DDOG - ClearBridge Select Strategy Q1 2025 Commentary

2025-04-17 07:00:00 ET

Summary

• A rapid rotation out of AI-indexed and related growth equities, felt most acutely by the Strategy’s larger cap and disruptor holdings, led to underperformance for the quarter.
• The balance we have established through active portfolio positioning mitigated some of the damage, highlighted by strength among leading e-commerce franchises as well as several consumer staples and industrial holdings.
• Indiscriminate selling in broad categories has provided opportunities to buy stocks on sale while reducing similar holdings with less compelling risk-reward profiles.
• This was a common theme among 10 new buys and eight sales.

By Aram Green

Market Overview

Equities sold off sharply in the first quarter, with volatility accelerating into April, as a rotation out of mega caps followed by a raft of U.S. tariff actions raised fears of an economic slowdown and higher inflation. The S&P 500 Index declined 4.3%, the benchmark Russell 3000 Index fell 4.7% while the Russell 2000 Index dropped 9.5%. The selloff in the Magnificent Seven and technology-related areas of the market caused growth stocks to significantly underperform value, with the Russell 3000 Growth Index down 10% compared to a gain of 1.6% for the Russell 3000 Value Index....

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