ClearBridge is a leading global asset manager committed to active management. Research-based stock selection guides our investment approach, with our strategies reflecting the highest-conviction ideas of our portfolio managers.
The Fed raised the Federal Funds rate in June and again in September, making it three hikes so far in 2018. Higher rates pressured some industrial names in the portfolio, which also suffered from concerns the economy is entering the late innings, and corresponding fears of lower demand. Higher rates are also sparking concerns that housing has peaked and that overall housing demand growth has slowed.
After beating small-cap growth as well as large caps in the second quarter, the benchmark Russell 2000 Value Index trailed both in the third quarter, adding 1.6%. Though, during the quarter, we found value across various stages of the value cycle.
The ClearBridge Small Cap Value Strategy underperformed its Russell 2000 Value Index benchmark. Communications services and IT companies drove portfolio performance in the third quarter.