ClearBridge Value Strategy Q3 2026 Commentary
equities posted modest gains in the third quarter, and value stocks extended their lead over growth.
The benchmark Russell 1000 Value Index returned 2.6%, compared with 0.9% for the Russell 1000 Growth Index, adding to value's substantial year-to-date advantage.
A sharp momentum selloff in July unwound crowded AI trades and favored value, before growth regained the upper hand in August and September on strong earnings and renewed optimism about AI investment.
Two macro forces shaped sector returns within the benchmark.
Continued conflict with Iran drove oil prices sharply higher, making energy the benchmark's best-performing sector.
Information technology (IT) also performed well, and June's Russell reconstitution gave large technology companies such as Apple and Microsoft a bigger presence in the value benchmark.
At the other end, the Federal Reserve's first rate increase since 2023 and a sharp rise in Treasury yields weighed on rate-sensitive and cyclical stocks.
Utilities, among the most rate-sensitive areas of the market, were the weakest sector.
The ClearBridge Value Strategy generated a modestly positive absolute return but underperformed its Russell 1000 Value Index benchmark during the third quarter, as our IT exposure and stock selection in health care more than offset the benefit of our overweight to energy and selection in materials.
Our focus remains on companies with visible cash generation that can compound value across a range of macro outcomes.
In IT, Microsoft (MSFT) rose sharply after quarterly results showed accelerating growth in its Azure cloud business, higher profits and wider adoption of its Microsoft 365 Copilot assistant.
However, most of the gain came before we initiated our position, making Microsoft the Strategy's largest relative detractor.
| Product | Price | Change |
|---|---|---|
| Brent Crude | $102.14/bbl | +0.34% |
| WTI Crude | $96.90/bbl | +0.21% |
| EN590 Diesel | $846/MT | +0.18% |
| Jet Fuel A-1 | $1090/MT | +0.55% |
| Mazut M100 | $450/MT | -0.15% |
| Bitumen 60/70 | $470/MT | +0.08% |
| Sulphur Gran 99.5% | $470/MT | -0.44% |
| Urea 46% Gran | $650/MT | +1.12% |
| NPK 16-16-16 | $460/MT | -0.28% |
| Nat Gas TTF | $15.42/MMBtu | +0.92% |
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