NSRGY - ClearBridge Large Cap Value Strategy Q2 2024 Commentary

2024-07-08 10:35:00 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.
• U.S. equities continued to be a tale of two cities, as enthusiasm for artificial intelligence and new weight loss drugs drove an increasing concentration of “winners” while slowing economic indicators weighed on the broader market.
• Core PC and server markets remain depressed, but we believe that aging infrastructure and the growth of IT workloads will lead to a cyclical recovery.
• The divergence in valuations between perceived AI winners and losers has created a number of attractive opportunities where high-quality companies are being underappreciated.

By Dmitry Khaykin & Deepon Nag

Market a Tale of Two Cities - One Is a Little Packed

Market Overview

U.S. equities continued to be a tale of two cities, as enthusiasm for artificial intelligence and new weight loss drugs drove an increasing concentration of "winners" while slowing economic indicators weighed on the broader market. Against this backdrop, the Russell 1000 Value Index trailed its growth counterpart in the quarter, returning -2.17% to the Russell 1000 Growth Index's 8.34% return. Value stocks took a defensive turn in the quarter, with utilities and consumer staples leading as the market rotated out of more cyclical sectors toward companies with more stable earnings, and as some utilities began to get credit for their role in powering the data centers on which AI relies. More economically sensitive and commodity-linked sectors, such as materials and energy, trailed due to rising disinflation and cracks in industrial and consumer activity, which also weighed on consumer discretionary stocks....

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