ClearBridge Value Equity Strategy Portfolio Manager Commentary Q3 2018

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Includes: ABB, ADNT, AGN, AIG, BIIB, DVN, GOOG, GOOGL, HBI, MLCO, MSFT, ORCL, QCOM, RGLD, RLGY
by: ClearBridge Investments
Summary

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.

Currently, growth and momentum investment styles have converged to beat most value disciplines over this market cycle, and the resulting underperformance for value has intensified since the beginning of 2017.

However, we think this is not the time to abandon the value ship: market conditions are changing. The continued rise in interest rates suggests we are in the early stages of a bond bear market, which could intensify as central banks withdraw liquidity.

Low correlations of value to growth and momentum have surfaced true value stocks, where prices have fallen below business value. This provides the classic opportunity for active valuation managers to invest in names with much more upside than downside, and where there is cheap optionality from the changes that are taking place.