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.

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Susan Gim

Franklin Templeton’s specialist investment managers provide their outlooks on Central Banks, the global economy and key asset classes for the second half of 2024. They include insights from the following firms:

Brandywine Global Investment Management expects high yield bonds to continue to benefit from an attractive yield as well as strong fundamentals and favorable supply-demand dynamics. Headquartered in Philadelphia, Brandywine Global looks beyond short-term, conventional thinking to rigorously pursue long-term value. Based in Philadelphia, it has $61 billion in assets under management (AUM) as of March 31, 2024.

ClearBridge Investments provides its views on the outlooks for both large cap growth and international growth stocks for the remainder of the year. Headquartered in New York with $187.9 billion in AUM, it is an authentic active global equity manager with a legacy dating back over 50 years.

Martin Currie, a firm that dates back to 1881 and has $20.7 billion in AUM, provides its outlooks on global emerging markets. Headquartered in Edinburgh, Scotland, Martin Currie is driven by its purpose of Investing to Improve Lives.

Western Asset Management provides its outlooks on global fixed income as well as U.S. municipal bonds. Western Asset is a globally integrated fixed income manager, sourcing ideas and investment solutions worldwide. Based in Pasadena, CA, it has $385.4 billion in AUM.

Brandywine Global: High yield bond market outlook

Bill Zox, CFA, Portfolio Manager says “The high yield asset class continues to benefit from an attractive yield around 8%, strong fundamentals and favorable supply-demand dynamics. The one metric that warrants caution – a spread over Treasuries that is near the tight end of the historic range – must be managed but is not in our view enough to offset the many positive factors. Defaults have stabilised at well below average levels since late last year. Interest coverage has stabilised at well above average levels.

“The management teams of high yield issuers have had almost two years to prepare for higher interest rates and possible recession. And, except for the lowest 10%-15% of credit quality, they have had good access to capital, not just in the high yield market but in loans, private credit, asset-backed securities and public and private equity. High yield issuers with publicly traded equities can access the convertible bond market at the same low interest rates we saw from 2020-2021 if they are willing to give up some of the upside on their stock, which may well be at a high valuation.

“Since 2022, most of the new issuance in high yield has been for refinancing. We have not seen much, if any, of the risky bond structures or financing of bad businesses that precipitated major sell-offs in prior high yield cycles. This very limited net new supply is being met with strong global demand for high yield bonds from allocators who understand these positive factors and the long history of compelling risk-adjusted returns that the asset class has delivered.

Western Asset: Global fixed income outlook

Michael Buchanan, Co-Chief Investment Officer says “The market consensus expectation is for interest rates to remain “higher for longer” due to resilient economic growth and persistent inflation, which continues to exceed the Federal Reserve’s target. This outlook suggests that any potential rate cuts by the Fed would be limited and likely not occur until the latter half of the year. However, there’s also a strong possibility that if inflation rates gradually decline, even if unevenly, it could pave the way for the Fed to eventually lower rates further, although the timing and extent of such cuts remain uncertain.

“Western Asset holds a constructive view across most fixed income sectors, encouraged by the slow but steady resolution of inflationary pressures and other challenges that arose during the Covid crisis, although geopolitical risks remain a significant concern. A peaceful navigation through these risks could lead to a more favorable outlook for fixed income markets, especially as growth is expected to slow and inflation to decline, potentially allowing the Fed to adjust its policy stance.

“We believe that this positive macroeconomic outlook promotes renewed optimism for fixed income and even suggests an “end of cash” era, arguing that cash equivalents are often the worst-performing asset class; this is supported by the evidence that fixed income investments typically outperform cash, especially when the Fed enters a policy easing cycle. Historical trends show that diversified bond portfolios can offer healthy returns even when the Fed pauses rate cuts. Moreover, fixed income offers valuable portfolio diversification benefits, as the historically negative correlation between equities and bonds has resumed after being disrupted by the high inflation environment of 2021-2022.

“We believe that in this environment, active management is critical to help investors identify attractive opportunities. Specifically, high yield credit, structured products, emerging market debt and agency mortgage-backed securities (MBS) present compelling prospects due to their attractive spreads and strong fundamentals. Additionally, we see potential in municipal bonds (munis), as historical data suggests that entering the market before the Fed initiates rate cuts has typically led to more favorable outcomes compared to investing after the initial rate reduction in a cycle.

