“Patient management seeks capital appreciation from a high-conviction portfolio or companies with new or innovative technologies, products and services.” -ClearBridge Investments
The Aggressive Growth A Fund from ClearBridge Investments has an opportunistic mandate allowing for a more speculative large cap stock selection. With $15.4 billion in net assets and only 71 holdings, the fund has been chosen this week as it provides investors access to the defensive but high growth healthcare sector. Traditionally in the event of a market correction, this segment of the market continues to perform well. This is supported by the performance of L&G Global Health & Pharmaceutical Index, which returned 2.7% in 2007, 8.4% in 2008 and 8.4% in 2009 as well as Schroders Global Healthcare portfolio which outperformed the market considerably during this period. Surprisingly this fund has a low turnover rate of 5%, which puts it into the 1st Quintile of Mutual funds using that metric.
Type of Fund
This fund is an open ended retail mutual fund, with a $1000 minimum investment requirement for standard accounts and $250 for IRA accounts. The expense ratio is 1.15%.
Manager Profile
Richard Freeman has 38 years of experience and co-manages the fund with Evan Bauman. Starting his career at Shearson American Express, he holds an MBA in Finance from New York University. Evan Bauman holds a BS in Mathematics from Duke University and has 18 years investment experience.
Performance
| Return Ranking - Calendar | |||||
|---|---|---|---|---|---|
| Period | SHRAX Return | Category Return Low | Category Return High | Rank in Category (%) | Quintile |
| 2014 | 12.30% | -0.70% | 12.30% | 11.11% | 1 |
| 2013 | 43.40% | 23.90% | 43.40% | 11.11% | 1 |
| 2012 | 15.10% | 10.80% | 19.60% | 77.78% | 4 |
| 2011 | -0.90% | -12.10% | 12.50% | 66.67% | 3 |
| 2010 | 23.90% | 11.40% | 23.90% | 11.11% | 1 |
SHRAX has a year to date performance of 3.0%, which puts the fund in the 4th quintile for its category. Relatively conservative this year, the fund in 2014 posted a 12.3% return and in 2013 a 43.4% return. It was consistently ranked in the 1st quantile for both years and has only had one negative year in the last five.
Dividend Analysis
The fund is not an income vehicle.
Asset Allocation Weightings
Unlike the last fund we digested, SHRAX holds a concentrated equities portfolio with very little asset diversification. Current weightings are:
- 88.79% Stocks
- 0.00% Bonds
- 10.17% Cash
- 0.04% Other
- 0.00% Preferred Stocks
- 0.00% Convertible Bonds
Portfolio Sector Weightings
An interesting combination of defensive and cyclical sectors, with a significant percentage of the total portfolio invested in the high growth sectors of healthcare and technology.
Top 10 Holdings
Biogen and United Health Group are the top two weighted holdings, and account for 16.03% of the total equities portfolio. Amgen, which accounts for 5.19% of the portfolio recently had their cholesterol lowering “Rapatha” approved by the FDA. Its stock was upgraded to strong buy by crowdsourced ratings platform Vetr. Another stock that has become a recent darling with analysts is that of Anardarko Petroleum. The lone energy company within the top 10 holdings, its stock was upgraded by Jeffries on the 7th with a new price target of $88.00.
Concerns
Primary concern is the reduced number of holdings in comparison to its peers. SHRAX sits in the 4th quintile for this category. As a growth mandated fund the stock selection, although large cap, could be higher risk and translate into higher volatility.
Bottom Line
An interesting fund that offers a slightly different approach to its peers, its positive features include low turnover rate, defensive equity holdings and the ability to invest in high growth large cap opportunities. Caution should be taken though when investing, as the fund has a high stock concentration with the top 3 sectors accounting for 63.36% of the total equity allocation. To dig a little deeper into SHRAX, click here.