LBFIX
ClearBridge Select-I
Introduction to ClearBridge Select-I
ClearBridge Select-I (LBFIX) is a mutual fund designed to achieve long-term capital growth by investing primarily in publicly traded equity and equity-related securities of both U.S. and non-U.S. companies. As a midcap growth fund, it targets companies with significant growth potential, making it an attractive option for investors seeking to capitalize on the dynamic midcap sector. Managed by Franklin Templeton Investments, the fund offers exposure to a diverse range of market capitalizations, with a particular focus on medium-sized companies. With an expense ratio of 1.11%, the fund is positioned to deliver substantial returns, as evidenced by its impressive 1-year return of 40.59%.
At A Glance
Executive Summary
LBFIX stands out with a 40.59% 1-year return and a tech-heavy portfolio, offering high growth potential for midcap investors.
Pros:
- High 1-year return of 40.59%. Strong tech sector allocation at 39.48%. Managed by Franklin Templeton Investments.
Cons:
- Higher expense ratio of 1.11%. Potential volatility with a beta of 1.16. No yield for income-focused investors.
Tech-Heavy Portfolio Driving Growth
The ClearBridge Select-I fund has a significant allocation to the technology sector, comprising 39.48% of its portfolio. This tech-heavy focus is a key driver of the fund’s recent performance, as technology stocks have been at the forefront of market growth. Top holdings such as NVIDIA Corp, ServiceNow Inc, and Apple Inc highlight the fund’s strategic emphasis on leading tech companies. This allocation not only positions the fund to benefit from ongoing technological advancements but also aligns with the broader market trend favoring tech investments. Investors looking for exposure to high-growth tech stocks will find this fund’s portfolio composition particularly appealing.
Impressive Performance Metrics
ClearBridge Select-I has demonstrated strong performance metrics, particularly over the past year, with a 1-year return of 40.59%. This outpaces its benchmark, the S&P 500 Total Return Index, which posted a 1-year return of 37.62%. The fund’s alpha of 2.93% indicates its ability to generate excess returns relative to the benchmark, while a beta of 1.16 suggests a higher level of volatility. Despite this, the fund’s Sharpe Ratio of 0.18 and Treynor Ratio of 2.52 reflect its capacity to deliver risk-adjusted returns. These metrics underscore the fund’s potential for investors seeking high returns, albeit with a willingness to accept increased volatility.
Sector and Market Cap Diversification
The fund’s sector allocation is diverse, with significant investments in technology, industrials, and healthcare, which together account for over 65% of the portfolio. This diversification helps mitigate sector-specific risks while capitalizing on growth opportunities across different industries. Additionally, the fund’s market cap allocation is well-balanced, with 40.96% in medium-sized companies and 20.96% in extra-large companies. This blend of market capitalizations allows the fund to capture growth from both established and emerging companies, providing a comprehensive approach to midcap investing. Such diversification is crucial for investors looking to balance risk and reward in their portfolios.
Competitive Comparison with Similar Funds
When compared to similar funds, ClearBridge Select-I holds its ground with a competitive 1-year return of 40.59%. While funds like VY TRPrice Diversified MidCap Growth-I (IAXIX) have slightly higher returns at 44.02%, LBFIX’s focus on technology and its strategic asset allocation offer unique advantages. The fund’s expense ratio of 1.11% is higher than some peers, such as Alger MidCap Growth-I2 (AMGOX) with an expense ratio of 0.96%, but its robust performance metrics and tech-heavy portfolio justify the cost for growth-focused investors. This comparison highlights LBFIX’s strengths and areas where it stands out in the midcap growth category.
Risk and Volatility Considerations
Investors should be aware of the risks associated with ClearBridge Select-I, particularly its higher volatility as indicated by a beta of 1.16. The fund’s standard deviation of 4.61% and a max drawdown of -9.0% reflect potential fluctuations in value. However, the fund’s ability to recover quickly, with a drawdown recovery length of zero, suggests resilience in volatile markets. The correlation with its benchmark at 89.71% indicates a strong alignment with broader market movements, which can be advantageous during market upswings but may also lead to increased risk during downturns. These factors are essential for investors to consider when evaluating the fund’s suitability for their risk tolerance.
Strategic Asset Allocation and Cash Position
ClearBridge Select-I maintains a strategic asset allocation with a significant cash position of 41.69%, providing flexibility to capitalize on market opportunities. This cash reserve allows the fund to quickly adjust its portfolio in response to market changes, enhancing its ability to manage risk and seize growth prospects. The fund’s allocation to U.S. equities at 88.18% underscores its focus on domestic growth opportunities, while a smaller allocation to non-U.S. equities at 9.85% offers international diversification. This strategic allocation is designed to optimize returns while maintaining a level of liquidity that supports dynamic investment strategies.
Conclusion: A Strong Choice for Growth-Oriented Investors
ClearBridge Select-I stands out as a compelling option for growth-oriented investors seeking exposure to midcap equities with a strong emphasis on technology. Its impressive 1-year return of 40.59%, coupled with a strategic sector and market cap allocation, positions it well for capturing growth in dynamic markets. While the fund’s higher expense ratio and volatility may be considerations for some, its robust performance and tech-heavy portfolio offer significant potential for those willing to embrace risk for higher returns. Investors looking to enhance their portfolios with a focus on growth and innovation will find ClearBridge Select-I a valuable addition.
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Futher Reading
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