SOBO - ClearBridge Energy MLP Strategy Q4 2024 Commentary

2025-03-07 06:15:00 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.
• Midstream energy infrastructure outperformed broad equities in the quarter due to strength in pipelines focused on natural gas, which are benefiting from the need to ensure power grid stability and meet energy demand from a variety of sources, such as AI and data centers.
• The sector remains well-positioned to benefit from growing U.S. hydrocarbon production volumes while maintaining limited commodity price exposure.
• Increased M&A activity under a new presidential administration could provide a catalyst for investors to embrace the new midstream energy business model, while any move toward less stringent permitting for pipelines would also be a positive.

By Patrick McElroy, CFA, & Peter Vanderlee, CFA

Natural Gas Fuels Midstream Outperformance

Market Overview

Despite inklings of a market broadening in the fourth quarter sparked by Donald Trump's election victory and further interest rate cuts from the Federal Reserve, the post-election rally proved short-lived and momentum-led with relatively narrow leadership. Rate cuts came amid strong economic data that began to support the case for a slower easing cycle from the Federal Reserve than had been expected. This, along with potentially reflationary policy from the Trump administration, such as tariffs, as well as slight upticks in inflation, put some upward pressure on interest rates, causing some weakness in economically sensitive such as energy and rate-sensitive sectors. The broad market S&P 500 Index ( SP500 , SPX ) rose 2.41%, with the S&P energy sector declining -2.44% despite crude oil prices edging up in the quarter, from $68.17 to $71.72 per barrel....

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