As the U.S. equity bull market grows long in the tooth, investors can consider an actively managed ETF to bank on a seasoned investment team’s ability to sift through various stocks and hone in on companies with solid fundamentals that may continue to push ahead.
For example, Legg Mason partnered with ClearBridge Investments to provide the ClearBridge All Cap Growth ETF (NasdaqGM: CACG), which is managed by the ClearBridge team, including Peter Bourbeau, Margaret Vitrano, Richard Freeman, and Evan Bauman.
“Active investing, with its potential to generate outperformance, minimize losses in a down market and provide diversification, should remain a critical part of an overall investment strategy,” according to Legg Mason.
According to a Legg Mason survey, 67% of respondents said they agree that in a higher-risk environment, the expertise of an active manager is more important. Additionally, among high net worth millennials, the number that agreed with the assessment was 82%.
CACG tries to achieve long-term capital appreciation by investing in a diversified portfolio of large, medium and small capitalization stocks that have the potential for above-average long-term earnings and cash flow growth, according to a prospectus sheet.
“CACG may benefit investors who seek growth potential across market cycles along with the potential tax advantages and compelling relative pricing of an active ETF wrapper,” according to Legg Mason.
Related: ETFs to Tap into the Outperforming Quality Factor
The active fund utilizes a bottom-up investment process to find inefficiently priced companies with strong fundamentals, incentive-driven management teams, dominant positions in niche markets and goods and services that are in high customer demand. The team will also look through companies with a range of growth opportunities while evaluating the company’s business model, financial structure and management acumen.
ClearBridge also includes different selection criteria for the separate asset categories. For instance, large company growth stocks will include those that exhibit superior balance sheets, exceptional management teams and long-term, consistent operating histories. Small- and mid-sized company growth stocks are screened for rapid earnings growth potential, unrecognized values, industry leadership and management teams that have a significant ownership stake.
Top holdings include UnitedHealth Group 5.6%, Comcast 3.9%, Biogen 3.6%, Amazon 3.1% and Microsoft 2.3%.
For more information on active strategies, visit our actively managed ETFs category.