Webinars [[{“value”:”Original broadcast details
Date: Thursday, April 11, 2024
Executive Summary
The story of 1Q24 was mostly a continuation of the trends from 2023.
The S&P 500 followed its 26.3% return in 2023 with an additional 10.6% return in 1Q24, the best start to a year since 2019. Also like in 2023, in 1Q24 the S&P 500 return benefited from outsized contributions from a few mega-cap growth stocks.
Our LAM-CS composite outperformed the S&P 500 by +110 bps and the S&P 500 Value by +360 bps.
We outperformed despite not owning any of the mega-cap growth stocks that made outsized contributions to the S&P 500.
International markets also benefited from outsized gains in the largest stocks.
Our International and Global portfolios underperformed their cap-weighted benchmarks due to our underweight of the largest stocks, but they outperformed the equal-weighted versions of those benchmarks.
GIVES’ differentiated approach to value-style impact investing returned 9.3% as the MSCI ACWI Sustainable Impact Index lost 3.2%.
Many richly priced, impact-themed stocks suffered serious declines. We avoided these, given our valuation discipline. Price matters, even in impact investing.
Our portfolios remain attractively valued, even after strong returns.
In the U.S., even after our significant gains in 2023 and 1Q24, our LAM-CS forward P/E ended the quarter at 11.7x, only about half a point above its average since inception. Meanwhile, the S&P 500 forward P/E was 21.2x, 36% above its average over that same period.
The spread between our valuation and that of the S&P 500 remains extremely wide.
The valuation spread of our LAM-CS Composite relative to the S&P 500 was 81% at quarter-end. We continue to expect that this spread will compress and drive substantial outperformance. Based on earnings growth, it appears our portfolio should be valued at a premium to the S&P 500, not a discount.
We have been waiting a few years for the valuation spread to compress.
It can be hard to be patient, but outperforming by a little has been a pretty good way to pass the time, while we wait to outperform by a lot. Perhaps the waiting may be over, given our 39.7% return and 980 bps of outperformance over the last 12 months.
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