ClearBridge Multi Cap Growth ESG Portfolios

Investment Overview

The ClearBridge Multi Cap Growth ESG Portfolios seek out growth company stocks with the potential for above-average long-term earnings and/or cash flow growth.

 

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: 

  • Achieve long-term capital appreciation through investment in large-, mid- and small-capitalization stocks that have the potential for above-average long-term earnings and/or cash flow growth.
  • Select companies that can be held for long periods of time.
  • Actively evaluate a company’s ESG drivers of business performance to gauge its level of social awareness.
 

Investment Philosophy

  • An all-capitalization portfolio that seeks a low-turnover approach to portfolio construction.
  • Bottom-up investment process seeks inefficiently priced companies with strong fundamentals, dominant positions in niche markets, and/or goods or services customers are practically compelled to use.
  • Competitive risk-adjusted returns achieved by capitalizing on the convergence between a company’s investment potential and its ESG management aspects.
 

Portfolio Positioning

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

Key Differentiators

  • Portfolio managers average over 26 years of investment industry experience.
  • They believe a true growth portfolio should consist of stocks that can be held not for a quarter or two, but for many years so that earnings and/or cash flow growth can compound over time.
  • Portfolios typically concentrated in generally 25-45 stocks.
  • Sector concentrations can be significant, but they are a byproduct of the bottom-up fundamental research-driven stock selection process.
 

There is no guarantee that the Portfolio's objectives will be met.

 

 

Investment
Process

Define the investment universe

Consider companies across the market-capitalization spectrum that we believe have the potential for above-average long-term earnings and/or cash flow growth.

Perform bottom-up fundamental analysis

Emphasize companies with significant franchise value, material ownership stake by management, strong balance sheets and/or ubiquitous products or services.

Determine buy list

Identify companies that may be inefficiently priced and/or overlooked by Wall Street at time of position initiation.

Maintain concentrated portfolio with long-term horizon

Construct a low-turnover portfolio of generally 25-45 holdings that have met our ESG criteria and concentrated by industry and issuer, and allow earnings and/or cash flow growth to compound.

Review holdings continuously

Re-examine a current holding when long-term deterioration in company or industry fundamentals is seen as a significant possibility, valuation is excessive or, a new idea provides better risk/return prospects.

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

Richard Freeman

Managing Director, Portfolio Manager

Evan Bauman

Managing Director, Portfolio Manager

Mary Jane McQuillen

Managing Director, Head of Environmental, Social and Governance Investment, 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 Multi Cap Growth ESG 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.  In addition to investments in large-capitalization companies, investments may be made in speculative and/or small-cap and mid-cap companies which involve a higher degree of risk and volatility than investments in larger, more established companies. In addition, because the investments may be concentrated in a limited number of industries and companies, the portfolios may involve heightened risk.  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.  Certain limits on the amount of investment in any one company may cause individual MCG investment portfolios to vary from each other and thus the performance results of such portfolios may also vary from each other, particularly when combined with the price volatility of stocks in such portfolios. 

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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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Portfolio characteristics (Source: FactSet)

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 Multi Cap Growth ESG SMA GIPS® Endnotes Inception date: January 2006. Composite creation date: June 2008.
Period Total
net return
(%)
Total pure
gross return*
(%)
R3000G return
(%)
Number of
portfolios
Bundled fee
portfolios (%)
Composite
dispersion (%)
Composite 3 Yr.
St. Dev.
Benchmark 3Yr.
St. Dev.
Composite
assets ($mm)
Firm assets
(%)
Total firm
assets ($mm)
2016 6.03 9.20 7.39 105 100 0.58 14.64 11.50 76.9 0.1 100,936.9
2015 -5.08 -2.22 5.09 106 100 1.04 13.16 10.95 81.2 0.1 92,536.4
2014 10.93 14.23 12.44 8 100 n/m 12.50 9.87 34.9 0.0 100,721.5
2013 42.21 46.36 34.23 <5 100 n/m 16.86 12.66 2.8 0.0 85,024.7
2012 18.81 22.33 15.21 <5 100 n/m 20.47 16.21 0.2 0.0 54,624.3
2011 -3.70 -0.80 2.18 <5 100 n/m 23.87 18.43 0.5 0.0 50,870.8
2010 30.99 34.84 17.64 <5 100 n/m n/a n/a 0.5 0.0 55,366.5
2009 47.63 51.93 37.01 <5 100 n/m n/a n/a 0.4 0.0 53,522.7
2008 -44.35 -42.59 -38.44 <5 100 n/m n/a n/a 0.6 0.0 50,614.9
2007 2.44 5.51 11.40 <5 100 n/m n/a n/a 0.8 0.0 47,112.0

*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 Multi Cap Growth 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 long-term capital appreciation by investing in the stocks of small, mid, and large capitalization companies that the manager believes have the potential for above-average long-term earnings and/or cash flow growth. The main risks of this strategy are General Investment Risk, Industry and Issuer Concentration Risk, Small Cap Risk, Mid Cap Risk, High Volatility Risk, ESG Investing Risk, and Non-U.S. Investment Risk. Prior to June 2008, the minimum was $5,000. The composite consists of the following percentages of non-fee-paying seed capital: 12/2013 - 2%, 12/2014 - .2%, 12/2015 - .1%.

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. Effective January 1, 2013, the number of portfolios reflects a change from prior periods due to an aggregation of accounts as reported by one sponsor. As of January 2014, 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. For prior years, the equal-weighted standard deviation was used. Total firm assets for 2007 represents the CBI-Retail firm. The composite employed a 10% significant cash flow policy which was discontinued in January 2012. A list of composite descriptions is available upon request. Policies for valuing portfolios, calcul ating performance, and preparing compliant presentations are available upon request. Past performance is not necessarily indicative of future results.

Benchmark Information:
The Russell 3000® Growth Index measures the performance of those Russell 3000 Index companies with higher price-to-book ratios and higher forecasted growth values

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.

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