Summary

• The ClearBridge Appreciation Fund performed better than the benchmark S&P 500 Index in the first quarter of 2026, with positive contributions from five of 11 sectors.
• ASML share performance was primarily fueled by record-breaking orders for AI infrastructure and a significantly raised revenue outlook for 2026.
• Johnson & Johnson is benefiting from an acceleration in earnings growth as its pharma business is growing at a high-teens rate excluding the impact of loss of exclusivity.
• ClearBridge decided to walk away from the McCormick position due to the execution risk associated with its proposed $44 billion acquisition of Unilever’s food unit.
• ClearBridge transitioned to a more cautious stance as the "buy the dip" mindset looks less reliable amid rising inflation risk, policy uncertainty and labor market softening.

Key Takeaways

• Markets: Most major equity indexes declined in the first quarter as concerns over rising AI capex at hyperscalers, inklings of AI disruption in software, stress in private credit and a shock to energy prices