheating in select areas of the economy. The lagged effect of fiscal stimulus packages in other regions, though, may amplify Chinas already robust rebound from Covid-19. The USs recent bumper stimulus package could meaningfully increase Chinas exports to the US over the next two years. High demand for Chinese goods, coupled with the resilient domestic economy, should, in our view, give authorities leeway to address areas of concern via monetary policy
2 | Causeway Concentrated Equity Fund |
without impacting economic growth. The best performing markets in the Index included Chile, Saudi Arabia, Taiwan, Norway, and South Africa. The biggest laggards included Colombia, Turkey, the Philippines, Brazil, and Peru. The best performing sectors in the Index were energy, financials, and materials, while consumer staples, utilities, and health care were the worst performing Index sectors.
Fund holdings in the software & services, technology hardware & equipment, and media & entertainment industry groups, as well as an overweight position in the insurance industry group and an underweight position in the retailing industry group, contributed the most to the Funds performance relative to the Index. Holdings in the commercial & professional services and banks industry groups, along with overweight positions in the pharmaceuticals & biotechnology and utilities industry groups and an underweight position in the energy industry group, detracted from relative performance. The largest contributor to absolute return was travel & tourism technology company, Sabre Corp. (United States). Additional top contributors included technology conglomerate, Alphabet Inc. (United States), specialty chemicals manufacturer, Ashland Global Holdings, Inc. (United States), financial services provider, ING Groep NV (Netherlands), and enterprise management software provider, Oracle Corp. (United States). The largest detractor from performance was defense & information technology services provider, Leidos Holdings, Inc. (United States). Other notable detractors included paper & packaging producer, WestRock Co. (United States), pharmaceuticals & biotechnology company, Roche Holding AG (Switzerland), electric utility provider, RWE AG (Germany), and pharmaceutical producer, Novartis AG (Switzerland).
Investment Outlook
With vaccination rates accelerating, investors turned their attention to undervalued stocks that were sharply sold off when the pandemic accelerated a year ago. Value stocks outpaced their growth peers during the first quarter of 2021, largely led by cyclical sectors such as industrials, materials, consumer discretionary, financials, and the more economically sensitive portion of technology. As high-quality cyclical stocks re-rate upward, we are using this opportunity to lower portfolio risk, measured as prospective volatility versus the benchmark. Consistent with prior market recoveries, stocks in economically defensive industries have lagged the overall markets. Several of these low beta stocks have risen to the top half of our risk-adjusted return ranking, making them potentially attractive portfolio candidates. A common theme for many of our portfolio companies, whether cyclical or defensive, is operational restructuring. We believe companies with experienced management teams can prove to the market that they have used the crisis to reduce expenses and boost efficiency. In our view, this effort should enhance operating leverage and facilitate higher levels of profitability from these well-positioned companies. As free cash flow rises, we believe companies will return capital to shareholders in the form of dividends and share buybacks, providing a critical boost to total return.
The Fund leverages Causeways experience in rigorous, bottom-up fundamental stock selection and quantitative risk management abilities. Typically consisting of 25 to 35 stocks, we believe the Fund has the potential to generate alpha (returns in excess of a benchmark). We designed the Fund with a concentrated approach, employing Causeways proprietary quantitative risk controls. We believe this will allow us to maximize long-term returns while controlling for volatility.
Causeway Concentrated Equity Fund | 3 |
We thank you for your continued confidence in Causeway Concentrated Equity Fund.
March 31, 2021
Jonathan P. Eng Portfolio Manager |
Joseph Gubler Portfolio Manager |
Harry W. Hartford Portfolio Manager |
Sarah H. Ketterer Portfolio Manager |
Ellen Lee Portfolio Manager |
Conor Muldoon Portfolio Manager |
Steven Nguyen Portfolio Manager |
Alessandro Valentini Portfolio Manager |
The above commentary expresses the portfolio managers views as of the date shown and should not be relied upon by the reader as research or investment advice. These views are subject to change. There is no guarantee that any forecasts made will come to pass.
Holdings are subject to change. Current and future holdings are subject to risk. Securities mentioned do not make up the entire portfolio and, in the aggregate, may represent a small percentage of the portfolio.
Investing involves risk including loss of principal. In addition to the normal risks associated with investing, international investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles or from economic or political instability in other nations. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume. Diversification does not prevent all investment losses.
A company may reduce or eliminate its dividend, causing losses to the Fund.
