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.

CASE STUDIES SHOW SUSTAINABLE INVESTING YIELDS VARIED BENEFITS

When embracing sustainability, families and institutions often affirm their highest ideals.

Nurturing Well-Being Through Sustainable Investing

Nancy Klavans is hardly a newcomer to the idea of backing projects that improve the lives of others. Since 1991 the Germeshausen Foundation created by Nancy’s parents, Polly and Ken Germeshausen, has made innovative grants linking different fields including education, the arts, sustainability, religion and peace- building.

In 2001, Nancy* decided to bring the same focus to the foundation’s investment portfolio. Only a few of the investments were aligned with environmental stewardship and other value-based goals. As her investment counselors, we started by helping the Klavans use screening to curtail their investments in companies tied to fossil fuels, gambling and weapons production. With our guidance they also invested in a group of strategies that use environmental, social and governance research to identify companies that could outperform over the long-term, or what we call sustainable alpha.

Nancy and her family decided to go further by backing innovative, forward-looking leaders who are willing to take risks as they strive to build a stronger sense of community and improve people’s lives. The foundation’s investment return is focused on advancing many of the same philanthropic goals as its grant making. For example, some initiatives are impact investments targeting early-stage companies, including the use of advanced technology and distribution systems to build a supply chain for localized food production.

To date, the Klavans have aligned more than 85% of their portfolio to sustainable investing and nearly 100% is fossil-fuel free. While deploying their assets to benefit the environment and society, the family has not compromised on returns. Since January 2014, their foundation’s portfolio has outperformed the 4.7% average annual gain by its benchmark of bonds and stocks. The Klavans show the success possible when a family takes a step-by-step approach to putting their investments and grant making on parallel tracks.

*We are grateful to the Klavans for allowing us to share their journey in sustainability.

Unity Through Sustainability

We have found that leaders of an institution grow closer together as they work to align their investment decisions with their organization’s values. Through detailed give and take, they clarify their core objectives and achieve stronger unity around common goals.

For example, we advise an agency that is devoted to creating jobs and protecting the environment by expanding the use of renewable energy. During an eight month period, we helped its investment committee draw up a policy statement fully synchronizing the organization’s mission and portfolio holdings.

Committee members tackled some tough questions. Should the institution hold stock in companies with fossil fuel reserves? Should the endowment reject mutual funds with any exposure to the fossil fuel industry? After several extended discussions, the committee decided against holding shares in the fossil fuel sector and limited its holdings to mutual funds with no more than 10% exposure to the industry.

Today, the institution’s diversified portfolio includes equities and fixed income, and we are helping to identify sustainable investments outside the U.S., including in emerging markets.

By clarifying its goals and rallying behind a long-term plan for a sustainable portfolio, the institution set some of the essential building blocks for successful investing.

 

 

 

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 and you may not get back the amount invested. 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.

This communication and any accompanying documents are confidential and privileged. They are intended for the sole use of the addressee. Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, indepth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties.



⚑ Case Studies

This article appears in the September 2016 issue of The Advisory. Other articles in this issue include:

 

From our CEO: How We Help Clients Build Sustainable Portfolios
Mike Hankin, Brown Advisory President and CEO, describes a framework for helping clients incorporate their values into their investment portfolios.
By Michael D. Hankin, Chief Executive Officer
⚑ Sustainable Investing

Investors Seeking Sustainability Gain Confidence Through Screening
By screening their portfolios, investors align their assets with their values and gain greater confidence in their long-term investment plans.

By Chad Larson, Strategic Advisor and Emily Dwyer, Equity Research Analyst
⚑ Screening

Diving Deep: Achieving Outperformance By Using Environmental Research
Brown Advisory outperforms by finding undervalued stocks and bonds through original environmental research that dives deep beneath the surface of corporate disclosures, regulatory filings and investor releases.

By Karina Funk, CFA, Head of Sustainable Investing and Large-Cap Sustainable Growth Co-Portfolio Manager and Amy Hauter, Sustainability Analyst, Fixed Income
⚑ Sustainable Alpha

Five Ways to Invest That Make the World a Better Place
More than ever before, investors do not have to make a cut-and-dried choice between portfolio investment and philanthropy. We identify five options enabling them to do good while doing well.

By Ethan Berkwits, Private Client Strategy Analyst and Brigid Peterson, Endowments and Foundations Advisor
⚑ Impact

 

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