BEPC - ClearBridge Canadian Equity Strategy Q1 2024 Portfolio Manager Commentary

2024-04-12 04:35:00 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.
• The Strategy delivered solid absolute returns but underperformed the benchmark in a momentum-driven market, with weakness in interest-rate-sensitive names in utilities and communication services offsetting strength in industrials and materials.
• We continued to increase exposure to rate-sensitive holdings as recent monetary tightening has improved their risk/reward. While the Strategy is typically low turnover, we will continue to be decisive when warranted and as further opportunities arise.
• With the equity market discounting an ideal scenario including rate cuts, continued economic growth and healthy corporate earnings, we see little margin for error. Accordingly, our bottom-up approach continued to drive the Strategy toward more defensive positioning than is typical.

By Garey J. Aitken, CFA, & Timothy W. Caulfield, CFA

Prioritizing Risk Management Through the Cycle

Market Overview

The Canadian equity market kicked off 2024 with a robust 6.6% first-quarter advance, building on the solid 11.8% return registered in 2023. In fact, equity market returns accelerated throughout the quarter with strength in March helping propel the S&P/TSX Composite TRI to new all-time highs. That said, gains in Canadian equities continue to pale in comparison to the ongoing boom in U.S. equities, with the S&P 500 TRI returning 13.3% (in Canadian dollars) in the first quarter on top of 23.3% in 2023 - a large portion of these gains derived from mega cap information technology ('IT') and related names....

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