4 | Causeway Concentrated Equity Fund |
March 31, 2021
Cumulative Inception to Date* |
||||
Institutional Class |
8.01 | % | ||
Investor Class |
7.90 | % | ||
MSCI ACWI Index (Gross) |
6.81 | % |
* | Inception is December 15, 2020. |
The performance data represents past performance and is not an indication of future results. Investment return and the principal value of an investment will fluctuate so that an investors shares, when redeemed, may be worth less than their original cost and current performance may be higher or lower than the performance quoted. For performance data current to the most recent month end, please call 1-866-947-7000 or visit www.causewayfunds.com. Investment performance reflects expense reimbursements in effect during certain periods. In the absence of such expense reimbursements, total return would be reduced. The contractual expense limits are in effect until January 31, 2022. Total returns assume reinvestment of dividends and capital gains distributions at net asset value when paid. Investor Class shares pay a shareholder service fee of up to 0.25% per annum of average daily net assets. Institutional Class shares pay no shareholder service fee. Pursuant to the current January 28, 2021 prospectus, the Funds annualized gross ratios of expenses in relation to average net assets were 1.70% and 1.95% for the Institutional Class and Investor Class, respectively, and the Funds annualized ratios of expenses in relation to net assets after fee waivers and reimbursements were 0.85% and 1.10% for the Institutional Class and Investor Class, respectively. For more information, please see the prospectus.
The MSCI ACWI Index (Gross) (the Index) is a free float-adjusted market capitalization index, designed to measure the equity market performance of developed and emerging markets, consisting of 23 developed country indices, including the U.S, and 26 emerging market country indices. The Index is gross of withholding taxes, assumes reinvestment of dividends and capital gains, and does not reflect the payment of transaction costs, fees and expenses associated with an investment in the Fund. It is not possible to invest directly in an index. There are special risks in foreign investing (please see Note 5 in the Notes to Financial Statements).
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 this report. You may not redistribute the MSCI data or use it as a basis for other indices or investment products.
Causeway Concentrated Equity Fund | 5 |
SCHEDULE OF INVESTMENTS (000)*
March 31, 2021 (Unaudited)
Causeway Concentrated Equity Fund | Number of Shares | Value | ||||||
COMMON STOCK |
||||||||
France 12.0% | ||||||||
AXA SA |
8,605 | $ | 231 | |||||
Danone SA |
2,217 | 152 | ||||||
Sanofi-Aventis SA |
2,829 | 280 | ||||||
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663 | ||||||||
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Germany 5.5% | ||||||||
RWE AG |
3,546 | 139 | ||||||
SAP SE |
1,366 | 167 | ||||||
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306 | ||||||||
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Italy 2.6% | ||||||||
Enel SpA |
14,189 | 141 | ||||||
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Japan 2.5% | ||||||||
Takeda Pharmaceutical Co. Ltd. |
3,800 | 137 | ||||||
|
|
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Netherlands 2.4% | ||||||||
Akzo Nobel NV |
1,199 | 134 | ||||||
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South Korea 3.5% | ||||||||
Samsung Electronics Co. Ltd. |
2,685 | 193 | ||||||
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Spain 3.0% | ||||||||
CaixaBank SA |
54,382 | 168 | ||||||
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Switzerland 11.0% | ||||||||
Novartis AG |
2,637 | 226 | ||||||
Roche Holding AG |
718 | 232 | ||||||
Zurich Insurance Group AG |
349 | 149 | ||||||
|
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607 | ||||||||
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United Kingdom 2.8% | ||||||||
Rolls-Royce Group PLC1 |
105,345 | 153 | ||||||
|
|
The accompanying notes are an integral part of the financial statements.
