HEAD-TO-HEAD: Legg Mason vs Schroders

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Source: FE Analytics (fund NAVs have been converted to US dollars)

Performance

The Legg Mason Clearbridge fund has outperformed its peer average for all but one of the past five years; it has also held up well against its benchmark, the Russell 1000 Growth Index, although lagging in 2017 because of its more defensive strategy.

Overweight positions in healthcare, especially bio-pharmaceutical and health insurance stocks, has buoyed its recent performance, and the fund’s focus on stable growth companies in technology and consumer products as well as healthcare provided protection against the worst of the market slump in the final quarter of last year, Tambe said.

“The manager doesn’t chase high multiples.”

The Schroder fund’s performance has been solid, not spectacular. It was boosted by good stock picks at low valuations in 2009 in the wake of the global financial crisis, but the fund’s inherent low beta has meant it has underperformed during the past two years as high growth and momentum styles enjoyed greater success, Tambe said.

The bull market was especially driven by large cap technology and healthcare stocks, which also hampered the Schroder performance. Subsequently, a couple of positions in leveraged companies were a burden on the fund when the market sold off in late 2018.

Discrete annual performance

 Source: FE Analytics

Three-year annualised volatility

Source: FE Analytics

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