SBMAX
ClearBridge MidCap-A
Introduction to ClearBridge MidCap-A
ClearBridge MidCap-A (SBMAX) is a mutual fund designed to achieve long-term capital growth by investing primarily in medium capitalization companies. Managed by Franklin Templeton Investments, the fund allocates at least 80% of its net assets to equity securities of mid-cap firms, which are known for their potential to offer higher growth compared to large-cap stocks. With a focus on growth, SBMAX aims to capitalize on the dynamic nature of mid-cap companies, which often have more room for expansion and innovation. The fund’s strategy is particularly appealing to investors looking for exposure to companies that are past the initial growth phase but still have significant growth potential.
At A Glance
Executive Summary
SBMAX offers mid-cap growth with diverse sector allocation and a 1.17% expense ratio, but recent performance lags peers.
Strong sector diversification Focus on mid-cap growth Managed by Franklin Templeton
Higher expense ratio than peers Recent underperformance No yield for income investors
Sector Allocation and Diversification
SBMAX offers a well-diversified portfolio across various sectors, which is crucial for mitigating risks associated with investing in mid-cap stocks. The fund’s largest allocations are in Industrials (17.16%), Technology (15.55%), and Financials (13.64%), providing a balanced exposure to both cyclical and defensive sectors. This diversification helps cushion the fund against sector-specific downturns while allowing it to benefit from sector-specific upswings. The fund’s allocation to sectors like Health Care (12.15%) and Cyclical (13.10%) further enhances its growth potential, as these sectors are often at the forefront of innovation and economic cycles. Such a diversified approach is essential for investors seeking to balance risk and reward in their mid-cap investments.
Performance Analysis and Benchmark Comparison
In terms of performance, SBMAX has shown mixed results. Over the past year, the fund delivered a return of 27.66%, which is commendable but falls short of its benchmark, the S&P 500 Total Return Index, which returned 37.62% over the same period. This underperformance is a critical consideration for potential investors, as it highlights the challenges the fund faces in keeping pace with broader market indices. Despite this, the fund’s long-term performance remains relatively strong, with an inception return of 9.49%. Investors should weigh these performance metrics against their investment goals, particularly if they are seeking a fund that consistently outperforms its benchmark.
Risk Metrics and Volatility
SBMAX’s risk metrics indicate a level of volatility that investors should be aware of. The fund has a beta of 1.00, suggesting it moves in line with the market, but its negative alpha of -10.00% indicates it has underperformed relative to its expected returns. The Sharpe Ratio of -0.65 further underscores the fund’s risk-adjusted performance challenges. Additionally, the fund’s standard deviation of 4.43% and a max drawdown of -9.6% highlight the potential for significant fluctuations in value. These metrics suggest that while SBMAX offers growth potential, it also carries a level of risk that may not be suitable for all investors, particularly those with a low risk tolerance.
Expense Ratio and Cost Considerations
The expense ratio of SBMAX stands at 1.17%, which is relatively high compared to some of its peers. For instance, similar funds like PGIM Jennison MidCap Growth-A (PEEAX) and Congress MidCap Growth-Inst (IMIDX) have lower expense ratios of 0.0107% and 0.0079%, respectively. This higher cost can eat into investors’ returns over time, making it an important factor to consider when evaluating the fund’s overall value proposition. While the fund’s management by Franklin Templeton Investments may justify the higher fees for some investors, those seeking cost efficiency might find better options elsewhere.
Top Holdings and Investment Strategy
SBMAX’s top holdings reflect its strategic focus on mid-cap growth opportunities. The fund’s largest positions include Performance Food Group Co (2.95%), Clean Harbors Inc (2.72%), and Avantor Inc (2.64%). These companies are leaders in their respective industries, offering potential for significant growth. The fund’s strategy of investing in companies with strong market positions and growth prospects aligns with its objective of capital appreciation. By focusing on mid-cap stocks, SBMAX aims to capture the growth potential of companies that are often overlooked by larger funds, providing investors with unique opportunities for capital gains.
Comparative Analysis with Similar Funds
When compared to similar funds, SBMAX presents a mixed picture. While it offers a robust sector diversification and a focus on mid-cap growth, its recent performance and higher expense ratio may deter some investors. For example, AmerBeacon Stephens MidCap Growth-A (SMFAX) and Voya MidCap Opportunities-A (NMCAX) have outperformed SBMAX over the past year with returns of 30.32% and 31.83%, respectively. Additionally, these funds have lower expense ratios, making them potentially more attractive to cost-conscious investors. This comparative analysis highlights the importance of evaluating SBMAX not just on its own merits but also in the context of available alternatives.
Conclusion: Suitability and Investor Profile
SBMAX stands out for its focus on mid-cap growth and sector diversification, making it a suitable choice for investors seeking exposure to medium-sized companies with growth potential. However, its higher expense ratio and recent underperformance relative to its benchmark and peers suggest that it may not be the best fit for all investors. Those with a higher risk tolerance and a long-term investment horizon may find the fund’s growth strategy appealing, while cost-conscious investors or those seeking immediate returns might consider other options. Ultimately, SBMAX is best suited for investors who prioritize growth and are willing to accept the associated risks.
Similar Securities
JACNX: Janus Henderson Contrarian-D | Growth-Focused MidCap Fund
JACNX offers a compelling growth strategy with a 45.53% 1-year return, focusing on attractively valued midcap equities and a competitive 0.76% expense ratio.
CMGIX: BlackRock MidCap Growth Equity-Inst | Mid-Cap Growth Potential
CMGIX offers exposure to mid-cap growth stocks with a focus on high earnings potential, featuring a competitive expense ratio of 0.8%.
RPMGX: TRPrice MidCap Growth-Inv | Mid-Cap Growth Opportunities
RPMGX offers mid-cap growth with a focus on technology and healthcare, boasting a 28.57% 1-year return, though with higher risk metrics.
TQSAX: TRPrice Integrated US SMCap Core Eq-Adv | Small/Mid-Cap Growth Fund
TQSAX offers robust growth with a 42.49% 1-year return, focusing on small/mid-cap U.S. equities. High alpha and sector diversity enhance its appeal.
BRMIX: iShares Russell MidCap IxFd-Inst | Growth-Focused MidCap Investment
BRMIX offers low-cost exposure to US mid-cap stocks with a 0.09% expense ratio, ideal for growth-focused investors seeking mid-cap market exposure.
Futher Reading
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