Five Spot: Legg Mason Fund Big on Software

Aram Green, who manages the $578 million Legg Mason Partners Small Cap Growth Fund(SASMX Quote), said the stock market won't return to a low reached in March because the government's trillion-dollar stimulus packages and bailouts are taking effect.

Green favors companies as diverse as fast-food chain Burger King(BKC Quote), software maker Citrix Systems(CTXS Quote) and biotechnology firm Alexion Pharmaceuticals(ALXN Quote).

The fund, which is rated four out of five stars by Morningstar(MORN Quote), has returned 9.2% this year, more than twice that of the benchmark Russell 2000 Growth Index. It has fallen an annual average of 10% and 0.4% over three and five years, respectively, also beating the Russell index.

He offers his investment ideas in the Fund Manager Five Spot, where America's top mutual fund managers give their best stock picks in five fast and furious questions.

Are you a bull or a bear?

Green: We are bullish longer term but believe in the near term, given the quick upward move since early March in the equity markets coupled with many still unanswered questions. We are confined to a choppy stock market through summer.

We remain hopeful that the market "bottom" passed a few weeks back. Though it is unclear what the long-term price will be for such actions, the banking system in the U.S. has been "saved." The federal government has been fervently pumping money into the system and there are some early signs the enormous policy stimulus and intervention is starting to work. The collapse of credit spreads and the improving ability for companies to access capital, albeit at higher rates than in prior years, gives us comfort that we have entered a period of greater stability in the markets.