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ClearBridge Small Cap Value Strategy Q3 2023 Portfolio Manager Commentary

ClearBridge Small Cap Value Strategy Q3 2023 Portfolio Manager Commentary The ClearBridge Small Cap Value Strategy had a strong performance in the third quarter of 2023, outperforming its benchmark, the Russell 2000 Value Index. In the Q3 2023 fund letter, the portfolio managers discussed the strategy's investment approach and provided insights into the current market conditions. During the quarter, the strategy benefited from its overweight allocation to the Financials and Industrials sectors, which were among the top-performing sectors in the market. The portfolio managers believe that these sectors offer attractive investment opportunities due to their strong fundamentals and favorable valuation metrics. Within the Financials sector, the strategy's holdings in regional banks and insurance companies performed well. The portfolio managers noted that the rising interest rate environment and the improving economic conditions have been beneficial for these companies. They also mentioned that the recent regulatory changes have created favorable conditions for regional banks, allowing them to generate robust earnings growth. In the Industrials sector, the strategy's investments in companies involved in manufacturing and construction industries delivered positive returns. The portfolio managers highlighted that the ongoing infrastructure projects and the rebound in manufacturing activities have supported the growth prospects of these companies. Another contributing factor to the strategy's strong performance was its stock selection within the Energy sector. Despite the volatility in oil prices, the strategy's holdings in energy exploration and production companies generated positive returns. The portfolio managers attributed this to the improving global demand for energy and the disciplined capital allocation strategies implemented by these companies. The strategy also benefited from its investments in the Materials sector, particularly in companies engaged in metals and mining. The portfolio managers noted that the strong demand for metals, driven by the global economic recovery and the transition to clean energy, has boosted the earnings of these companies. They remain positive on the long-term prospects of the sector, given the emphasis on infrastructure development and renewable energy initiatives. In terms of individual stock performance, the strategy's holdings in several small-cap companies contributed to the overall outperformance. These companies benefited from their strong competitive positions, robust earnings growth, and attractive valuations. The portfolio managers highlighted the positive impact of their active management approach, which focuses on identifying high-quality companies with growth potential. Looking ahead, the portfolio managers remain optimistic about the strategy's prospects. They believe that the current market environment presents compelling investment opportunities, particularly in the small-cap space. They will continue to focus on companies with strong balance sheets, attractive growth prospects, and sound management teams. The portfolio managers emphasized that diligent research and active management will be key to generating alpha in the current market conditions. In conclusion, the ClearBridge Small Cap Value Strategy had a strong performance in the third quarter of 2023, outperforming its benchmark. The strategy's overweight allocation to the Financials and Industrials sectors, as well as its stock selection within the Energy and Materials sectors, contributed to its success. The portfolio managers remain optimistic about the strategy's prospects and will continue to identify high-quality small-cap companies with growth potential. For the full fund letter, please visit the ClearBridge website [insert hyperlink to the letter].

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