Overview

The Causeway team believes that active management can add value, with lower risk. Our philosophy is value-driven with a fundamentally based, bottom-up approach to stock selection. As such, our sector and country weightings are a residual of our stock selection. We believe that companies derive their value from the contribution of yield and profitable re-investment back into the company. We do not believe in "timing" the market. Therefore, we try to remain fully invested.

Our philosophy on risk management is simple. We believe risk is best measured by the volatility of a portfolio's returns, not its dispersion from a benchmark. In our view, investors are rewarded over the long term by a reduction in volatility. Therefore, our goal is to construct a portfolio, which is focused on providing consistent, long term, risk-adjusted returns.

We have used our team-based investment process for more than 16 years dating back to our prior firms. It is a disciplined approach to buying and selling stocks with a focus on outperforming our benchmark while reducing risk.

Causeway's first step is to screen companies throughout the MSCI World Index universe, plus South Korea. Causeway's screens use earnings yield, payout yield and other traditional value methodologies. This reduces the universe to a manageable number of stocks that are subjected to extensive fundamental analysis. The portfolio managers and analysts develop a forecasted 2-year expected return for each stock. Each security is then ranked by its expected dollar-denominated return.

Finally, our quantitative team applies a risk measurement to determine the overall volatility resulting from that stock's inclusion in the portfolio. The top 150 stocks are ranked on a risk/return basis. The portfolio is developed from this list and typically contains 35-55 stocks.