ClearBridge International Growth EAFE Strategy Q1 2025 Commentary

2025-04-09 06:33:00 ET

Summary

• During the first quarter, the ClearBridge International Growth EAFE Strategy underperformed its MSCI EAFE Index benchmark.
• In a sharp reversal, international equities broadly outperformed the U.S. in the quarter, boosted by plans for increased fiscal spending in Europe and greater economic policy latitude.
• The Strategy trailed its core benchmark but bested its growth index, supported by strength among communication services and bank holdings that offset weakness in health care and industrials.
• Multiple drivers are coalescing to support an extended period of strength for international markets, with the potential for easing regulation and increased investments around defense and technological competitiveness being two areas that could drive further improvement.

By Elisa Mazen, Michael Testorf, CFA & Pawel Wroblewski, CFA

Necessary Reforms Spur Global Leadership Shift

Market Overview

Led by a sharp revival in Europe, international equities delivered strong gains in the first quarter as increasing policy uncertainty in the U.S. spurred investors to look overseas for more predictable returns. The benchmark MSCI EAFE Index advanced 6.86%, outperforming its U.S. counterpart, the S&P 500 Index, by over 1,100 basis points in a reversal of global leadership. The MSCI Emerging Markets Index added 2.93%, boosted by a rebound in China....

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