A Quant Approach for All Seasons

Causeway argues that diversified, multi-factor quantitative strategies can remain more resilient than concentrated exposures because market leadership repeatedly reverses across regimes.

• Recent reversals illustrate the problem: Brent crude futures swung almost 40% in two months, while South Korea’s KOSPI nearly tripled from its 2025 low before falling, lifting year-to-date volatility above 60%, higher than Bitcoin’s.
• Causeway’s Emerging Markets and International Small Cap strategies began in 2007 and 2014, respectively, and their history spans changing leadership across value, growth, company size, momentum, quality, yield curves, currencies and commodities.
• Over the past decade, the annual leadership category changed in 100% of year-to-year periods in emerging markets and 78% of periods in international small caps, indicating that persistent style leadership is uncommon.
• International Small Cap produced positive median excess returns across every regime shown, while Emerging Markets was positive across nearly all regimes; in momentum-reversal months, its median excess return was -0.03%, versus -1.06% for momentum itself.

Takeaway: Investors cannot reliably predict the next market regime, so Causeway favors combining relatively low-correlated alpha factors to limit reliance on any one signal; the evidence is based on historical strategy results and does not guarantee future performance.