Causeway

Causeway embodies the traits of a great steward, earning an upgrade to a High Parent Pillar.

Investors Sarah Ketterer and Harry Hartford co-founded Causeway Capital Management as a global value firm in 2001. Over its 25 years, investing has remained the core of everything it does. From the start, the firm has been a trailblazer in melding quantitative and fundamental investing. Every strategy uses some combination of the two, which remains a sharp edge on rivals. Of the firm’s 110 employees, 26 are members of the fundamental team, and 11 are quantitative investors.

The founding duo built the firm to last and is slowly transitioning to the next set of leaders. Their ownership share has declined to just above 50% and will continue to decline, as they have distributed firm shares to 28 current employees, 19 of them research team members. Years ago, they established an operating committee that now has six members; it handles the firm’s key business and allows Hartford and Ketterer to see how future leaders make decisions. When it’s time, leadership will transition to investment personnel; quantitative portfolio manager Joe Gubler and fundamental portfolio manager Conor Muldoon serve on the committee, making them likely prospects.

Causeway runs with discipline. It has rigorously stuck to its core of international and value investing. Even within those borders, it has a compact lineup of strong offerings. Currently, the firm has just five mutual funds, headlined by fundamental flagship Causeway International Value and quantitative flagship Causeway Emerging Markets, plus a small number of strategies for private clients. The firm has scrupulously avoided trendy, splashy launches and has liquidated the few strategies that weren’t viable historically. They are open to different geographies and vehicle types; for instance, they’re likely to launch actively managed ETFs fairly soon. Annually, the firm calculates its total capacity; recently, it managed roughly USD 70 billion with an estimated capacity of USD 90 billion. Investors can count on Causeway to close strategies to new investors when appropriate, because it has done so historically.

The one key area where the firm could improve is expenses. Within Morningstar’s fee level categories, the institutional shares of Causeway International Value and Causeway Global Value are average compared with peers, while seven other share classes are above average and one is high.

Note: This share class' Parent Pillar rating is analyst-driven, as its Branding Name, Causeway (Branding Name ID: BN000008E4), is covered by Morningstar Manager Research.