ClearBridge All Cap Value ESG Catholic Portfolios

Investment Overview

The ClearBridge All Cap Value ESG Catholic Portfolios are designed for investors seeking long-term growth aligned with Catholic values, focused on large-, medium-, and small-company value stocks.
 

The ESG Investment Program actively incorporates environmental, social and governance (ESG) factors into the fundamental research platform and into the stock-selection process. In addition, ongoing company engagement and shareholder advocacy are key components of the Program.

A few examples of the ESG considerations include:

  • Innovative workplace policies, employee benefits and programs
  • Environmental management system strength, eco-efficiency and life-cycle analysis
  • Community involvement, strategic philanthropy and reputation management
  • Strong corporate governance and independence on the board

ClearBridge is a Signatory to the UN Principles for Responsible Investment, and is affiliated with the Investor Network on Climate Risk, the Carbon Disclosure Project, the Interfaith Center on Corporate Responsibility, the Global Impact Investing Network, and the US Forum for Sustainable and Responsible Investment.
 

INVESTMENT OBJECTIVE

Seeks to:

  • Focus on consistent growth of capital while managing volatility
  • Current income as a secondary consideration
  • Outperform the Russell 3000 Value Index over a full market cycle, and with less risk
  • Actively evaluate a company’s “non-financial” drivers of business performance to gauge its level of social awareness and consistency with Catholic values
     

Investment Philosophy

  • The strategy applies value criteria to attempt to find the most inefficiently priced stocks in the small-, mid- and large-capitalization sectors. The goal is to achieve above-average returns while seeking to manage risk.
  • The managers integrate environmental, social and governance (ESG) factors into the stock selection process. 
  • They believe competitive risk-adjusted returns can be achieved by capitalizing on the convergence between a company’s investment potential and its ESG management aspects.

When evaluating an individual stock, the portfolio managers look for:

  • Low market valuations
  • Positive changes in earnings prospects because of factors such as:

                -New, improved or unique products and services
                -New or rapidly expanding markets for the company’s products
                -New management
                -Changes in the economic, financial, regulatory or political environment                               particularly affecting the company

  • Effective research, product development and marketing
  • A business strategy not yet recognized by the marketplace
 

KEY DIFFERENTIATORS

Incorporates additional measures to avoid traditional pitfalls of value investing

  • Fundamental research around high Return on Invested Capital (ROIC) business is bedrock to investment process.
  • Use of quantitative screening focuses fundamental budget on key valuation measures by sector and areas to tilt the portfolio.
  • Use of top down themes and trends (with multi-year view) shapes areas to avoid and exploit the market.

Strong research support across organizations

  • Dedicated research team of fundamental and quantitative analysts.

Experienced investment management team

  • Portfolio managers Sam Peters, Albert Grosman, and Mary Jane McQuillen have more than 20 years of investment industry experience.
     

Portfolio Positioning

  • Designed for investors seeking a core, value portfolio, with the ability to invest in all market capitalizations 
  • Offers a long-term buy-and-hold strategy, which may reduce portfolio turnover
 

Diversification does not guarantee a profit or protect against a loss.

Market, security and/or other investment considerations may result in higher turnover from time to time. Also, all capitalization ranges will not necessarily be represented in an individual account.

 

 

Investment
Process

Define the investment universe

Identify quality equity investments in different categories, which may include common stocks in the Russell 3000 Value Index.

Evaluate stocks using proprietary discipline

Emphasize market and industry themes and trends. Stress long-term value in analyzing quantitative, fundamental and technical factors.

Apply fundamental analysis to select securities

Emphasize companies with healthy balance sheets selling at or near book value and at prices that do not accurately reflect cash flows, tangible assets or management skills.

Construct a diversified portfolio and review holdings

Build a portfolio of best ideas that have met the ESG and Catholic criteria. Re-examine a current holding when fundamentals or technical factors deteriorate, full growth potential is reached, there is unusual insider buying/selling, or a decline in company’s social/environmental performance causes it to violate social and Catholic values screens.

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. There is no guarantee investment objectives will be achieved.

 

 

meet your managers

Global investment manager with over 50 years of experience and long-tenured portfolio managers who seek to build income, high active share or low volatility portfolios.


Meet Your Managers

Albert Grosman

Managing Director, Portfolio Manager

Mary Jane McQuillen

Managing Director, Head of Environmental, Social and Governance Investment, Portfolio Manager

Sam Peters, CFA

Managing Director and Portfolio Manager

Active share is a measure of the percentage of stock holdings in a manager's portfolio that differs from the benchmark index.

To find out more about the ClearBridge All Cap Value ESG Catholic Portfolios, talk to your financial advisor.

 

 

What I Should Know
Before Investing

All investments involve risk, including 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.  While most investments are in U.S. 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. 

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IMPORTANT INFORMATION: Past performance is no guarantee of future results. Management and performance of individual accounts may vary for reasons that include the existence of different implementation practices and model requirements in different investment programs.

Pure Gross performance shown does not reflect the deduction of investment management fees and certain transaction costs, which will reduce portfolio performance. Net performance includes the deduction of a 3% annual wrap fee for equity and balanced portfolios and a 1.5% annual wrap fee for fixed income portfolios. These deducted fees amounts are the maximum anticipated wrap fees. Actual fees may vary. For fee schedules, contact your financial professional or, if you enter into an agreement directly with Legg Mason Private Portfolio Group, LLC ("LMPPG"), refer to LMPPG's Form ADV disclosure document. Returns reflect the reinvestment of dividends and other earnings.

An investor cannot invest directly in an index. Unmanaged index returns do not reflect any fees, expenses or sales charges. 

