LEGFX
BrandywineGLOBAL SmallCap Value-I
Introduction to BrandywineGLOBAL SmallCap Value-I
The BrandywineGLOBAL SmallCap Value-I fund, ticker symbol LEGFX, is designed to provide long-term capital appreciation by investing primarily in small-cap companies. Managed by Franklin Templeton Investments, this fund targets companies with market capitalizations similar to those in the Russell 2000 Index. With a focus on value investing, LEGFX seeks to identify undervalued stocks that have the potential for significant growth. The fund’s strategy includes investing at least 80% of its net assets in equity securities of small-cap companies, with the flexibility to allocate up to 25% of its assets in foreign issuers. This approach offers investors exposure to a diverse range of small-cap stocks, making it an attractive option for those looking to capitalize on the growth potential of smaller companies.
At A Glance
Executive Summary
LEGFX offers small-cap value exposure with a 1.22% expense ratio, focusing on undervalued stocks. It has a 25.03% 1-year return, ideal for risk-tolerant investors.
Focus on small-cap value stocks with growth potential. Exposure to diverse sectors, including financials and industrials. Potential for high returns with a 25.03% 1-year performance.
Higher expense ratio compared to similar funds. Negative alpha and Sharpe ratio indicate potential risk. Limited international exposure with only 1.05% in non-US equity.
Performance Analysis: A Year of Strong Returns
LEGFX has demonstrated impressive performance over the past year, achieving a 25.03% return. This performance is noteworthy, especially when compared to its benchmark, the S&P 500 Total Return Index, which posted a 37.62% return over the same period. While the fund’s return is slightly lower than the benchmark, it still represents a strong showing for a small-cap value fund. The fund’s focus on undervalued small-cap stocks has allowed it to capture significant upside potential, despite the inherent volatility associated with this asset class. Investors should note that while the fund has delivered strong returns recently, its risk metrics, such as a negative alpha of -12.63% and a Sharpe ratio of -0.59, suggest that there may be periods of underperformance relative to the market.
Sector Allocation: A Diverse Portfolio
The BrandywineGLOBAL SmallCap Value-I fund boasts a well-diversified portfolio across various sectors, with a significant allocation to financials at 24.06%, followed by industrials at 13.55% and cyclical stocks at 17.05%. This sector allocation reflects the fund’s strategy of investing in undervalued small-cap companies with growth potential. The fund’s exposure to the financial sector is particularly noteworthy, as it positions the fund to benefit from economic recovery and growth. Additionally, the fund’s allocation to technology (8.95%) and healthcare (8.74%) sectors provides a balanced approach to capturing growth opportunities in these dynamic industries. This diversification across sectors helps mitigate risk and enhances the fund’s potential for long-term capital appreciation.
Risk Metrics: Understanding the Volatility
Investors considering LEGFX should be aware of the fund’s risk profile, which is characterized by a beta of 1.16, indicating a higher level of volatility compared to the market. The fund’s standard deviation of 6.22% further underscores this volatility, suggesting that investors may experience significant fluctuations in the fund’s value. Additionally, the fund’s negative alpha of -12.63% and Treynor ratio of -10.92 highlight potential challenges in achieving risk-adjusted returns. Despite these risk metrics, the fund’s downside risk (UI) of 4.51% and max drawdown of -10.2% suggest that the fund has managed to limit losses during market downturns. Investors should weigh these risk factors against the fund’s potential for high returns when considering an investment in LEGFX.
Competitive Comparison: How LEGFX Stacks Up
When compared to similar funds, LEGFX presents a mixed picture. While its 1-year return of 25.03% is competitive, it falls short of some peers like WCM SmallCap Growth-Inst (WCMLX), which achieved a 32.36% return. However, LEGFX’s focus on value stocks differentiates it from growth-oriented peers. The fund’s expense ratio of 1.22% is higher than some competitors, such as Yorktown SmallCap-Inst (YOVIX) with an expense ratio of 0.0144. Despite this, LEGFX offers a unique value proposition with its emphasis on small-cap value stocks, which may appeal to investors seeking exposure to undervalued companies with growth potential. Investors should consider these factors when evaluating LEGFX against other small-cap funds.
Top Holdings: Key Contributors to Performance
The top holdings of LEGFX provide insight into the fund’s investment strategy and performance drivers. Notable holdings include Western Asset Prem Instl US Trs Rsv Pref, PetIQ Inc Class A, and First Advantage Corp, which collectively represent a significant portion of the fund’s assets. These companies are indicative of the fund’s focus on small-cap value stocks with potential for growth. The inclusion of companies like Signet Jewelers Ltd and Polaris Inc further highlights the fund’s strategy of investing in undervalued stocks across various industries. This diversified approach to stock selection has contributed to the fund’s strong performance over the past year, offering investors exposure to a range of growth opportunities within the small-cap value space.
Investor Suitability: Who Should Consider LEGFX?
LEGFX is best suited for investors with a higher risk tolerance who are seeking exposure to small-cap value stocks. The fund’s focus on undervalued companies with growth potential makes it an attractive option for those looking to capitalize on the opportunities presented by smaller companies. However, investors should be prepared for the inherent volatility associated with small-cap stocks, as reflected in the fund’s risk metrics. The fund’s higher expense ratio may also be a consideration for cost-conscious investors. Overall, LEGFX offers a compelling investment opportunity for those willing to accept higher risk in exchange for the potential for significant long-term capital appreciation.
Conclusion: The Unique Appeal of LEGFX
In conclusion, the BrandywineGLOBAL SmallCap Value-I fund offers a unique investment opportunity for those interested in small-cap value stocks. With a focus on undervalued companies and a diverse sector allocation, the fund provides exposure to a range of growth opportunities. While the fund’s risk metrics and higher expense ratio may be a concern for some investors, its strong recent performance and potential for long-term capital appreciation make it an attractive option for risk-tolerant investors. LEGFX stands out for its emphasis on value investing within the small-cap space, making it a suitable choice for those looking to diversify their portfolio with high-growth potential stocks.
Similar Securities
FRMCX: Franklin MicroCap Value-A | High-Return Micro-Cap Investment
FRMCX targets undervalued micro-cap stocks for growth and income, with a 1.16% expense ratio and 31.85% 1-year return, ideal for risk-tolerant investors.
LEGFX: BrandywineGLOBAL SmallCap Value-I | Small-Cap Equity Investment
LEGFX offers small-cap value exposure with a 1.22% expense ratio, focusing on undervalued stocks. It has a 25.03% 1-year return, ideal for risk-tolerant investors.
JSIVX: Janus Henderson SmallCap Value-L | Undervalued Small-Cap Stock Investment
JSIVX offers small-cap value exposure with a focus on undervalued stocks, a 0.75% expense ratio, and a 33.33% 1-year return.
VSCAX: Invesco SmallCap Value-A | High Alpha Small-Cap Investment
VSCAX offers high alpha and small-cap exposure with a 49.69% 1-year return, ideal for aggressive investors seeking capital appreciation.
FRVLX: Franklin SmallCap Value-A | Small-Cap Value Investment
FRVLX offers small-cap value exposure with a 0.99% expense ratio and 36.24% 1-year return, focusing on undervalued stocks for growth.
Futher Reading
https://finance.yahoo.com/quote/LEGFX/”>Yahoo: BrandywineGLOBAL SmallCap Value-I
https://ftcloud.fasttrack.net/web/chart/LEGFX
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