Causeway Capital Global Value Equity 2014 Letter

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Causeway Capital Global Value Equity commentary for the fourth quarter 2014.

Oil prices and economic weakness weighed heavily on equity performance during the quarter. Reflecting oversupply and concerns about demand, crude oil prices fell to their lowest level in over five years, and global equities echoed this downward trend. The weakest performing developed markets included Norway, Portugal, Italy, Spain, and Denmark. The top performing markets in the MSCI World Index (Index) included the United States, Hong Kong, New Zealand, Ireland, and Israel. The worst performing sectors during the final quarter of calendar 2014 were energy, materials, telecommunication services, industrials, and financials, while the best performing sectors in the Index were consumer discretionary, utilities, information technology, consumer staples, and health care. Every major currency except the Hong Kong dollar depreciated versus the US dollar during the period, thus diminishing returns on overseas assets for US dollar-based investors.

Causeway Capital Global Value Equity: Portfolio Holdings

The Portfolio underperformed the Index for the quarter, due primarily to adverse industry group allocation (a byproduct of our bottom-up stock selection process). Portfolio holdings in the pharmaceuticals & biotechnology, energy, and automobiles & components industry groups, along with an underweight position in the retailing and food & staples retailing industry groups, detracted from relative performance. In contrast, holdings in the transportation, consumer services, software & services, materials, and insurance industry groups were positive relative contributors during the period. The largest individual detractor from performance was energy services firm, Technip SA (France). Additional top detractors included pharmaceutical giant, Sanofi (France), oil & gas exploration company, CNOOC (Hong Kong), oil field equipment manufacturer, National Oilwell Varco (United States), and automaker, Hyundai Motor (South Korea). The top individual contributor to return was multinational airline holding company, International Consolidated Airlines Group SA (United Kingdom). Additional top contributors to absolute return included enterprise management software provider, Oracle Corp (United States), for-profit educator, Apollo Education (United States), title insurance company, First American Financial Corp. (United States), and health insurance provider, UnitedHealth (United States).*

*The securities identified and described above 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. Past performance does not guarantee future results. For a description of our performance attribution methodology, or to obtain a list showing every holding’s contribution to the overall account’s performance during the quarter, please contact our product manager, Kevin Moutes, at 310-231-6116 or [email protected].

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