Please see GIPS® endnotes for important additional information regarding the portfolio performance shown and for effects of fees. 

Performance Source: Legg Mason

Hypothetical growth of dollars: For illustrative purposes only. Assumes no withdrawals or contributions. The performance results shown were calculated assuming reinvestment of dividends and income and take into account both realized and unrealized capital gains and losses.

IMPORTANT INFORMATION: Separately Managed Accounts (SMAs) are investment services provided by Legg Mason Private Portfolio Group, LLC (LMPPG), a federally registered investment adviser. Client portfolios are managed based on investment instructions or advice provided by one or more of the following Legg Mason-affiliated sub-advisers: ClearBridge Investments, and Western Asset Management Company. Management is implemented by LMPPG, the designated sub-adviser or, in the case of certain programs, the program sponsor or its designee.


Professional money management may not be suitable for all investors. Factual information relating to the securities discussed was obtained from sources believed to be reliable, but there can be no guarantee as to its accuracy. It should not be assumed that investments made in the future will be profitable or will equal the performance of the securities discussed in the material.

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Source: FactSet. Portfolio characteristics are based on a model portfolio, not an actual client account. The model portfolio is a hypothetical portfolio whereby the portfolio characteristics are based on simulated trading and account activity of a client account invested in this strategy. The model portfolio assumes no withdrawals, contributions or client-imposed restrictions.

Portfolio characteristics of individual client accounts may differ from those of the model portfolio as a result of account size, client-imposed restrictions, the timing of client investments, market conditions, contributions, withdrawals and other factors. 

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ClearBridge All Cap Value ESG Catholic SMA GIPS® Endnotes Inception date: January 2013. Composite creation date: December 2012.
Period Total
net
return
(%)
Total
pure
gross
return*
(%)
R3000V
return
(%)
Number
of
portfolios
Bundled
fee
portfolios
(%)
Composite
dispersion
(%)
Composite
3 Yr.
St. Dev.
Benchmark
3 Yr.
St.Dev.
Composite
assets
($mm)
Firm
assets
(%)
Total
firm
assets
($mm)
2016 15.35 18.77 18.40 5 100 n/m 13.43 11.12 1.3 0.0 100,936.9
2015 -7.44 -4.64 -4.13 <5 100 n/m 11.84 10.90 1.0 0.0 92,536.4
2014 7.30 10.50 12.70 5 100 0.20 n/a
n/a
3.2 0.0 100,721.5
2013 25.95
29.66 32.69 5
100 n/m
n/a
n/a
3.1 0.0 85,024.7

*Pure gross of fee returns do not reflect the deduction of any expenses, including transaction costs, and are presented as supplemental to the net of fee returns.

n/m - Information is not statistically meaningful due to an insufficient number of portfolios in the composite for the entire year.

Compliance Statement:
ClearBridge Investments, LLC claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. ClearBridge Investments, LLC has been independently verified for the periods January 1, 1997 - December 31, 2016. The verification reports are available upon request.

Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm's policies and procedures are designed to calculate and present performance in compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite presentation.

Firm Information:
ClearBridge Investments, LLC ("ClearBridge") is a wholly owned subsidiary of Legg Mason, Inc. ("Legg Mason").  The investment advisory business now known as ClearBridge was registered in September 2005 to facilitate Legg Mason's acquisition of substantially all the equity asset management businesses known as Citigroup Asset Management.  These former businesses serve as the foundation of ClearBridge and its claim of GIPS compliance for institutional accounts through predecessor firms, effective as of January 1997.  In June 2008, ClearBridge combined this business with its retail business to form a single GIPS firm.  As of April 1, 2013 and January 1, 2016, ClearBridge's affiliates, Global Currents Investment Management, LLC, and ClearBridge, LLC, respectively, have become part of the ClearBridge GIPS firm.

Composite Information:
The ClearBridge All Cap Value ESG Catholic SMA composite consists of discretionary wrap accounts with an account minimum of US $25,000.  The managers actively integrate criteria inclusive of environmental, social and governance (ESG) issues into the portfolio construction of the strategy.  In addition, the portfolios are constructed to be in line with USCCB socially responsible guidelines, as directed by the client. Accounts within the composite are primarily invested by applying value criteria to attempt to find the most inefficiently priced stocks in the small, mid and large capitalization sectors.  The main risks of this strategy are General Investment Risk, Small Cap Risk, Mid Cap Risk, ESG Investing Risk, and Non-U.S. Investment Risk.

Input and Calculation Data:

The fee schedule currently in effect is 3.00% on all assets.  Net of fee composite returns are calculated by reducing each monthly composite pure gross rate of return by the highest "bundled" fee charged (3.00%) annually, prorated to a monthly ratio.  The "bundled" fee includes transaction costs, investment management, custodial, and other administrative fees.  The internal dispersion of annual returns is measured by the asset-weighted standard deviation of portfolio returns included in the composite for the entire year.  The three-year annualized ex-post standard deviation is not available prior to 2015 because the composite did not have 36 months of data.  A list of composite descriptions is available upon request.  Policies for valuing portfolios, calculating performance, and preparing compliant presentations are available upon request. Past performance is not necessarily indicative of future results.

Benchmark Information:
The Russell 3000® Value Index measures the performance of the broad value segment of the U.S. equity value universe.

All investments involve risk, including loss of principal. Past performance is no guarantee of future results. Please see each product’s webpage for specific details regarding investment objective, risks associated with hedge funds, alternative investments and other risks, performance and other important information. Review this information carefully before you make any investment decision.

Certain SMA products may not be available at all firms. 

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