6 | Causeway Concentrated Equity Fund |
SCHEDULE OF INVESTMENTS (000)* (concluded)
March 31, 2021 (Unaudited)
Causeway Concentrated Equity Fund | Number of Shares | Value | ||||||
United States 52.4% | ||||||||
Aflac Inc. |
2,956 | $ | 151 | |||||
Alphabet Inc., Class C1 |
134 | 277 | ||||||
Ashland Global Holdings Inc. |
3,091 | 274 | ||||||
Booking Holdings Inc.1 |
66 | 154 | ||||||
Broadcom Inc. |
310 | 144 | ||||||
Carrier Global Corp. |
3,754 | 159 | ||||||
Essent Group Ltd. |
4,358 | 207 | ||||||
Exelon Corp. |
5,678 | 248 | ||||||
Fiserv Inc.1 |
2,145 | 255 | ||||||
Hill-Rom Holdings Inc. |
1,505 | 166 | ||||||
Leidos Holdings Inc. |
1,291 | 124 | ||||||
Oracle Corp. |
3,497 | 246 | ||||||
Quest Diagnostics Inc. |
1,116 | 143 | ||||||
Sabre Corp.1 |
11,442 | 170 | ||||||
Westrock Co. |
3,423 | 178 | ||||||
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2,896 | ||||||||
|
|
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Total Common Stock |
||||||||
(Cost $5,058) 97.7% |
5,398 | |||||||
|
|
|||||||
Total Investments 97.7% |
||||||||
(Cost $5,058) |
5,398 | |||||||
|
|
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Other Assets in Excess of Liabilities 2.3% |
129 | |||||||
|
|
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Net Assets 100.0% |
$ | 5,527 | ||||||
|
|
* | Except for share data. |
1 | Non-income producing security. |
As of March 31, 2021, all of the Funds investments in securities were considered Level 1, in accordance with the authoritative guidance on fair value measurements and disclosure under U.S. GAAP.
For the period ended March 31, 2021, there were no transfers in or out of Level 3.
For more information on valuation inputs, see Note 2 in the Notes to Financial Statements.
The accompanying notes are an integral part of the financial statements.
Causeway Concentrated Equity Fund | 7 |
As of March 31, 2021, the sector diversification was as follows (Unaudited):
Causeway Concentrated Equity Fund | Common Stock |
% of Net Assets |
||||||
Information Technology |
23.5% | 23.5% | ||||||
Health Care |
21.5 | 21.5 | ||||||
Financials |
16.3 | 16.3 | ||||||
Materials |
10.6 | 10.6 | ||||||
Utilities |
9.6 | 9.6 | ||||||
Industrials |
5.7 | 5.7 | ||||||
Communication Services |
5.0 | 5.0 | ||||||
Consumer Discretionary |
2.8 | 2.8 | ||||||
Consumer Staples |
2.7 | 2.7 | ||||||
|
|
|
|
|||||
Total | 97.7 | 97.7 | ||||||
Other Assets in Excess of Liabilities | 2.3 | |||||||
|
|
|||||||
Net Assets | 100.0% | |||||||
|
|
The accompanying notes are an integral part of the financial statements.
8 | Causeway Concentrated Equity Fund |
STATEMENT OF ASSETS AND LIABILITIES (000)*
(Unaudited)
CAUSEWAY CONCENTRATED EQUITY FUND |
||||
3/31/21 | ||||
ASSETS: |
||||
Investments at Value (Cost $5,058) |
$ | 5,398 | ||
Cash |
137 | |||
Receivable Due from Adviser |
10 | |||
Receivable for Dividends |
6 | |||
Receivable for Tax Reclaims |
3 | |||
Prepaid Expenses |
1 | |||
|
|
|||
Total Assets |
5,555 | |||
|
|
|||
LIABILITIES: |
||||
Payable for Professional Fees |
13 | |||
Payable for Transfer Agent Fees |
10 | |||
Payable for Printing Fees |
3 | |||
Payable Due to Administrator |
1 | |||
Payable for Shareholder Service Fees Investor Class |
| |||
Other Accrued Expenses |
1 | |||
|
|
|||
Total Liabilities |
28 | |||
|
|
|||
Net Assets |
$ | 5,527 | ||
|
|
|||
NET ASSETS: |
||||
Paid-in Capital (unlimited authorization no par value) |
$ | 5,125 | ||
Total Distributable Earnings |
402 | |||
|
|
|||
Net Assets |
$ | 5,527 | ||
|
|
|||
Net Asset Value Per Share (based on net assets of |
$10.80 | |||
|
|
|||
Net Asset Value Per Share (based on net assets of |
$10.79 | |||
|
|
* | Except for Net Asset Value Per Share data. |
Amounts designated as are rounded to $0.
The accompanying notes are an integral part of the financial statements.
