CACG - ClearBridge SMID Cap Growth Strategy Q1 2024 Commentary

2024-04-28 11:20:00 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.
• SMID growth stocks rose in the first quarter, helped by resilient corporate earnings, continued enthusiasm for AI and the prospect of interest rate cuts.
• The Strategy underperformed its benchmark as a lack of exposure to AI beneficiary Super Micro Computer and bitcoin proxy MicroStrategy overcame positive contributions from holdings in the materials and industrials sectors.
• It looks increasingly likely that policymakers have navigated a soft landing and, as capital markets reopen, we anticipate increased IPO activity to be a source of new investments for the first time since 2021.

By Brian Angerame, Jeffrey Bailin, CFA, Aram Green & Matthew Lilling, CFA

SMID Playing Catch Up in Growth Rally

Market Overview

Equity markets rallied in the first quarter as resilient corporate earnings, continued enthusiasm over artificial intelligence ('AI') and the prospect of interest rate cuts spurred performance that surprised even the most optimistic investors. The Russell 1000 Index returned 10.30%, which continued its streak of outperforming SMID stocks as the Russell 2500 Index returned 6.92%. Growth stocks outperformed their value counterparts, with the benchmark Russell 2500 Growth Index returning 8.51% versus the 6.07% return of the Russell 2500 Value Index....

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