Equities Fixed Income Hedge Funds Private Equity and Real Estate Sustainable Investing

Equities

We follow a philosophy that low-turnover, concentrated portfolios derived from sound bottom-up fundamental research provide an opportunity for attractive performance results over time. We have a culture and firm equity ownership structure that help us attract and retain professionals who share those beliefs, and we follow a repeatable investment process that helps us stay true to our philosophy.

We construct balanced portfolios for private clients, nonprofits and institutions depending on the needs of the client. We can be 100% open architecture, using third-party managers only, or we can put together a mix of internal and external strategies, whatever is in the client's best interest.

Fixed Income

We follow a philosophy that fixed income strategies built from a foundation of stability coupled with fundamental credit research can seek to generate alpha and control risk. We have a culture and firm equity ownership structure that attract and retain professionals who share those beliefs, and we follow a repeatable investment process that helps us stay true to our philosophy.

We construct balanced portfolios for private clients, nonprofits and institutions depending on the needs of the client. We can be 100% open architecture, using third-party managers only, or we can put together a mix of internal and external strategies, whatever is in the client's best interest. Meet the Investment Solutions Group.

Hedge Funds

Hedge Funds

The Investment Solutions Group is an investment-management team within Brown Advisory that specializes in asset allocation, manager selection, hedge funds and other alternative investment strategies. Dedicated to open-architecture solutions, our team has established a strong track record of identifying high-quality, third-party investment managers across the hedge fund, long-only and private equity universes. We leverage this expertise to help clients assemble portfolios that we believe best fit their needs and goals, offering clients a range of solutions from complete portfolio management to fulfillment of specific hedge-fund and alternative-asset mandates.

Founded in June 2002, the Investment Solutions Group now manages in excess of $3.4 billion for clients (data as of January 31, 2017) in a combination of managed accounts, advisory relationships and fund-of-fund offerings.

Private Equity and Real Estate

Private Equity and Real Estate

Brown Advisory has incorporated private equity and real estate investments in client portfolios since our founding. Today, we can provide that exposure in three distinct ways.

Feeder Funds and Multimanager Funds
We introduce clients to investment opportunities in early- and late-stage venture capital and buyout funds, as well as select real estate funds. We also construct these feeder funds into multimanager funds through our Private Equity Partners (PEP) and Real Estate Partners (REP) vehicles to make private equity investing as easy as possible for our clients.

Customized Private Equity Portfolios
For most clients, private equity is one component of a balanced portfolio that we manage. Other clients, however, come to us specifically for custom-built private equity and real estate portfolios.

For more information on private equity please click here or contact Jacob Hodes at 410-537-5315 or [email protected].

Sustainable Investing

Sustainable Investing Strategies

  • Multi-Manager Strategies
  • For clients seeking an open-architecture solution, we have access to several of the premier sustainable managers in the industry - all vetted by internal research.
  • Private Equity
  • Our private equity team is focused on evaluating the growing universe of private impact investments to identify standout opportunities that target various issues of particular concern to our clients. To date, we have placed assets in investments targeting a variety of impact themes such as community impact, microfinance, education technology, sustainable real estate, water initiatives and others.*
  • *Many alternative investments by regulation may only be sold to Accredited Investors (institutions with at least $5 million in assets) or Qualified Purchasers (institutions with at least $25 million in investments).

Customized Portfolios

This diverse assortment of solutions will meet many clients’ sustainability objectives; however, we understand the continued evolution of this space and seek to be able to react quickly to client needs.

For clients with unique missions, value-aligned investing programs, or who simply wish to ensure that they do not own certain controversial companies or have access to certain industries, we offer the following customized options:

Additional Screening: To the extent we have reliable data and can build rules into our compliance systems, we can add specific screens to a separate account to restrict companies (e.g. oil and gas providers) or industries (e.g. tobacco or weaponry).

Customized and Thematic Portfolios: Within a separate account, we can work together to solve for a sustainability need. From a universe of securities researched from both the bottom-up and for their ESG profile, we can assemble a custom portfolio of securities designed to meet many specific sustainable goals or outcomes.

SUSTAINABILITY—AN EXPANDING TOOLKIT

The boom in sustainable strategies has made it far easier than even five years ago to construct a sustainable portfolio across asset classes—from stocks to fixed income to compelling private equity alternatives.

No question about it, sustainable investing is a growth industry. There were 925 investment funds that incorporate environmental, social or governance factors in their approach as of the end of 2014, according to US SIF Foundation. That’s up a staggering 88% from 2010.

