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Fund in Focus: Legg Mason US Aggressive Growth

Active managers have struggled to deliver excess returns in the US market, this does not mean that the sector is bereft of attractively managed active offerings

Fatima Khizou 14 October, 2016 | 10:44AM

Despite the macro bumps of 2016, U.S. equity markets have been rallying, with the S&P 500 index reaching all-time highs in July. However, negative sentiment has seen investors continue to sell U.S. equities at a record pace. According to Morningstar data, actively managed U.S. equity funds have seen global outflows of $116 billion in the first six months of 2016.

The asset class has enjoyed a seven-year bull market and many commentators are now showing doubts that it will continue to move higher. Contributing to this trend is the surge in popularity of passive funds in the past few years. Many individual investors and allocators have opted for a passive approach by investing in index funds and ETFs, which allows them to gain access to the U.S. equity market in a very low-cost manner while profiting from returns that often exceed those of actively managed funds.

It is of little surprise that the Vanguard US 500 Stock Index fund dominates the Morningstar US Large-Cap Blend Equity Category in asset terms. The fund aims to invests in the S&P 500 Net Return Index constituents and, as such, offers broad access to the US equity market. Over one, three and five-year time frames, the fund has achieved solid returns that placed it in the top quartile of the category.

While we acknowledge that active managers have struggled to deliver excess returns, this does not mean that the sector is bereft of attractively managed active offerings. The Legg Mason ClearBridge US Aggressive Growth Fund is an established and strong proposition. As the name suggest, the fund adheres to a growth-leaning philosophy and is manged by two seasoned investors: Evan Bauman and Richard Freeman, who is amongst the industry's longest-tenured managers.

The investment approach targets companies that are growing faster than the S&P 500 but which also generate healthy free cash flow and don’t have too much debt. The fund’s long- and medium-term track record is impressive and it holds a Morningstar Analyst Rating of Silver, which reflects our analysts forward-looking conviction in the fund. The offering has attracted a large amount of inflows during 2014-15, making it the largest fund in the US Large-Cap Growth Equity Category. 

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Legg Mason CB US Agrsv Gr A USD Acc203.93 USD-0.43
Vanguard US 500 Stock Index Ins USD Acc35.53 USD-0.43

About Author

Fatima Khizou  is an Investment Research Analyst for Morningstar

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