ClearBridge Investments
Elisa Mazen of ClearBridge Investments
- Elisa Mazen runs the top-ranked international large-cap mutual fund of the last 10 years, and she's succeeded in both international and US-focused funds.
- Mazen told Business Insider the four stocks she expects to thrive for the next decade. She also explained how all four fit into the major categories in her ClearBridge International Growth Fund.
- She says her broad approach to growth has helped the fund thrive in all types of markets since 2010.
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Perfecting your skills at one style of investing is hard enough, but succeeding at two is even more impressive.
Elisa Mazen can say she's pulled off that rare feat. She's the head of the global growth equity investment team for ClearBridge Investments, and manages several strategies. One is Legg Mason's ClearBridge International Growth Fund, which is ranked by Kiplinger as the best international diversified large company fund of the past 10 years.
The fund has a five-star rating from Morningstar, and over the last decade, it's returned 10.7% per year. Mazen's fund changed from a US fund to an international one at the end of 2015 but has continued to trounce the market, as it's returned 17.3% per year for the last three years. That's better than all but five funds in the space.
To hear Mazen tell it, that's not so surprising.
"All things being equal, growth stocks should, we believe, outperform value stocks primarily because you just get to your goal line faster through this process of compounding, higher returning companies," she said in an exclusive interview with Business Insider.
Asked about which investments she believes in most strongly for the next decade, Mazen named these four stocks from her portfolio. She says they represent three different approaches that she uses in choosing investments, and that this diversity is a big reason for its success.
"What you have is a very broad approach to growth, which allows you to outperform in a lot of different types of market environments," she said.
(1) Shopify
Mazen says the e-commerce company offers a huge range of products and solutions, but Shopify is only beginning to tap into its potential growth outside the US.
"It's almost like a closed ecosystem, very efficient, very cost effective," she said. "You can do everything with Shopify and then host with Shopify."
Mazen says up to 20% of the International Growth Fund portfolio is invested in "emerging companies" that have the greatest potential growth, but also pose the most risk. That's Shopify, which she says is poised for outstanding performance but is also expensive, as its stock has jumped more than 1,600% since its IPO less than five years ago.
"I think that's one of the winners of the decade, but on the riskier side," she said.
(2) LVMH
"We have long liked the luxury-goods end of the market, and frankly we think there is no one better," Mazen said. "It's a very diversified business in luxury that we think can grow for a very long period of time."
She adds that LVMH has no debt and is aggressive in making acquisitions and building up its portfolio to include handbags, makeup, wine, spirits, and experiential vacations. That means it's in position for long-term growth with all of those categories.
She says that's an example of what she wants in a "secular growth" investment. Those comprise 40% to 60% of the portfolio and provide needed stability.
"These are not companies that are growing 20% plus on the top line, but they do grow above the market, she said.. They are efficient in taking out costs. Their strong earnings growth and compounding returns make them appealing investments.
(3) Nintendo
As well-known as Nintendo is, Mazen says its expansion into the Chinese market is a huge and underappreciated growth opportunity. That could provide big opportunities for Nintendo's numerous franchises.
"I think it's a very interesting company," she said. "I've always been fascinated how durable that Pokemon franchise continues to be."
The entertainment conglomerate fits into Mazen's collection of "structural growth" stocks, which are tempting opportunities that could benefit from huge economic trends. Those companies make up as much as 40% of her portfolio.
"We think these stocks are inexpensive with low multiples. When they work, those stocks can be very powerful," she said.
(4) Shiseido
"This is a company that is the best cosmetic company in Japan," Mazen said of Shiseido. She thinks the stock has been held back by relatively weak profit margins, but believes Shiseido will improve on that score and reach the levels of its peers.
"The market does not understand the true earning power of this company," she said. "For the next 10 years, we think this is one of the winners."