Amazon, Apple and Microsoft are among the most notable shifts toward value, while Nvidia and Alphabet remain concentrated in growth.

“The rebalance will also drive meaningful sector and industry changes, most notably among semiconductor stocks, with elevated turnover across portfolios,” Elisa Mazen, ClearBridge portfolio manager says.

“As a result of these changes, trading activity within strategies tied to these two large cap indexes is expected to be higher than normal.”

Much of the market’s attention has focused on the Magnificent Seven, where the benchmark shifts are substantial, particularly for Amazon.com. Based on preliminary projections1 through the end of May, these bellwether mega caps will see their collective weighting decline ~11.6 percentage points in the Russell 1000 Growth Index (RLG) while simultaneously gaining ~ 10.7 percentage points in the Russell 1000 Value Index (RLV).

These reclassifications will immediately impact active strategies’ weightings relative to their growth and value benchmarks.

Sector-level changes based on preliminary May 29 pricing are also expected to be meaningful. Within the RLG, overall information technology (IT) exposure changes modestly, but on the subsector level semiconductors will increase to 35.9%, led by the additions of KLA Corp. which will become the third-largest stock in the index and Micron Technology, while the software subsector will decline by 5.5%.

Additionally, communication services will increase by 3.6%, while consumer discretionary will decline by 4.9%.

Within the RLV, consumer discretionary will increase by 4.4% and IT by 2.2%, while communication services will decline by 4.6%.

Industrials and IT are expected to experience the largest net outflows as a result of the rebalance.

Mazen adds, “Turnover will likely increase in the near term as large cap portfolios adjust to the new index compositions, but this is not unique to ClearBridge. These dynamics are expected to affect both active and passive managers broadly across both growth and value mandates.”

The post While markets watch SpaceX, a Russell rebalance rewrites the rulebook for both active and passive managers appeared first on AdviserVoice.

Grace Su

ClearBridge Investments is pleased to announce that two of its recently launched global equity funds, the ClearBridge Global Value Improvers Fund and the ClearBridge Global Growth Fund, have each received inaugural ‘Recommended’ ratings from leading investment research house Lonsec.

These ratings follow the ‘Highly Recommended’ rating previously awarded by Zenith Investment Partners for ClearBridge’s suite of infrastructure funds, further reinforcing the firm’s multi-asset investment capabilities.

“We are delighted to see leading independent ratings agencies continue to recognise the strength and discipline of our investment teams across a broad range of strategies” said ClearBridge Managing Director and Head of APAC Business Development, Matt Bushby.

The ClearBridge Global Value Improvers Fund invests in 30-40 companies across developed and emerging markets that are considered by ClearBridge to be undervalued and those that are improving on certain ClearBridge ESG measures.

In its assessment, Lonsec highlighted the extensive experience of co-Portfolio Managers Grace Su and Jean Yu in implementing ‘value’ equity strategies, supported by a well-resourced and experienced research platform.

“The investment process is seen as differentiated and rigorous, with a forward-looking perspective on improvements linked to ESG factors. The manager’s ESG policy framework and disclosure are ahead of their peers. They are committed to integrating ESG within their investment process with a strong policy framework,” Lonsec noted in its report.

The ClearBridge Global Growth Fund targets above-market, “growth-like” returns with market levels of risk by investing in between 60-100 global companies diversified across a growth spectrum and trading below their intrinsic value, as assessed by the investment team.

Lonsec commended the depth and capability of the investment team, including co-Portfolio Managers Elisa Mazen, Michael Testorf, and Pawel Wroblewski, who have worked together as key decision-makers for over a decade.^[1]

“The capability and experience of the investment team is viewed as strong as it leverages extensive analyst resourcing and skilled co-PMs in delivering on the investment philosophy,” Lonsec said in its report.

“Lonsec has recognised the team’s skills and dedication to a disciplined investment process. Their long-standing collaboration and deep global research expertise are core to the strategy’s value proposition” Bushby said.

———

The post ClearBridge’s Global Equity Funds receive ‘Recommended’ ratings by Lonsec appeared first on AdviserVoice.