The proliferation of sustainable investment strategies is good news, whether you want to reflect your values in your portfolio or you simply are looking for top-performing opportunities. Just five years ago, if a client wanted a fully sustainable portfolio, we could find managers we were confident in for no more than 50% of total assets. There were not enough strategies that passed our due-diligence process. Today, however, we can boost that to 80% in a balanced portfolio. Here is a tour of some compelling strategies that we use in client portfolios.

Across the Asset Spectrum

For many years, equities were the only asset class where you could invest sustainably. Today, there are numerous options for the core allocations in a balanced portfolio. Some managers construct sustainability strategies by screening out categories of companies, such as those involved in the production of oil in an effort to align with fossil-fuel divestment mandates, whereas other strategies exclude investments in tobacco or nuclear energy related companies. Other managers look at a company’s sustainability orientation as part of their fundamental analysis. Among global equity strategies, some managers we like focus on a specific sector, such as renewable energy, while others buy into a theme such as building efficiency. Many diversified equity managers look for sustainability themes such as “big data,” or innovations in the use of real-time data to calibrate the use of water or energy. Such systems streamline the production of goods ranging from corn to steel.

The options in fixed income have expanded significantly in recent years. Now you can find top-shelf strategies that focus on affordable housing, health care and education, microfinance and even communitydevelopment programs. Recently, we have helped clients invest in projects devoted to alternative energy, mass transit and pollution clean-up. We helped a family fund a habitat-restoration project on Martha’s Vineyard. A similar bond we bought for a different client helped to minimize the disruption to the environment by the construction of five buildings at the Massachusetts Institute of Technology.

Private equity and venture capital funds invest in some of the most cutting-edge sustainability companies in industries from recycling to clean technologies. A private equity fund we know well has backed a software company that offers a program enabling a car owner to recalibrate the vehicle’s engine to optimize gas mileage. Another fund includes a portfolio company that delivers locally grown vegetables in San Franciso and New Orleans.

When building sustainable portfolios, we employ myriad strategies that run the gamut of environmentally and socially centered approaches, from restoring wetlands to financing entrepreneurs in Latin America. But as much as the industry has evolved, we are still searching for high-quality sustainable options in vehicles like hedge funds and international and emerging markets stocks. We anticipate that we will soon be able to close the remaining 20% gap in quality strategies and build 100% sustainable portfolios as more compelling options arise. Given investor demand, arise they will.

 

Please download The Advisory to read other articles in this issue including:

Demystifying Sustainable Investing
By Mike Hankin, President and CEO

For many investors, the topic of sustainable investing is a jungle of jargon and vague terms. When you cut through the confusion, though, you find that sustainable investing strategies have matured and improved, and now form the core of an increasing number of investors’ portfolios.

When considering whether to incorporate their values into their portfolios, investors often find themselves at a loss as they try to sort through a dizzying array of SRI, ESG and other acronym-laden choices available to them. Mike Hankin, Brown Advisory President and CEO, describes the firm’s commitment to cutting through the noise to get at what matters most to clients: performance, advice and service.

Starting Points
By Dune Thorne, Head of Boston Office; Alice Paik, Head of Strategic Advisory

Even investors with strongly held convictions sometimes avoid raising with their advisors the idea of syncing their investment portfolios with their ideals. Yet by focusing on sustainability, a family or institution can achieve clarity of purpose and commit to a long-term plan—two requirements of successful investing.

Beyond the Usual Suspects
By Karina Funk, Co-Portfolio Manager Large-Cap Sustainable Growth Strategy; David Powell, Co-Portfolio Manager Large-Cap Sustainable Growth Strategy

CEOs across the board try to give their firms a boost by increasing revenue and cutting costs. Our focus is on finding stocks across sectors with underlying environmental business advantages. That can lead us to holdings that might surprise you.

The views expressed are those of the authors and Brown Advisory as of the date referenced and are subject to change at any time based on market or other conditions. These views are not intended to be a forecast of future events or a guarantee of future results. Past performance is not a guarantee of future performance. In addition, these views may not be relied upon as investment advice. The information provided in this material should not be considered a recommendation to buy or sell any of the securities mentioned. It should not be assumed that investments in such securities have been or will be profitable. To the extent specific securities are mentioned, they have been selected by the author on an objective basis to illustrate views expressed in the commentary and do not represent all of the securities purchased, sold or recommended for advisory clients or other clients. The information contained herein has been prepared from sources believed reliable but is not guaranteed by us as to its timeliness or accuracy, and is not a complete summary or statement of all available data. This piece is intended solely for our clients and prospective clients and is for informational purposes only. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication.


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