The ClearBridge International Value ADR ESG Portfolios seek to provide a value-based, international equity strategy that will outperform the MSCI EAFE (Net) Index USD over 3-5 years, with similar risk to the index. Investments are made from the universe of non-U.S. companies, including emerging markets, with publicly traded ADR securities listed on the major U.S. exchanges and that have market capitalizations greater than $100 million.
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.
The strategy seeks to outperform the MSCI EAFE (Net) Index USD over a full market cycle of 3-5 years, investing internationally through ADRs.
Focusing on a small number of companies trading at low prices relative to their dynamic intrinsic values leads to enhanced stock selection over time.
Designed for investors seeking international diversification in developed and emerging markets across all market sectors and capitalizations.
Find quality companies trading at low prices relative to dynamic intrinsic values
- Eliminate businesses with undesirable characteristics
- Focus on limited number of companies with the greatest chance for success
Opportunistic approach to security selection, enhanced by major dislocation in the markets
Defined risk management at security and portfolio levels
- De-risk stock selection via deep understanding of a select list of mispriced businesses
- Rigorous ongoing review of existing holdings to ensure investment case remains intact
- Diversification of business models and customer bases throughout portfolio
- Explicit limits at portfolio, sector and country/region levels
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.
There is no guarantee that the Portfolio's objectives will be met.
Universe of securities
Identify publicly traded ADRs across 11 macro sectors in both developed and emerging markets, each with a market capitalization greater than $100 million and sufficient liquidity.
Seek stocks selling below their normal valuation levels by employing a quantitative model that compares current valuations (as measured by price-to-earnings, price-to-book and price-to-cash flow ratios) to historical valuations.
Seek to eliminate stocks with negative characteristics and barriers to success. These factors could include a declining quality of financial characteristics, deteriorating industry conditions or competitive position, or a lack of confidence in company management.
Fundamental analysis and client portfolio
- Use a comprehensive fundamental research process to understand the business of each company and focus on long-term value, rather than short-term price or earnings forecasts.
- Construct the portfolio consisting of 60-85 holdings. Positions are weighted based upon upside potential, downside risk, our fundamental conviction, and the impact on diversification.
A security is typically reviewed for sale if:
- It appreciates to our predetermined target price;
- A change in company fundamentals results in a failure to meet one of the four criteria of our Focus List elimination process; or
- Value Trap screen triggers a comprehensive reassessment
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.
Paul D. Ehrlichman
Managing Director, Head of Global Value Equity, Portfolio Manager
Sean M. Bogda, CFA
Managing Director, Portfolio Manager
Mary Jane McQuillen
Managing Director, Head of Environmental, Social and Governance Investment, Portfolio Manager
Safa R. Muhtaseb, CFA
Managing Director, Portfolio Manager
Managing Director, Portfolio Manager
Active share is a measure of the percentage of stock holdings in a manager's portfolio that differs from the benchmark index.
What I Should Know
All investments involve risk, including loss of principal and there is no guarantee that investment objectives will be met. The managers invest the portfolios primarily in ADRs, but may also make limited investments in U.S.-traded stocks of non-U.S. and U.S. companies engaged in significant non-U.S. business. These limited investments may include U.S.-traded stocks that result from the conversion of ADRs, as well as other U.S.-traded stocks. The portfolios' investments in non-U.S. companies may include companies in developed and emerging markets which involve risks in addition to those ordinarily associated with investing in U.S.-traded stocks, including the potentially negative effects of currency fluctuation, political and economic developments, foreign taxation and differences in audition and other financial standards. These risks are magnified in emerging markets. 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.
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.
Holdings, sector weightings, market capitalization and portfolio characteristics are subject to change at any time and are based on a representative portfolio. Holdings, sector weightings, market capitalization and portfolio characteristics of individual client portfolios in the program may differ, sometimes significantly, from those shown. This information does not constitute, and should not be construed as, investment advice or recommendations with respect to the securities and sectors listed.
|Period||Total net return
gross* return (%)
|MSCI EAFE (Net) (USD) return (%)||Number of
|Composite 3 Yr.St. Dev.||Benchmark 3Yr. St. Dev.||Composite
|Firm assets (%)||Total firm
|Jul - Dec 2016||8.33||9.92||5.67
*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.
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.
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.
The ClearBridge International Value ADR ESG 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. Accounts within the composite seek to provide a value-based, international equity strategy that will outperform the MSCI EAFE Index over 3-5 years with risk similar to the Index. Investments are primarily in ADRs of companies in both developed and emerging markets. ClearBridge uses WM/Reuters daily FX rates taken at 4 p.m. London time, which may vary from Benchmark indices' exchange rates periodically. 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 because the composite does 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.
The MSCI EAFE® measures total market performance, including price appreciation and income from net-dividend payments. The "Net" Index series assumes that dividends are reinvested after the deduction of withholding tax. The index uses withholding tax rates applicable to Luxembourg holding companies.
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.