SEMHF - ClearBridge Appreciation ESG Strategy Q1 2024 Portfolio Manager Commentary

2024-04-18 08:00:00 ET

Summary

• ClearBridge is a leading global asset manager committed to active management. Research-based stock selection guides our investment approach, with our strategies reflecting the highest-conviction ideas of our portfolio managers.
• Although technology and AI remain a dominant part of the market narrative, benchmark performance has broadened significantly in the current rally.
• Although we remain concerned a QT-driven liquidity drain is a matter of when and not if, we expect the Fed to ensure ample liquidity exists through the presidential election.
• ClearBridge is closely watching sustainability-related opportunities presented by artificial intelligence as well as its energy intensity and social dimensions as the phenomenon plays out in our companies across sectors.

By Scott Glasser, Michael Kagan, & Stephen Rigo, CFA

Top-Heavy Market Not Expected to Last - Market Overview

The soft landing rally that took hold in November 2023 continued in 2024's first quarter. The S&P 500 Index ( SP500 , SPX ) advanced in each month of the quarter, bringing the benchmark's winning streak to five consecutive months and a 27% cumulative return. The S&P 500's 10.56% quarterly advance was the 11th best start to a year since 1950, with the index making a record high in nearly 40% of the period's trading days.

Although technology and AI remain a dominant part of the market narrative, benchmark performance has broadened significantly in the current rally. During the first quarter, every sector, except for real estate, posted positive absolute returns. Yes, the technology-heavy communication services sector led performance (on the backs of Meta and Netflix), but energy was the next best performing sector as oil rallied above $80 per barrel. Information technology ((IT)) outperformed yet again, but returns were essentially in-line with the financials sector. The paths to outperformance have - finally - broadened beyond mega cap tech....

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