Causeway Concentrated Equity Fund | 9 |
(Unaudited)
CAUSEWAY CONCENTRATED EQUITY FUND |
||||
12/15/20 to 3/31/21* |
||||
INVESTMENT INCOME: |
||||
Dividend Income (net of foreign taxes withheld of $5) |
$ | 32 | ||
|
|
|||
Total Investment Income |
32 | |||
|
|
|||
EXPENSES: |
||||
Transfer Agent Fees |
20 | |||
Professional Fees |
16 | |||
Investment Advisory Fees |
12 | |||
Administration Fees |
4 | |||
Printing Fees |
3 | |||
Custodian Fees |
2 | |||
Pricing Fees |
1 | |||
Shareholder Service Fees Investor Class |
| |||
|
|
|||
Total Expenses |
58 | |||
|
|
|||
Waiver of Investment Advisory Fees |
(12 | ) | ||
Reimbursement of Other Expenses |
(34 | ) | ||
|
|
|||
Total Waiver and Reimbursement |
(46 | ) | ||
|
|
|||
Net Expenses |
12 | |||
|
|
|||
Net Investment Income |
20 | |||
|
|
|||
Net Realized and Unrealized Gain (Loss) on Investments: |
||||
Net Realized Gain on Investments |
42 | |||
Net Unrealized Appreciation on Investments |
340 | |||
|
|
|||
Net Realized and Unrealized Gain on Investments |
382 | |||
|
|
|||
Net Increase in Net Assets Resulting from Operations | $ | 402 | ||
|
|
* | Commenced operations on December 15, 2020. |
Amounts designated as are rounded to $0.
The accompanying notes are an integral part of the financial statements.
10 | Causeway Concentrated Equity Fund |
STATEMENT OF CHANGES IN NET ASSETS (000)
CAUSEWAY CONCENTRATED EQUITY FUND |
||||
12/15/20 to 3/31/21* (Unaudited) |
||||
OPERATIONS: |
||||
Net Investment Income |
$ | 20 | ||
Net Realized Gain on Investments |
42 | |||
Net Unrealized Appreciation on Investments |
340 | |||
|
|
|||
Net Increase in Net Assets Resulting From Operations |
402 | |||
|
|
|||
Net Increase in Net Assets Derived from Capital Share Transactions(1) |
5,125 | |||
|
|
|||
Total Increase in Net Assets |
5,527 | |||
|
|
|||
NET ASSETS: |
||||
Beginning of Period |
| |||
|
|
|||
End of Period |
$ | 5,527 | ||
|
|
* | Commenced operations on December 15, 2020. |
(1) | See Note 7 in the Notes to Financial Statements. |
Amounts designated as are $0.
The accompanying notes are an integral part of the financial statements.
Causeway Concentrated Equity Fund | 11 |
For the Period Ended March 31, 2021 (Unaudited)
For a Share Outstanding Throughout the Period
Net Asset Value, Beginning of Period ($) |
Net Investment Income ($) |
Net Realized and Unrealized Gain on Investments ($) |
Total from Operations ($) |
Dividends from Net Investment Income ($) |
Distributions from Capital Gains ($) |
Total Dividends and Distributions ($) |
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CAUSEWAY CONCENTRATED EQUITY FUND |
| |||||||||||||||||||||||||||
Institutional |
| |||||||||||||||||||||||||||
2021(1)(2) |
10.00 | 0.04 | 0.76 | 0.80 | | (3) | | | ||||||||||||||||||||
Investor |
| |||||||||||||||||||||||||||
2021(1)(2) |
10.00 | 0.04 | 0.75 | 0.79 | | | |
| Per share amounts calculated using average shares method. |
(1) | Commenced operations on December 15, 2020. |
(2) | All ratios for periods less than one year are annualized. Total returns and portfolio turnover rates are for the period indicated and have not been annualized. |
(3) | Amount represents less than $0.01 per share. |
Amounts designated as are $0 or round to $0.
The accompanying notes are an integral part of the financial statements.
12 | Causeway Concentrated Equity Fund |
Net Asset Value, End of Period ($) |
Total Return (%) |
Net Assets, End of Period ($000) |
Ratio of Expenses to Average Net Assets (%) |
Ratio of Expenses to Average Net Assets (Excluding Waivers and Reimburse- ments) (%) |
Ratio of Net Investment Income to Average Net Assets (%) |
Portfolio Turnover Rate (%) |
||||||||||||||||||||
10.80 | 8.01 | 4,393 | 0.85 | 3.88 | 1.32 | 8 | ||||||||||||||||||||
10.79 | 7.90 | 1,134 | 0.97 | 4.00 | 1.20 | 8 |
The accompanying notes are an integral part of the financial statements.
Causeway Concentrated Equity Fund | 13 |
NOTES TO FINANCIAL STATEMENTS (Unaudited)
14 | Causeway Concentrated Equity Fund |
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(continued)
Causeway Concentrated Equity Fund | 15 |
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(continued)
16 | Causeway Concentrated Equity Fund |
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(continued)
Causeway Concentrated Equity Fund | 17 |
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(continued)
18 | Causeway Concentrated Equity Fund |
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(concluded)
Causeway Concentrated Equity Fund | 19 |
DISCLOSURE OF FUND EXPENSES (Unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees, and (2) ongoing costs, including management fees, shareholder service fees, and other Fund expenses. It is important for you to understand the impact of these costs on your investment returns.
