ClearBridge Value Fund Q4 2024 Commentary

2025-01-15 07:20:00 ET

Summary

• Strategy outperformed its Russell 1000 Value benchmark during 4Q, as positive contributions from stock selection and sector allocation effects contributed to relative performance.
• We do not have to make a major bet against these efforts as we have capitalized to add defensive sectors and low-volatility stocks, which have all fallen out of favor.
• We think 2025 will be full of surprises, with the contradictory nature of Trump policies likely at the center of them.

Key Takeaways

• Markets: Despite inklings of a market broadening in the fourth quarter sparked by Donald Trump’s election victory and further interest-rate cuts from the US Federal Reserve (Fed), the post-election rally proved short-lived and momentum-led with relatively narrow leadership. While small-capitalization, value and cyclical shares were bid up in the aftermath of Trump’s win, growth stocks reasserted control by quarter-end. As a result, the benchmark Russell 1000 Value Index returned -1.98% in the fourth quarter, significantly behind the Russell 1000 Growth Index’s 7.07% return.
• Contributors: Holdings in Marvell Technology (MRVL), EQT (EQT) and GE Vernova (GEV). Stock selection in the financials, utilities and health care sectors.
• Detractors: Holdings in AES (AES), Freeport-McMoRan (FCX), Novo Nordisk (NVO) and UnitedHealth (UNH). Stock selection in the consumer staples and industrials sectors.
• Outlook: We think 2025 will be full of surprises, with the contradictory nature of Trump policies likely at the center of them. Overall, we see three main scenarios for 2025: continued “Goldilocks”/soft landing, cyclical inflation upside or a recession.

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