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Institutional Investor Advisor Individual Investor
Total AUM Avg. PM Years Experience Years Since Inception
$7.3B 30 23
As of March 31 2021

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 4.58 98.55 24.00 24.53 15.61 16.46
Russell 2000 Growth Index 4.88 90.20 17.16 18.61 12.77 13.02
As of March 31 2021

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 $7.3B
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
20 Years experience
15 Years at ClearBridge

Jeffrey Russell, CFA

Portfolio Manager
40 Years experience
31 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

  • Repositioning Through a Value Rotation
    Small Cap Growth 1Q21: We established seven new positions, largely financed through trims of existing holdings whose market values have risen meaningfully.
  • Cultivating New Growth Ideas Amidst Transition
    Small Cap Growth 4Q20: A major market rotation after “Vaccine Monday” boosted cyclicals but was a headwind to portfolio results.
  • Delivering Alpha Through Uncertainty
    Small Cap Growth 3Q20: While mean reversion led to a September value rally across equity markets broadly, growth outperformance persisted among small caps.
  • Small Cap Growth Strategy
    2Q20 Commentary: A coterie of companies benefiting from the transition to work-from-home policies were stellar performers.
  • Small Cap Growth Strategy
    1Q20 Commentary: We remain focused on thoughtfully financed growth businesses that can endure periods of macro dislocation and widen competitive advantages.

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 4.58 98.55 24.00 24.53 15.61 16.46
Russell 2000 Growth Index 4.88 90.20 17.16 18.61 12.77 13.02

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 27.82 20.08
Health Care 26.60 33.26
Industrials 16.52 14.80
Consumer Discretionary 10.77 14.92
Consumer Staples 6.22 3.08
Financials 6.07 3.91
Communication Services 2.75 2.21
Energy 1.61 0.20
Materials 0.93 2.59
Real Estate 0.66 3.46
Utilities 0.00 1.50
Cash 0.05 0.00
Portfolio Characteristics1,2
Characteristics Representative Portfolio Russell 2000 Growth Index
P/E Ratio (trailing 12 mos.) 37.9 32.1
P/E Ratio (forward 12 mos.) 33.8 26.4
Price/Book 9.0 7.4
EPS Growth Next 3-5 Years (%) 24.3 21.5
Weighted Median Market Cap ($ bn) 4.2 3.5
Weighted Average Market Cap ($ bn) 5.9 4.1
ROE -1.7 -2.8
Dividend Yield 0.2 0.4
Turnover (trailing 12 mos.) 23.2 --
Risk Statistics1
10 Year Risk Statistics Composite Russell 2000 Growth Index
Annualized Returns (10 Years) 16.46 13.02
Standard Deviation (%) 18.90 19.27
Sharpe Ratio 0.87 0.70
Tracking Error (%) 5.53 --
R2 0.92 --
Alpha (%) 3.85 --
Beta 0.94 --
Top 10 Holdings1
Characteristics % of Total Representative Portfolio
Trex Co Inc 3.35
Penumbra Inc 2.79
Chegg Inc 2.72
Fox Factory Holding Corp 2.69
BJ's Wholesale Club Holdings Inc 2.41
Monolithic Power Systems Inc 2.37
National Vision Holdings Inc 2.16
ICON PLC 2.07
Western Alliance Bancorp 2.02
Syneos Health Inc 1.98
Total 24.56
Total Number of Holdings 87
  • 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 (12/31/20) 3 Yrs (12/31/20) 5 Yrs (12/31/20) 10 Yrs (12/31/20)
    Net-of-fees  43.9% 23.6% 20.2% 15.9%
    Gross-of-fees  45.1% 24.7% 21.2% 16.9%
    Russell 2000 Growth 34.6% 16.2% 16.4% 13.5%
  • 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. In July 2020 Legg Mason, Inc. was purchased by Franklin Resources Inc. 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.