Ongoing operating expenses are deducted from a mutual funds gross income and directly reduce its final investment return. These expenses are expressed as a percentage of a mutual funds average net assets; this percentage is known as a mutual funds expense ratio.
The following examples use the expense ratio and are intended to help you understand the ongoing costs (in dollars) of investing in the Fund and to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period (December 15, 2020 to March 31, 2021).
The table on the next page illustrates the Funds costs in two ways:
Actual Fund Return. This section helps you to estimate the actual expenses after fee waivers that the Fund incurred over the period. The Expenses Paid During Period column shows the actual dollar expense cost incurred by a $1,000 investment in the Fund, and the Ending Account Value number is derived from deducting that expense cost from the Funds gross investment return.
You can use this information, together with the actual amount you invested in the Fund, to estimate the expenses you paid over that period. Simply divide your actual account value by $1,000 to arrive at a ratio (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply that ratio by the number shown under Expenses Paid During Period.
Hypothetical 5% Return. This section helps you compare the Funds costs with those of other mutual funds. It assumes that the Fund had an annual 5% return before expenses during the year, but that the expense ratio (Column 3) for the period is unchanged. This example is useful in making comparisons because the Securities and Exchange Commission requires all mutual funds to make this 5% calculation. You can assess the Funds comparative cost by comparing the hypothetical result for the Fund in the Expenses Paid During Period column with those that appear in the same charts in the shareholder reports for other mutual funds.
NOTE: Because the return is set at 5% for comparison purposes NOT the Funds actual return the account values shown may not apply to your specific investment.
20 | Causeway Concentrated Equity Fund |
DISCLOSURE OF FUND EXPENSES (Unaudited)
(concluded)
Beginning Account Value 12/15/20 |
Ending Account Value 3/31/21 |
Annualized Expense Ratios |
Expenses Period |
|||||||||||||
Causeway Concentrated Equity Fund |
||||||||||||||||
Actual Fund Return |
||||||||||||||||
Institutional Class |
$ | 1,000.00 | $ | 1,080.10 | 0.85 | % | $ | 2.59 | * | |||||||
Hypothetical 5% Return |
||||||||||||||||
Institutional Class |
$ | 1,000.00 | $ | 1,020.69 | 0.85 | % | $ | 4.28 | ** | |||||||
Actual Fund Return |
||||||||||||||||
Investor Class |
$ | 1,000.00 | $ | 1,079.00 | 0.97 | % | $ | 2.96 | * | |||||||
Hypothetical 5% Return |
||||||||||||||||
Investor Class | $ | 1,000.00 | $ | 1,020.10 | 0.97 | % | $ | 4.89 | ** |
* | Expenses are equal to the Funds annualized expense ratio multiplied by the average account value over the period, multiplied by 107/365 (to reflect the period since inception to period end). |
** | Expenses are equal to the Funds annualized expense ratio multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period shown). |
Causeway Concentrated Equity Fund | 21 |
STATEMENT REGARDING BASIS FOR APPROVAL OF INVESTMENT ADVISORY AGREEMENT (Unaudited)
At a meeting on August 10, 2020, the Trustees considered and approved an investment advisory agreement (the Advisory Agreement) between Causeway Capital Management Trust (the Trust) and Causeway Capital Management LLC (the Adviser) with respect to Causeway Concentrated Equity Fund (the Fund) for a two-year period beginning September 20, 2020. Section 15(c) of the Investment Company Act of 1940, as amended (the 1940 Act) requires the Board of Trustees (the Board) of the Trust to approve the Advisory Agreement prior to the commencement of services to the Fund. The Advisory Agreement must be approved by a majority of the Trustees and a majority of the independent Trustees (i.e., Trustees who are not interested persons of the Trust as defined in the 1940 Act). The Board was comprised of four independent Trustees when the Advisory Agreement was considered.
Information Received. As the Adviser has provided services to the various series of the Trust since it commenced operation in October 2001, the Board is familiar with the Adviser, its operations and personnel. At each regular quarterly meeting, the Board reviews a wide variety of materials relating to the nature, extent and quality of the Advisers services. In addition, the Trustees received and reviewed extensive quantitative and qualitative materials prepared by the Adviser relating to the Advisory Agreement in response to information requested on the independent Trustees behalf by their independent legal counsel. At the August meeting, the Trustees also received and reviewed a report prepared by Broadridge Financial Services, Inc. providing a comparison of the Funds proposed advisory fee and estimated expenses to the fees and expenses of a peer group of funds to assist the Board in considering the approval of the Advisory Agreement.
