Market Strategy Shift: ClearBridge Growth Rises as Mega Cap Stocks Dominate – See What Changed!

New York City, NY – The second quarter saw an interesting shift in equity leadership, with mega cap growth stocks dominating the market. The S&P 500 Index rose by 4.28%, while the NASDAQ Composite saw an 8.26% increase during the period. In contrast, both the Russell Midcap Growth Index and Russell 2000 Index experienced declines of 3.21% and 3.28%, respectively. Despite these fluctuations, the ClearBridge Growth Strategy outperformed its updated benchmark by over 500 basis points and delivered positive returns.

A significant change occurred during the quarter with the Strategy’s benchmark transitioning from the Russell 3000 Growth Index to the Russell Midcap Growth Index. This change came after a year-long evaluation process involving ClearBridge’s CIO and various internal teams. The decision to switch benchmarks was based on the increasing concentration of mega caps in the Russell 3000 Growth Index, which had begun to skew the index’s composition.

The Strategy’s investment approach has remained consistent over its 40-year history, focusing on high-conviction, early-stage growth companies. The switch to the Russell Midcap Growth Index was deemed more appropriate for evaluating the Strategy’s performance and risk exposures due to the overlap with the universe of new ideas.

In the midst of a mixed economic environment, the Strategy saw strong performance in the health care and information technology sectors during the quarter. Changes in sector allocations resulted from the benchmark switch, with increased overweight in communication services and a shift in IT allocations. The Strategy continues to diversify its portfolio, recently adding holdings in the industrials sector.

Looking ahead, the Strategy aims to focus on market leaders with significant growth potential and sustainable revenue streams. The promotion of Amanda Leithe to Portfolio Manager reflects the team’s ongoing commitment to quality and growth. With a renewed focus on the $10 billion to $100 billion market cap range, the Strategy seeks to provide a differentiated approach to active management.