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Institutional Investor Advisor Individual Investor
Total AUM Avg. PM Years Experience Years Since Inception
$4.7B 28 21
As of June 30 2019

Strategy Average Annual Total Returns

(%, Gross of Fees)2
YTD 1 Year 3 Years 5 Years 7 Years 10 Years
ClearBridge Small Cap Growth Composite 21.32 6.97 21.81 11.93 15.29 17.24
Russell 2000 Growth Index 20.36 -0.49 14.69 8.63 12.87 14.41
As of June 30 2019

Overview

The Small Cap Growth Strategy invests in quality growth companies mispriced by the market that possess large exploitable opportunities. 

Strategy Overview Small cap growth stocks
Benchmark Russell 2000 Growth Index
Total Strategy AUM $4.7B
Holdings Range 60-901
Objective Long-term growth of capital3

Investment Philosophy

Small cap stock prices may vary significantly from fair value in the short run, due to the mispricing of risk in the market, the deluge of short-term data and market illiquidity. Companies with superior prospects for capital appreciation may be identified through fundamental analysis and stock selection.

Meet Our Managers

Aram Green

Portfolio Manager
18 Years experience
13 Years at ClearBridge

Jeffrey Russell, CFA

Portfolio Manager
38 Years experience
29 Years at ClearBridge

Strategy Facts

A quality focus and long-term orientation causes the portfolio to differ considerably from its benchmark. 

Portfolio managers Jeff Russell and Aram Green bring a long tenure of investment experience.

Patient approach seeks to exploit opportunities due to mispricing of risk, market illiquidity and an emphasis on short-term results.

Literature & Perspectives

  • Small Cap Growth Strategy Update
    2Q19 Update: PM Jeff Russell highlights the drivers of portfolio performance and how the team took advantage of a healthy IPO market.
  • Small Cap Growth Strategy
    2Q19 Commentary: We were active buyers through a volatile quarter that saw small growth stocks close slightly higher.
  • Small Cap Growth Strategy
    1Q19 Commentary: Smaller growth companies led a sharp equity rebound supported by the Fed’s easier stance on interest rates.
  • Small Cap Growth Strategy
    4Q18 Commentary: Despite a sharp equity drawdown, opportunities remain abundant for the small growth stocks in the portfolio.
  • Small Cap Growth Strategy
    3Q18 Commentary: Economic strength provided ample support for the robust earnings small growth companies continue to produce.

Investment Process

  • Generate investment ideas through company meetings, financial analysis and collaboration among portfolio managers, portfolio analysts and centralized research platform
  • Conduct fundamental research to gauge attractiveness from a business model, financial structure, management and valuation standpoint
  • Construct portfolio of high conviction growth stocks with a focus on share takers generating unit growth via innovative products and services
  • Ongoing portfolio review, with attention to valuation and risk management 

Performance

A focus on innovation and share takers has enabled the Strategy to deliver competitive long-term results.  

Average Annual Total Returns (%, Gross of Fees)2

YTD 1 Year 3 Years 5 Years 7 Years 10 Years
ClearBridge Small Cap Growth Composite 21.32 6.97 21.81 11.93 15.29 17.24
Russell 2000 Growth Index 20.36 -0.49 14.69 8.63 12.87 14.41

Characteristics

The Strategy's bottom-up approach has consistently led to concentrations in the information technology, health care, industrials and consumer discretionary sectors.

Sector Weights1,2

Representative Portfolio Russell 2000 Growth Index
Information Technology 27.88 18.50
Health Care 21.09 26.44
Industrials 18.40 18.48
Consumer Discretionary 14.05 14.64
Consumer Staples 5.38 2.92
Financials 5.16 7.10
Communication Services 1.49 3.11
Energy 1.36 1.67
Materials 1.24 3.44
Real Estate 0.27 3.17
Utilities 0.00 0.53
Cash 3.68 0.00
Portfolio Characteristics1,2
Characteristics Representative Portfolio Russell 2000 Growth Index
P/E Ratio (trailing 12 mos.) 34.7 22.3
P/E Ratio (forward 12 mos.) 29.0 20.2
Price/Book 6.5 5.1
EPS Growth Next 3-5 Years (%) 24.7 16.8
Weighted Median Market Cap ($ bn) 3.4 2.5
Weighted Average Market Cap ($ bn) 4.8 2.9
ROE 5.3 7.1
Dividend Yield 0.4 0.7
Turnover (trailing 12 mos.) 5.7
Risk Statistics1
10 Year Risk Statistics Composite Russell 2000 Growth Index
Annualized Returns (10 Years) 17.24 14.41
Standard Deviation (%) 17.07 18.07
Sharpe Ratio 1.00 0.81
Tracking Error (%) 5.17
R2 0.92
Alpha (%) 3.77
Beta 0.90
Top 10 Holdings1
Characteristics % of Total Representative Portfolio
Trex Co Inc 3.16
Insulet Corp 3.13
Medidata Solutions Inc 3.00
ICON PLC 2.91
Copart Inc 2.90
Wix.com Ltd 2.70
Fox Factory Holding Corp 2.54
IDEX Corp 2.45
Cornerstone OnDemand Inc 2.31
Aspen Technology Inc 2.24
Total 27.34
Total Number of Holdings 75
  • 1

    Source: FactSet. Representative portfolio characteristics, holdings, sector weightings and market cap are based on a representative portfolio and are subject to change at any time. Holdings, sector weightings, market cap and portfolio characteristics of individual client portfolios may differ, sometimes significantly, from those shown. This information does not constitute, and should not be construed as, investment advice or recommendations with respect to the securities and sectors listed.

  • 2

    Past performance is no guarantee of future results. See GIPS endnotes. Performance is preliminary and subject to change.

  • 3

    There is no guarantee that the Strategy's objective will be met.

  • P/E ratios are weighted harmonic average. Price/Book is weighted average.

  • Performance source: Internal. Benchmark source: Russell Investments. Frank Russell Company (“Russell”) is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes and/or Russell ratings or underlying data and no party may rely on any Russell Indexes and/or Russell ratings and/or underlying data contained in this communication. No further distribution of Russell Data is permitted without Russell’s express written consent. Russell does not promote, sponsor or endorse the content of this communication.

  • Annualized Returns  1 Yr (6/30/19) 3 Yrs (6/30/19) 5 Yrs (6/30/19) 10 Yrs (6/30/19)
    Net-of-fees  6.1% 20.8% 11.0% 16.3%
    Gross-of-fees  7.0% 21.8% 11.9% 17.2%
    Russell 2000 Growth -0.5% 14.7% 8.6% 14.4%
  • ClearBridge Investments, LLC claims compliance with the Global Investment Performance Standards (GIPS®). 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. The ClearBridge Small Cap Growth Composite primarily invests in small capitalization stocks, non-U.S. equity securities and cash, with an objective of outperforming the Russell 2000 Growth Index. Results are calculated in U.S. dollars. The Russell 2000 Growth Index measures the performance of those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values. To receive a complete list and description of ClearBridge composites and/or a presentation that adheres to the GIPS standards, please contact ClearBridge Institutional Marketing.