However, the short-termism of the financial services industry means that average manager tenure in the UK is just four years. Evan Bauman, co-manager of the four crown-rated Legg Mason ClearBridge US Aggressive Growth fund, has been working on the US version of the portfolio for the better part of 20 years.
He says that he and co-manager Richie Freeman have a much longer time horizon than most managers and tend to be "very, very contrarian" in the way they select their limited holdings.
"I love that everyone is consensus-oriented because it gives me a chance to go against the grain," he said.
Bauman says the team has a low-turnover style of less than 10 per cent per year to allow their high-conviction bets to grow.
"It’s all about valuation, but you have to ask whether there is a growth story that goes along with it. It’s not just buying something because it is cheap."
"We want to own companies when expectations are low," he said.
The high-conviction fund only holds 63 names, the top-10 of which account for nearly 50 per cent of the portfolio.
The long-term buy-and-hold strategy has paid off for the US-based team.
Legg Mason ClearBridge US Aggressive Growth is a top-quartile performer in the IMA North America sector over one, three, five and 10 years, as well as over three and six months.
The fund, which Bauman says is benchmark-agnostic, has also beaten the Russell 3000 growth index over each period, apart from 10 years.
The Dublin-domiciled version of the fund launched in May 2000.
Since then it has made 142.9 per cent while the sector and index have gained 77.99 per cent and 111.72 per cent respectively.
Performance of fund vs sector and index since launch
Source: FE Analytics
In spite of the connotations of its name, the fund has also been remarkably consistent over the last decade.
It has beaten the sector in seven out of the last 10 years and also so far in 2013, while it has outperformed the Russell 3000 Growth in six years as well as in the year to date.
The fund even outperformed the sector during the market crash of 2008, although it did lose more than 40 per cent of its value that year, according to FE Analytics.
Long-term bets
Bauman says the team is overweight healthcare and energy, especially in the biotechnology space.
"What attracts us to biotechnology is innovation and the large unmet needs, such as cancer. These companies have clear growth and reasonable valuations," he said.
Our data shows that 27.25 per cent of the portfolio is allocated to healthcare. The fund’s second-highest sector bet, although an underweight to its peers and benchmark, is to telecommunications, media and technology.
In the energy space, the team is backing US oil and gas exploration company Anadarko and international oil and natural gas services company Weatherford – which Bauman says is a major player in international offshore drilling.
Apple
As Bauman mentioned, he is underweight technology. Perhaps the most notable absentee in his fund is technology giant Apple.
However, the manager says he is starting to think about picking up some of the stock after it disappointed over the last year.
The blue chip technology firm has seen a steady decline in its market value, shedding nearly 20 per cent over the last 12 months and issuing a disappointing earnings report after the first quarter.
"We never owned Apple because it is in a competitive market. It’s going to take a new product to stimulate growth."
Apple’s out-of-favour status is starting to put it back into the sights of the contrarian US manager.
"At $700 we had no interest in it, but at $440 it’s looking a lot more interesting," he said.
Bauman adds that while he missed out on the early growth of the tech firm, many of the companies he owns in his fund, such as North Carolina-based semiconductor firm Cree, have benefited from its rise.
Other sectors Bauman is avoiding in the US are those he considers expensive, such as consumer staples, utilities and telecoms.
Bauman says he is also steering clear of financials because there is too much changing regulation in the sector, making it difficult to select strong business models that can grow over time.
The management team is backed by 23 analysts that are broken down by sector and industry.
The fund requires a minimum investment of $1,000 and has ongoing charges of 1.78 per cent.
