LCILX
ClearBridge Sustainability Leaders-IS
Introduction to ClearBridge Sustainability Leaders-IS
The ClearBridge Sustainability Leaders-IS (LCILX) is a mutual fund designed to provide long-term capital growth by investing in large-cap equities that meet stringent financial and sustainability criteria. Managed by Franklin Templeton Investments, this fund emphasizes environmental, social, and governance (ESG) factors, making it an attractive option for investors who prioritize sustainable investing. With an expense ratio of 0.75%, LCILX offers a focused approach to growth by investing predominantly in U.S. equities, with a significant portion allocated to technology and healthcare sectors. The fund’s strategy aligns with the increasing demand for responsible investing, catering to investors seeking both financial returns and positive societal impact.
At A Glance
Executive Summary
LCILX offers ESG-focused growth with a 0.75% expense ratio, outperforming peers in sustainability criteria.
Focus on ESG criteria Strong technology sector allocation Competitive annualized returns
Higher expense ratio than some peers Negative risk metrics Limited bond diversification
Performance Amidst Market Dynamics
LCILX has demonstrated notable performance, particularly in the past year, with a one-year return of 29.98%. This performance, while impressive, is slightly below its benchmark, the S&P 500 Total Return Index, which posted a 37.62% return over the same period. Despite this, the fund’s focus on ESG criteria provides a unique value proposition that may appeal to investors looking for sustainable growth. The fund’s annualized returns since inception stand at 12.66%, showcasing its ability to deliver consistent growth over time. However, investors should be aware of the fund’s negative alpha of -7.68% and a Sharpe ratio of -0.61, indicating potential volatility and risk compared to its benchmark.
Sector Allocation and Investment Strategy
LCILX’s investment strategy is heavily weighted towards the technology sector, which comprises 29.56% of its portfolio. This allocation reflects the fund’s commitment to investing in sectors with high growth potential and innovation. Other significant allocations include healthcare (15.16%) and financials (13.82%), providing a diversified exposure to industries that are crucial to the global economy. The fund’s top holdings, such as Microsoft Corp and Apple Inc, underscore its focus on leading companies with strong ESG practices. This strategic allocation aims to capitalize on the growth potential of these sectors while adhering to the fund’s sustainability criteria.
Comparative Analysis with Similar Funds
When compared to similar funds, LCILX holds its ground with a competitive one-year return of 29.98%. For instance, the Catholic RespInv Multi-Style US Eq-Inst (CRTSX) and Impax LargeCap-Inst (PXLIX) have one-year returns of 31.47% and 29.40%, respectively. While LCILX’s expense ratio of 0.75% is higher than some peers, such as CRTSX’s 0.66%, its focus on ESG criteria may justify the cost for investors prioritizing sustainability. Additionally, LCILX’s beta of 0.95 suggests a slightly lower volatility compared to the market, which could be appealing to risk-averse investors. This comparative analysis highlights LCILX’s strengths in sustainable investing, despite its higher expense ratio.
Risk Metrics and Considerations
Investors should consider LCILX’s risk metrics, which indicate some areas of concern. The fund’s negative alpha of -7.68% and Treynor ratio of -8.07 suggest that it has underperformed relative to its risk-adjusted expectations. Additionally, the fund’s standard deviation of 3.61% and downside risk of 2.25% highlight potential volatility. However, the fund’s beta of 0.95 indicates that it is slightly less volatile than the broader market. These metrics suggest that while LCILX offers growth potential, it may also present higher risks, particularly for investors who are sensitive to market fluctuations. Understanding these risk factors is crucial for making informed investment decisions.
Sustainability and ESG Focus
A defining feature of LCILX is its commitment to sustainability and ESG criteria. The fund invests in companies that demonstrate strong environmental, social, and governance practices, aligning with the growing trend of responsible investing. This focus not only differentiates LCILX from traditional growth funds but also positions it to benefit from the increasing demand for sustainable investment options. By prioritizing ESG factors, LCILX aims to mitigate risks associated with poor corporate governance and environmental practices, potentially enhancing long-term returns. This approach appeals to investors who seek to align their financial goals with their values, making LCILX a compelling choice for socially conscious investors.
Market Cap and Asset Allocation
LCILX’s asset allocation is predominantly in U.S. equities, with 95.88% of its portfolio dedicated to this asset class. The fund’s market cap allocation is skewed towards large-cap and extra-large-cap companies, comprising 35.59% and 43.95% of the portfolio, respectively. This focus on larger, established companies aligns with the fund’s objective of providing stable growth through investments in industry leaders. Additionally, the fund maintains a small cash position of 1.13%, providing liquidity and flexibility to capitalize on market opportunities. This strategic allocation underscores LCILX’s commitment to growth while maintaining a diversified and balanced portfolio.
Conclusion: Suitability for Investors
LCILX stands out as a mutual fund that combines growth potential with a strong commitment to sustainability. Its focus on ESG criteria and strategic sector allocations make it an attractive option for investors seeking to align their portfolios with their values. However, potential investors should weigh the fund’s higher expense ratio and risk metrics against its sustainability focus and growth prospects. LCILX is particularly suitable for growth-oriented investors who prioritize responsible investing and are willing to accept some level of risk for the potential of higher returns. As the demand for ESG investments continues to rise, LCILX offers a compelling choice for those looking to invest in a sustainable future.
Similar Securities
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JARTX excels with a 42.68% 1-year return, focusing on large-cap growth stocks with a 0.98% expense ratio, outperforming its benchmark.
TRBCX: T. Rowe Price Blue Chip Growth Fund | High Growth Potential
TRBCX excels with a 45% 1-year return, driven by top tech stocks. Its 0.70% expense ratio is competitive for growth-focused investors.
MALVX: BlackRock Advantage LargeCap Value-Inst | Growth-Focused Large Cap Value Fund
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VAFCX: Invesco American Franchise-C | High Growth Potential with Top Tech Holdings
VAFCX stands out with a 44.24% 1-year return, driven by top tech holdings and a 1.74% expense ratio, ideal for growth-focused investors.
BIRAX: BlackRock Sustain Advntg LgCp Core-InvA | ESG-Focused Large Cap Fund
BIRAX offers a unique blend of growth and societal impact with a competitive 0.73% expense ratio and strong 1-year return of 37.91%.
Futher Reading
https://www.morningstar.com/funds/xnas/LCILX/quote
https://finance.yahoo.com/quote/LCILX/”>Yahoo: ClearBridge Sustainability Leaders-IS
https://ftcloud.fasttrack.net/web/chart/LCILX
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