Cashing In on the Euro Crisis

Fund Watch

Cashing In on the Euro Crisis

Causeway International Value fund bought European stocks when everyone was selling them.

When the European debt crisis rattled investors across the world in 2011, Sarah Ketterer saw an oppor­tunity. Ketterer, one of the managers of Causeway International Value (symbol CIVVX) and her firm’s chief executive officer, bought battered, high-quality European stocks. She knew the com­panies did enough business outside the euro zone to be able to withstand the Continent’s turmoil. That conviction paid off: The stocks rebounded smartly, helping her fund generate superior returns over the past year.

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More recently, Ketterer and her five co-managers sold some of those European stocks and reinvested the profits, mostly in Japan and the United Kingdom. The fund’s biggest holdings at last report included British grocer Tesco, French drug maker Sanofi and Japan’s Toyota. All told, International Value holds about 60 companies, almost all of them large and based in developed European and Asian nations.

The Causeway managers look for companies with low price-earnings ratios, high dividend yields and strong balance sheets. On average, each manager spends about a week per quarter overseas, meeting with company executives, competitors, suppliers and customers. Ultimately, the managers whittle down the list of acceptable candidates to about 200 stocks. They assign each one a two-year price target and then rank them on projected risk-adjusted returns, buying roughly the top 60 on the list.

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