Wealth Manager - the site for professional investment managers

Register to get unlimited access to Citywire’s fund manager database. Registration is free and only takes a minute.

Legg Mason's US star: why I hold no consumer staples

Legg Mason's US star: why I hold no consumer staples

Evan Bauman, Citywire + rated manager of the £980 million Legg Mason ClearBridge US Aggressive Growth fund, has warned that American consumer staples are worryingly overvalued.

Despite the sector comprising 11.3% of his Russell 3000 Growth benchmark index, Bauman (pictured) holds no stocks in the space.

That stance has been vindicated recently, following disappointing earnings reports from companies such as Best Buy, Target, Sears and Wal-Mart.

‘Many of the US consumer stocks have disappointed from a fundamental perspective,’ Bauman said.

‘Growth has been zero to negative in terms of revenues, and we have seen big disappointments from almost every big US brand company.’

Bauman supposed that shares in the sector had been both bid up by yield-chasing investors and over-rated by optimists on the US economy.

Of the weak updates from consumer groups, Bauman observed: ‘To me, what that signals is an economy that is still very soft. It is growing slightly, but it’s growing slightly at best.’

‘Some of these companies and some of these sectors are positioned for a full recovery that we have not witnessed,’ he warned.

In his own portfolio Bauman has instead emphasised firms such as Amgen, Comcast and Facebook. ‘These are not companies that need the economy.’

Over the past three years the fund has returned an annualised 16.7%, compared with 16.5% from the Russell 3000 Growth index and 13.4% from its average peer.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play Liontrust ESG head says sustainable investment doesn't mean low return

Liontrust ESG head says sustainable investment doesn't mean low return

Peter Michaelis talks about ethical investment growth and where he sees future opportunites.

Play Are platforms the biggest barrier to wealth manager ETF take-up?

Are platforms the biggest barrier to wealth manager ETF take-up?

Citywire hosted a roundtable discussion to find out how and if wealth managers are using ETFs in their clients' portfolios and the challenges they face trading through different platforms.

Play SVM's Veitch on what's next for banks

SVM's Veitch on what's next for banks

SVM fund manager Neil Veitch is finding value in what he describes as unstable financials and talks through his favourite small caps.

Read More
Your Business: Cover Star Club

Profile: Affinity’s Julia Warrander on the importance of diversity

1 Comment Profile: Affinity’s Julia Warrander on the importance of diversity

'Sometimes there are 10, sometimes 20 people around a table and, more often than not, I’m the only woman,' says the Affinity Wealth co-chief investment officer

Wealth Manager on Twitter