“In summary, our outlook at Western Asset is supported by expectations of easing inflation and eventual rate cuts. This favorable environment strengthens our conviction to increase exposure to select fixed income sectors that present attractive return opportunities. We also underscore the importance of active management to nimbly position portfolios and seize compelling opportunities as they arise, in an effort to maximise returns for our clients.”

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Matt Bushby

ClearBridge Investments^[1] proudly announces the launch of its inaugural global equity strategy tailored for Australian investors – the ClearBridge Global Growth Fund.

The ClearBridge Global Growth Strategy has a close to 12-year track record and an experienced team who manage over US$15.8billion in International and Global Growth Strategies.

The Strategy employs a disciplined, risk-aware approach aimed at delivering above-market, growth-like returns with market-level volatility. By identifying companies where the market has mispriced either the magnitude or duration of growth, the portfolio invests in 60 to 100 equities across a spectrum of growth: emerging, secular and structural, thereby allowing the Strategy to deliver for investors across various market environments.

Matt Bushby, Head of APAC Business Development at ClearBridge Investments said “The launch of this Fund marks the next stage of our growth strategy for Australian investors.

“Our business is transforming. Today, in addition to our award-winning listed infrastructure strategies, we are expanding our investment capabilities to offer Australian investors access to this very successful Global Growth Strategy.

“The ClearBridge Global Growth Fund is the first global equity fund ClearBridge has launched in Australia, and we are looking at potential opportunities to launch other global equity strategies in the future.

“We believe that increased volatility over the past few years as economies experienced higher inflation and the end of ultra-low interest rates, combined with the increased concentration risk in global equity indices, is driving financial advisers and investors to rethink their growth-equity allocations.  Increasingly investors are seeking consistency that can anchor their growth allocations through different market environments to compound over the longer term,” said Bushby.

The Strategy is managed by a team of experienced Portfolio Managers, including ClearBridge Investments’ Head of Global Growth, Elisa Mazen, who brings nearly 40 years’ experience in the funds management industry. Other Portfolio Managers managing this Strategy include Michael Testorf, CFA, and Pawel Wroblewski, CFA who have 37 years and 28 years of industry experience respectively.^[2]

Elisa Mazen commented on the success of the Strategy, attributing it to various factors, including the firms extensive proprietary research team of experienced analysts and detailed fundamental industry and company research. “We focus on investment thesis, valuation, risk assessment, as well as ESG factors^[3], to select high-quality businesses, with sustainable growth characteristics but which are trading at a discount. We then diversify the portfolio along a spectrum of growth which allows us to perform in a variety of market regimes.”

Portfolio Manager, Michael Testorf, CFA, emphasised the firm’s commitment to ESG principles stating “As part of our fundamental research, we engage with our portfolio companies regularly on ESG issues relevant to their business model and profitability^[4.

As at 31 March 2024, the ClearBridge Global Growth Strategy has produced an average annual gross return of 17.5% since its inception^[5], outperforming its benchmark, the MSCI AC World (Net) Index by 3.0%.

The top five holdings in the Strategy as at 31 March 2024 include:

• Microsoft Corp
• Amazon.com Inc
• Eli Lilly and Company
• Apple Inc
• Nvidia

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Notes:
[1] “ClearBridge Investments” refers to ClearBridge Investments Limited (AFSL 307727) and its subsidiaries, its Authorised Representative ClearBridge Investments, LLC. (as well as parts of Franklin Templeton Investments Corp. in Canada), who are operationally integrated under the global brand, ClearBridge Investments.
[2] The Portfolio Managers are employed by ClearBridge Investments, LLC. an Authorised Representative of ClearBridge Investments Limited
[3] The Fund may hold investments where ESG factors are not considered, including cash, cash equivalents, exchange-traded funds and certain types of derivatives. Taking all factors relevant to the overall investment thesis into account, including non-ESG factors, a security with a relatively lower ESG rating may be acquired and retained, and, conversely, a security with a relatively higher ESG rating may be neither acquired nor retained, where ClearBridge Investments believes this is consistent with the overall investment objective and strategy of the Fund.
[4] We acknowledge that there may be limitations to the degree of influence that ClearBridge Investments may reasonably have.
[5] Performance inception date for the ClearBridge Global Growth Strategy is 30 June 2012. Past performance is not a reliable indicator for future performance. Please note that a comparison between the ClearBridge Global Growth Strategy and the ClearBridge Global Growth Fund may not always be appropriate due to differences between the investment vehicles, including differences in fees, how these vehicles are traded, consideration of ta impacts and other differences which may impact the outcome.

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