Factors Considered. In reviewing the Advisory Agreement, the Trustees considered a number of factors including, but not limited to: (1) the nature, extent and quality of the services to be provided by the Adviser, (2) model investment performance of the Adviser for the strategy to be used by the Fund, since the Adviser had not previously managed portfolios using the strategy, (3) comparisons of the services to be rendered and the amounts to be paid under the Advisory Agreement with those of other funds, (4) the estimated costs of the services to be provided and estimated profits or losses to be realized by the Adviser and its affiliates from their relationship with the Fund, (5) the extent to which economies of scale would be realized as the Fund grows and whether fee levels reflect these economies of scale for the benefit of Fund investors, and (6) any other benefits that would be derived by the Adviser from its relationship with the Fund.
First, regarding the nature, extent and quality of the services to be provided by the Adviser, the Trustees considered, among other things, the Advisers personnel, experience, general track record and compliance program. The Trustees considered the qualifications, backgrounds and responsibilities of the Advisers principal personnel who would provide services to the Fund, as well as the level of attention those individuals would provide to the Fund. The Trustees noted the Advisers commitment to devoting resources to staffing and technology in support of its investment management services. They also reviewed the Advisers investment philosophy and processes and its compliance program, its various administrative, legal and regulatory responsibilities, and considered the scope of the Advisers proposed services to the Fund. The Trustees concluded that the nature, extent and quality of the services provided by the Adviser have benefitted the Trust generally and should benefit the Fund and its shareholders.
22 | Causeway Concentrated Equity Fund |
STATEMENT REGARDING BASIS FOR APPROVAL OF INVESTMENT ADVISORY AGREEMENT (Unaudited)
(continued)
Second, regarding the potential investment performance of the Fund, the Trustees reviewed the investment results of the Trust generally and the back-tested performance study of the Fund provided by the Adviser. After discussing the limitations of back-tested performance as well as the Advisers general investment management capabilities, the Trustees concluded that the Advisers record indicates that its management should benefit the Fund and its shareholders.
Third, regarding the Funds proposed advisory fee and total expenses as a percentage of the Funds average daily net assets:
| The Trustees compared the Funds proposed advisory fee and total expenses with those of other similar mutual funds. They noted that the Funds proposed advisory fee was 80 basis points per annum and was the same as the median for its Broadridge peer group and within the range of 65-100 basis points for the funds in its peer group. The Trustees noted that the Funds Institutional Class annual expense ratio, after application of the Advisers proposed expense limit, of 85 basis points was 10 basis points below the median of the funds in its Broadridge peer group and within the range of 74-99 basis points for the funds in its peer group. |
| The Trustees noted that the strategy to be used by the Fund is new, and that the Adviser does not have other accounts that use the strategy. |
The Trustees concluded that the Funds proposed advisory fee and expense ratio were reasonable and appropriate under the circumstances.
Fourth, the Trustees considered the Advisers estimated costs of providing services to the Fund and estimated profits or losses expected to be realized by the Adviser from its relationship with the Fund. They reviewed the Advisers estimated after-tax profit margin with respect to such services for the twelve months ended March 31, 2020 and the methodology used to generate that estimate, and noted that the cost allocation methodology presented to the Trustees was reasonable. They also observed that the Advisers estimated profitability was within the range cited as reasonable in various court decisions. After consideration of these matters, the Trustees concluded that the Advisers estimated operating margin with respect to its relationship with the Fund is reasonable.
Fifth, regarding economies of scale, the Trustees observed that, although the Funds proposed advisory fee schedule does not contain fee breakpoints, it is difficult to determine the existence or extent of any economies of scale. They noted that the Adviser would be sharing economies of scale through reasonable advisory fee levels, expense limit agreements, and devoting additional resources to staff and technology to focus on continued performance and service to the Funds shareholders. They also noted the entrepreneurial risks taken by the Adviser in forming the Fund and that, in the Funds early years, the Adviser may incur losses in managing the Fund. The Trustees concluded that under the circumstances the Adviser is sharing any economies of scale with the Fund appropriately.
