CHX - ClearBridge SMID Cap Growth Strategy Q4 2023 Portfolio Manager Commentary

2024-02-04 03:05:00 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.
• Equity markets generated strong returns in the fourth quarter, bolstered by declining bond yields and a resurgence of optimism that the U.S. economy could achieve a soft landing.
• The Strategy outperformed its benchmark, as strong drivers in our IT and consumer discretionary companies helped overcome headwinds to our consumer staples holdings.
• With rate hikes likely behind us and historical and relative valuation metrics attractive, conditions are aligning for SMID growth stocks to see strong performance.

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

Small and Mid Caps Attractive Amid Rate Transition

Market Overview and Outlook

Equity markets generated strong returns in the fourth quarter, bolstered by declining bond yields and a resurgence of optimism that the U.S. economy could indeed achieve a soft landing. This helped to further broaden market participation among SMID stocks, with the Russell 2500 Index returning 13.35% compared to the 11.96% return of the large cap Russell 1000 Index. Despite SMID growth stocks underperforming their value peers in the fourth quarter, with the benchmark Russell 2500 Growth Index returning 12.59% versus the 13.76% return of the Russell 2500 Value Index, growth stocks solidified their outperformance over value for the year by nearly 300 basis points....

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