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Analyst Report
Morningstar's Take
|01/12/2021

by Lena Tsymbaluk


ClearBridge Aggressive Growth's new manager is promising, but the portfolio still requires a significant overhaul, limiting this strategy to a Morningstar Analyst Rating of Neutral. Aram Green became comanager in March 2021 and should breathe new life into the stagnant portfolio he inherited. Green is a comanager on ClearBridge Small Cap Growth, and he also manages ClearBridge Select and ClearBridge Mid Cap Growth. All three of his charges have performed well on his watch; each topped its respective prospectus benchmark since he began managing them through October 2021. He has a strong eye for picking technology winners, which is an area this fund struggled with prior to his arrival. However, his focus has largely been on small- and mid-cap companies, while this strategy will require him to find winners across the entire market-cap spectrum. This strategy needed revitalization. Richie Freeman, who is retiring at the end of 2021, operated an extremely low-turnover strategy that missed the boat on a lot of the disruptive growth stocks that powered the Russell 3000 Growth prospectus benchmark over the past five years or so. As a result, since 2015, the fund widely trailed the index and drifted toward the value side of the Morningstar Style Box. While longtime comanager Evan Bauman remains on the strategy, this portfolio will be the product of Green's investing style going forward, which will push the portfolio back toward growthier waters. Early trades confirm that shift; since Green joined, the managers have added companies like 10x Genomics TXG, DocuSign DOCU, Lyft LYFT, and HubSpot HUBS, all of which are mid-cap growth companies and, aside from 10x Genomics, are also owned by Green in his other funds. This strategy is benchmarked to the all-cap Russell 3000 Growth Index, though, and the comanagers may need to find larger-cap stocks to populate this portfolio, and that's an area where Green is less proven. Transitioning the portfolio will take time, though, and investors also need to be mindful of potential capital gains distributions that may come from liquidating the inherited positions, some of which have sizeable unrealized gains embedded in them.

Morningstar Analyst Rating™
To find out how Morningstar rates a fund click here.
Portfolio RoleThis fund can play a core role in an investor's portfolio.
Morningstar Pillars
PeopleAverage
Promising change.
ParentAverage
A shrewd acquisition, but some uncertainty remains.
ProcessAverage
New style.
Performance
In need of a turnaround.
Morningstar Analyst RatingMorningstar evaluates funds based on five key pillars, which it's analysts believe lead to funds that are most likely to outperform over the long term on a risk-adjusted basis.
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