Sixth, regarding any other benefits that would be derived by the Adviser from its relationship with the Fund often called fall-out benefits the Trustees observed that the Adviser does not earn fall-out benefits such as affiliated custody fees, affiliated transfer agency fees, affiliated brokerage commissions, profits from rule 12b-1 fees,
Causeway Concentrated Equity Fund | 23 |
STATEMENT REGARDING BASIS FOR APPROVAL OF INVESTMENT ADVISORY AGREEMENT (Unaudited)
(concluded)
contingent deferred sales commissions or float benefits on short-term cash. The Trustees concluded that, as was the case for the Trust generally, the primary fall-out benefit received by the Adviser would be research services provided by brokers to be used by the Fund and that this benefit is reasonable in relation to the value of the services that the Adviser would provide to the Fund.
Approval. At the August 10, 2020 meeting, the Trustees discussed the information and factors noted above with representatives of the Adviser and considered the approval of the Advisory Agreement. The independent Trustees also met in a private session with independent counsel at which no representatives of the Adviser were present. In their deliberations, the independent Trustees did not identify any particular information or factor that was determinative or controlling, each Trustee did not necessarily attribute the same weight to each factor, and the foregoing summary does not detail all the matters considered. Based on their review, the Trustees (including the independent Trustees) unanimously concluded that the Advisory Agreement is fair and reasonable to the Fund and its shareholders and that the Funds advisory fee is reasonable and approval of the Advisory Agreement is in the best interests of the Fund and its shareholders, and the Board of Trustees unanimously approved the Advisory Agreement for a two-year period beginning September 20, 2020.
24 | Causeway Concentrated Equity Fund |
LIQUITY RISK MANAGEMENT PROGRAM (Unaudited)
In October 2016, the Securities and Exchange Commission (SEC) adopted Rule 22e-4, or the Liquidity Rule, under the Investment Company Act of 1940. The Liquidity Rule requires a mutual fund to adopt a liquidity risk management program (Program). In June 2018, the SEC adopted a requirement that a mutual fund disclose information about the operation and effectiveness of its Program in its reports to shareholders.
The Fund has adopted and implemented a Program pursuant to the Liquidity Rule. The Program is intended to provide a framework for: (1) assessing and managing the Funds liquidity risk (i.e., the risk that the Fund could not meet requests to redeem shares without significantly diluting remaining investors interests) based on a variety of factors, including the Funds investment strategy and liquidity of its portfolio investments, (2) classifying the liquidity of the Funds investments, (3) determining the Funds highly liquid investment minimum (HLIM), if applicable, (4) complying with the Funds illiquid investment limit, and (5) reporting to the Funds Board of Trustees. The Board of Trustees designated the Funds investment adviser, Causeway Capital Management LLC (the Program Administrator), to administer the Program. The Program Administrator established a liquidity risk management group to assist the Program Administrator in administering the Program.
Under the Program, each of the Funds portfolio investments is classified into one of four liquidity categories defined by the SEC: highly liquid, moderately liquid, less liquid, and illiquid. Liquidity classifications take into account a variety of market, trading, and investment factors, including the Funds reasonably anticipated trade size, and the Program Administrator has engaged a third-party vendor to assist with the classification of portfolio investments.
The Liquidity Rule prohibits mutual funds from acquiring investments that would cause their illiquid investments to exceed 15% of net assets. The Liquidity Rule also requires funds that do not primarily hold assets that are highly liquid investments to determine a minimum percentage of net assets to be invested in highly liquid investments (the HLIM). The Program includes provisions designed to comply with the 15% limit on illiquid investments and for determining and complying with the HLIM requirement, as applicable.
In accordance with the Liquidity Rule, the Program Administrator prepared, and the Funds Board of Trustees reviewed, a report regarding the operation and effectiveness of the Program for the period from the Funds inception through December 31, 2020. During the period, there were no liquidity events that materially impacted the Funds ability to timely meet redemptions without significantly diluting remaining investors interests. The report concluded that the Program remains reasonably designed to assess and manage the Funds liquidity risk, and that during the period the Program was implemented effectively.
Causeway Concentrated Equity Fund | 25 |
Item 2. | Code of Ethics. |
Not required for semi-annual report.
Item 3. | Audit Committee Financial Expert. |
Not required for semi-annual report.
Item 4. | Principal Accountant Fees and Services. |
Not required for semi-annual report.
Item 5. | Audit Committee of Listed Registrants. |
Not applicable to open-end management investment companies.
Item 6. | Schedule of Investments. |
Schedule of Investments is included as part of the Report to Shareholders filed under Item 1 of this form.
