Diversification Is Key: How International Equities Stood Up in a Narrow Market

New York, New York – International equities showed mixed results in the second quarter, with initial interest rate cuts in the European Union and Canada offsetting concerns about inflation and economic growth. The MSCI EAFE Index declined slightly, while the MSCI Emerging Markets Index saw an increase.

The U.K. and Asia Ex Japan experienced gains, outperforming the index, while Japan faced significant losses due to a falling yen. Europe Ex U.K. performed in line, but unexpected snap elections in France impacted the market. Growth stocks underperformed value stocks as bond yields rose, leading to divergence in investment styles.

ClearBridge International Growth EAFE Strategy slightly underperformed its benchmark during the quarter. Information technology (IT) stocks internationally continued to diverge from U.S.-based AI-driven counterparts, affecting the Strategy’s performance.

Healthcare holdings proved to be a positive contributor to performance, while certain IT and consumer discretionary stocks faced challenges. Portfolio positioning adjustments were made to capitalize on opportunities and manage risk in the market.

The second quarter highlighted the importance of a diversified growth strategy, combining core, structural, and emerging growth investments. The impact of international monetary conditions and market trends influenced portfolio performance amidst a changing global landscape.

Looking ahead, factors such as interest rates, consumer spending, and geopolitical tensions will continue to shape international markets. Portfolio adjustments and strategic investments in sectors like banking, consumer goods, and technology reflect a proactive approach to navigate market volatility and capitalize on emerging opportunities.

Overall, the ClearBridge International Growth EAFE Strategy remains focused on long-term growth prospects and adapting to changing market conditions to optimize performance and deliver value to investors.