Measured in local currency terms, global equities advanced modestly as investors’ need for returns led to cautious buying of some of the less cyclical areas of global markets and “bottom fishing” of deeply-discounted financials. The top performing markets in the MSCI EAFE Index (“Index”) included Ireland, Belgium, Denmark, the Netherlands, and France. The worst performing markets in our investable universe included Austria, South Korea, Israel, Singapore, and Italy. The best performing sectors in the Index were telecommunication services, consumer staples, information technology, health care, and financials. The worst performing sectors were materials, energy, utilities, consumer discretionary, and industrials. US dollar strength was the key performance driver in May. Currency proved a headwind for US-dollar based investors investing in foreign markets, as major currencies declined against the US dollar. The Japanese yen had its weakest month versus the US dollar since May 2015.
The Causeway International Value (Trades, Portfolio) Fund ("Fund") outperformed the Index this month, due primarily to stock selection. Fund holdings in the banks, insurance, materials, automobiles & components, and media industry groups contributed to relative performance. Holdings in the consumer durables & apparel, transportation, and diversified financials industry groups, along with an overweight position in the energy industry group and an underweight position in the household & personal products industry group, offset some of the relative outperformance. The top individual contributor to performance was financial services company, Zurich Financial Services (Switzerland). Other top contributors included banking & financial services company, Barclays Plc (United Kingdom), banking & financial services company, Lloyds Banking Group Plc (LSE:LYG, Financial) (United Kingdom), automobile manufacturer, Volkswagen AG (XTER:VOW, Financial) (Germany), and pharmaceutical & consumer healthcare products producer, Novartis AG (NVS, Financial) (Switzerland). The largest detractor was pharmaceuticals & chemicals company, Bayer AG (XTER:BAYN, Financial) (Germany). Additional notable detractors included luxury goods manufacturer & retailer, Compagnie Financiere Richemont (Switzerland), paints & coatings producer, Akzo Nobel NV (XAMS:AZKA, Financial)(Netherlands), energy supermajor, Royal Dutch Shell Plc (LSE:RDSA, Financial) (United Kingdom), and Japan Airlines Co., Ltd. (TSE:9201)(Japan).
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.
