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.

THE ADVISORY | DEMYSTIFYING SUSTAINABLE INVESTING

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.

In Brown Advisory’s most recent annual report, I wrote that our firm is guided by a desire to solve “puzzles” for our clients—to put the right pieces together so we can answer the big questions: What do you need to successfully reach your goals? And, what do we need to do as a business so that we can help get you there?

Over the years, you have made it clear to us that one of the important pieces to that puzzle is to offer solutions in the area of sustainable investing. You may recall that in 2009, we persuaded Winslow Management Company based in Boston to join Brown Advisory. The firm had been investing successfully in companies providing sustainable solutions since 1983 and, in fact, trademarked the phrase “green investing.” We were attracted to the company because of its record of investing successfully compared to a mainstream performance benchmark, versus an approach that only benchmarked against socially responsible investment (SRI) funds. Why? Long term, we think that the best solutions to environmental challenges will come from well-managed companies that perform well against their peers. The focus on sustainable investing is now an integral part of Brown Advisory, and partners David Powell and Karina Funk manage successfully a $400 million strategy that focuses on large-cap sustainable growth companies.

But, we know that the questions our clients ask are much broader than whether we can help them find a mutual fund that invests—or does not invest—in a particular type of company. From the early days of Brown Advisory, we have responded to questions from clients who are interested in reconciling their concerns and values with their investments. We have observed that this interest is especially prevalent among younger investors. The topic is also a regular agenda item for most endowment and foundation investment committees that face growing pressure to align their portfolios with their organization’s values. Our clients are not alone: Investments aligned to environmental, social or governance factors surged to $4.3 trillion last year from $569 billion in 2010, according to US SIF Foundation, a Washington-based trade association promoting sustainable investing, of which Brown Advisory is a member.

The number and breadth of potential solutions has also grown in recent years, from performance-based approaches that leverage environmental research, to “screens” to validate that investment holdings do not conflict with deeply held beliefs, to enterprises that offer the prospect of making a measurable impact on communities and society as a whole. But, regardless of any particular entry point into the sustainableinvesting discussion, we have found that nearly all of our clients are asking for help in understanding how much-discussed and much-debated social and environmental issues are affecting the world and how to respond within the context of their investments.

We are certainly not alone in trying to help clients solve this particular puzzle. A number of managers have focused exclusively on sustainable investing for decades, and in recent years there has been a flood of new entrants into the field. We now have “SRI” funds, “ESG” strategies, “impact” funds, and strategies focused on renewable energy or water to name a few. Each of these may be admirable in its own right and, in fact, we believe that the universe of available sustainable-investment strategies has expanded and matured tremendously over the past decade. Investors now have many more attractive options than they had in the past. But, taken together, these solutions can form a morass of confusing choices for investors. Unfortunately, our industry has had less impact in helping clients put these pieces together as part of a full solution.

So, we have committed the full resources of our firm to helping you, our clients, achieve the strategic, financial and values-oriented success that you seek, in whatever form that may take. This topic is important enough to us that we chose to publish this special issue of The Advisory to discuss our sustainable-investment approach with you.

Our strategy for addressing sustainability at Brown Advisory should sound familiar to those who have been with us for any length of time: We seek to deliver first-class performance, thoughtful strategic advice and the highest level of service, all defined by the specific needs expressed by each of our clients.

Performance: We are an investment firm, first and foremost, and a central aspect of nearly all of our client relationships is our responsibility to deliver outperformance through active management. When it comes to sustainability, we consider social and environmental factors in our investment research when it is clear they have a tangible impact on performance. On page 7, Karina and David discuss how we find companies that are poised to outperform due to their environmental strategies. Erika Pagel and James Stierhoff, members of our manager research team, discuss our efforts to find external sustainable investment firms with exceptionally talented teams and strong track records. We believe that having a deep understanding of this universe of managers is an essential component of our open-architecture research.

Advice: As I mentioned above, we know that a growing number of institutions as well as families are looking for strategic guidance: Some questions are specific, such as how to invest portfolios in alignment with their values. Some are more general and, frankly, convey a high level of frustration, such as whether one should be thinking about these issues only in the context of philanthropic choices. The process of sifting through the questions and answers can be complicated—families may feel uncomfortable or unprepared discussing the topic, institutions may have specific stakeholder concerns to address, and everyone grapples with the plethora of options available for expressing their values within their portfolios. Beginning on page 4, Dune Thorne, head of our Boston office, and Alice Paik, head of the Strategic Advisory Group, describe our experiences in walking clients through the process of creating a sustainable investing plan.

Service: Embedded in the above delivery of performance and advice is our commitment to first-class service, and we are making investments in technology and resources, from screening technology to proxy-voting systems to customized reporting solutions, to ensure that we are meeting client expectations.

If we can deliver on these three commitments, we feel confident that we can help you consider your options for sustainable investing and implement the strategies that fit with your longterm aspirations. It is an understatement to say that it is important that we do so, because we well know that our reason for existing as a firm is to help solve problems for clients. But, we believe adamantly that successful investing will require a proactive and significant commitment to understanding a sustainable world.

Sincerely,

 

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

Starting Points
By Dune Thorne, Head of Boston Office, and 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.

An Expanding Toolkit
By Erika Pagel, Portfolio Manager, and James Stierhoff, Associate Analyst

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.

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