Item 7. | Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. |
Not applicable to open-end management investment companies.
Item 8. | Portfolio Managers of Closed-End Management Investment Companies. |
Not applicable. Effective for closed-end management investment companies for fiscal years ending on or after December 31, 2005.
Item 9. | Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. |
Not applicable to open-end management investment companies.
Item 10. | Submission of Matters to a Vote of Security Holders. |
There have been no material changes to the registrants procedures by which shareholders may recommend nominees to the registrants board of trustees during the period covered by the report.
Item 11. | Controls and Procedures. |
(a) The registrants principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrants disclosure controls and procedures, as defined in Rule 30a-3(c) under the Act (17 CFR § 270.30a-3(c)) as of a date within 90 days of the filing date of the report, are effective based on the evaluation of these controls and procedures
required by Rule 30a-3(b) under the Act (17 CFR § 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Exchange Act (17 CFR § 270.30a-15(b) or §240.15d-15(b)).
(b) There were no changes in the registrants internal control over financial reporting (as defined in Rule 30a-3(d) under the Act (17CFR § 270.30a-3(d)) that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrants internal control over financial reporting.
Items 12. | Disclosure of Securities Lending Activities for Closed-End Management Investment Companies. |
Not applicable to open-end management investment companies.
Items 13. | Exhibits. |
(a)(1) Not required for semi-annual report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) |
Causeway Capital Management Trust | |||||
By |
/s/ Gracie Fermelia | |||||
Gracie Fermelia, President | ||||||
Date: June 9, 2021 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By |
/s/ Gracie Fermelia | |||||
Gracie Fermelia, President | ||||||
Date: June 9, 2021 | ||||||
By |
/s/ Eric Olsen | |||||
Eric Olsen, Treasurer | ||||||
Date: June 9, 2021 |
CERTIFICATION
Pursuant to Rule 30a-2(a) under the Investment Company Act of 1940
and Section 302 of the Sarbanes-Oxley Act of 2002
I, Gracie Fermelia, certify that:
1. | I have reviewed this report on Form N-CSRS of the Causeway Capital Management Trust (the Registrant); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information, included in this report fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the Registrant as of, and for, the periods presented in this report; |
4. | The Registrants other certifying officer(s), if any, and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the Registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the Registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report, based on such evaluation; and |
(d) | Disclosed in this report any change in the Registrants internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrants internal control over financial reporting; and |
5. | The Registrants other certifying officer(s) and I have disclosed to the Registrants auditors and the audit committee of the Registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrants ability to record, process, summarize, and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrants internal control over financial reporting. |
Date: June 9, 2021 |
/s/ Gracie Fermelia |
Gracie Fermelia President |
CERTIFICATION
Pursuant to Rule 30a-2(a) under the Investment Company Act of 1940
and Section 302 of the Sarbanes-Oxley Act of 2002
I, Eric Olsen, certify that:
1. | I have reviewed this report on Form N-CSRS of the Causeway Capital Management Trust (the Registrant); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information, included in this report fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the Registrant as of, and for, the periods presented in this report; |
4. | The Registrants other certifying officer(s), if any, and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the Registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the Registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report, based on such evaluation; and |
(d) | Disclosed in this report any change in the Registrants internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrants internal control over financial reporting; and |
5. | The Registrants other certifying officer(s) and I have disclosed to the Registrants auditors and the audit committee of the Registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrants ability to record, process, summarize, and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrants internal control over financial reporting. |
Date: June 9, 2021 |
/s/ Eric Olsen |
Eric Olsen Treasurer |
CERTIFICATION
Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
The undersigned, the President of the Causeway Capital Management Trust (the Fund), with respect to the Funds Form N-CSRS for the period ended March 31, 2021, as filed with the Securities and Exchange Commission, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
1. such Form N-CSRS fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. the information contained in such Form N-CSRS fairly presents, in all material respects, the financial condition and results of operations of the Fund.
Dated: June 9, 2021
/s/ Gracie Fermelia |
Gracie Fermelia |
President |
CERTIFICATION
Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
The undersigned, the Treasurer of the Causeway Capital Management Trust (the Fund), with respect to the Funds Form N-CSRS for the period ended March 31, 2021, as filed with the Securities and Exchange Commission, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
1. such Form N-CSRS fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. the information contained in such Form N-CSRS fairly presents, in all material respects, the financial condition and results of operations of the Fund.
Dated: June 9, 2021
/s/ Eric Olsen |
Eric Olsen |
Treasurer |
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