ClearBridge Small Cap Value Portfolios

Overview | Performance | Portfolio Characteristics

Overview

Small Cap Value portfolios, headed by Peter J. Hable, focus on investing primarily in equity securities of small capitalization companies that the portfolio managers believe have a high probability of outperforming small cap value stocks in general. The senior portfolio managers have spent their entire careers with ClearBridge Advisors and its predecessor firms.

Investment Objective

The strategy seeks to:

provide long-term capital growth by investing in stocks of small capitalization companies whose market price appears attractive in relation to its underlying fundamentals
outperform the Russell 2000 Value Index ¹over a complete market cycle

Investment Philosophy

We believe:

that small-company stocks may help diversify and potentially enhance returns of a portfolio investing exclusively in larger-company stocks
in generally investing across multiple economic sectors and industry groups

Investment Process

Define an initial investment universe

Consider small capitalization stocks with products and services that give the company a competitive advantage and skilled management committed to a long-term vision. To a limited extent, large and medium capitalization stocks may also be considered for investment.

Conduct quantitative screening

Create a subset of companies warranting further analysis by screening for significant cash flow, strong balance sheets and high return on equity.

Perform fundamental research

Narrow list to investable candidates across sectors.
Differentiate stocks with intrinsic value from those with price depreciation that may be mistaken for value stocks.

Construct portfolio and manage risk

Build a diversified portfolio of companies that meet investment guidelines. Manage risk by careful attention to sector diversification and individual security weights

Review and monitor portfolio continuously

Re-examine a current holding when fundaments deteriorate or reach full growth potential, technical factors deteriorate or there is unusual insider buying/selling

Investment Risks

All investments involve risk, including the loss of principal, and there is no guarantee that investment objectives will be met.

Investments may be made in small- and mid-cap companies, which involve a higher degree of risk and volatility than investments in large-cap companies.

Investments may also be made in ADRs and other securities of non-U.S. companies in developed and emerging markets which involve risks in addition to those ordinarily associated with investing in domestic securities, including the potentially negative effects of currency fluctuation, political and economic developments, foreign taxation and differences in auditing and other financial standards. These risks are magnified in emerging markets.

The managers may sometimes hold significant portions of portfolio assets in cash equivalents while waiting for buying opportunities.

Management Team

Established in 2005, ClearBridge Advisors has over 45 years of asset management experience. The firm is known for its research-driven, fundamental approach to investing, offering actively managed U.S. equity products in a wide range of capitalizations and styles.

Investment Management

Peter Hable

Managing Director

Senior Portfolio Manager
29 years investment industry experience

Mark Bourguignon

Director

Portfolio Manager
Senior Portfolio Analyst - Generalist
15 years of investment industry experience

Marina Chinn, CFA

Director

Portfolio Manager
Senior Portfolio Analyst - Generalist
11 years of investment industry experience

Mark Feasey, CFA

Director

Portfolio Manager
Senior Portfolio Analyst - Generalist
16 years of investment industry experience

Michael Kang

Director

Portfolio Manager
Senior Portfolio Analyst - Generalist
14 years of investment industry experience

¹ The Russell 2000 Value Index measures the performance of those Russell 2000 Index companies with lower priceto-book ratios and lower forecasted growth values. An investor cannot invest directly in an index. The index is not managed and not subject to management or brokerage commission. Dividends are subject to reinvestment.

Diversification does not assure a profit or protect against market loss.

The investment process may change over time. The characteristics set forth above are intended as a general illustration of some of the criteria the strategy team considers in selecting securities for client portfolios.

Client portfolios are managed based on investment instructions or advice provided by one or more of the following Legg Mason-affiliated investment management firms, as indicated in portfolio names or otherwise: ClearBridge Advisors, LLC, Western Asset Management Company and Global Currents Investment Management, LLC. Management is implemented by Legg Mason Private Portfolio Group, LLC or, in the case of certain programs, by the program sponsor or its designee.

All investments involve risk, including possible loss of principal.