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.

PHILANTHROPIC OPTIONS

Philanthropic giving is an essential component of many of our clients’ long-term financial plans. A well-developed philanthropic strategy involves a great deal of planning; there is upfront work to prioritize specific causes and issues, followed by decisions on optimal giving structures. Finally—in keeping with the topic of this publication—there is the choice of which assets the client will donate.

Many of our clients’ first instinct is to make charitable gifts with cash. However, making an in-kind gift of highly appreciated securities can often be a better solution from an income-tax perspective.

Structural Options

Before discussing the advantages of gifting appreciated securities vs. cash, we should briefly review some of the primary philanthropic structural options. We generally discuss four main giving options with our clients.

Direct gifts—in other words, outright donations of cash or other property directly to a charitable organization—are a relatively simple option and very common. When making an outright gift, you are generally entitled to an income tax deduction for the value of the gift (subject to income limitations).

Donor advised funds, or DAFs, have become extremely popular, and for good reason. Gifts to a DAF are eligible for an immediate income tax deduction, but charitable distributions out of the account can be made gradually over time—this provides a great deal of flexibility to donors who may wish to deploy charitable assets gradually rather than all at once.

Private foundations are a third option. They are particularly good options for families who want to move beyond gifting and become active in a more programmatic manner. When considering private foundations, families should understand the administrative burdens of such structures, as well as the fact that these foundations must distribute at least 5% of their assets annually. In contrast, DAFs do not have an annual distribution requirement; there have been recent conversations in Congress about instituting annual payout requirements for DAFs, but it is far too soon to speculate about whether this will come to pass. Another consideration: If you gift an interest in an operating business to a private foundation, you may face complications later with regard to taxes on income earned by that business.

Finally, various trust structures can offer benefits to both the donor and the charitable recipient. Let’s say that you wish to provide an income stream to a charity for a period of time while retaining your principal for yourself or your heirs. You can create a charitable lead trust to accomplish this. Conversely, you may wish to establish an income stream from a pool of capital for yourself during your lifetime, and then bequeath that capital to a charity at your death or at some fixed future date. In this case, you would use a charitable remainder trust. Using these types of structures adds complexity to a philanthropic plan, but trusts can be highly effective for clients who want a synergistic strategy that produces positive outcomes for family and charity at the same time.

We often work with clients to help them develop their philanthropic strategy, and, as mentioned previously in this publication, we find that our role in advising clients on both investment and tax matters can be quite helpful. For example, we can effectively address the need to reduce portfolio risk with a set of actions that also achieve desired charitable goals. In some cases, we work alongside the philanthropic advisors of the community foundations and other organizations that our clients wish to support, reviewing the variety of solutions that these organizations offer their donors and choosing the strategies that best fit each client’s goals and circumstances.

Gifting Appreciated Assets

As noted above, many people primarily think about gifting with cash, but a gift of a low-cost-basis asset can provide tangible benefits to the donor. Consider a donor who purchased stock at $20 that is currently worth $100. If the donor sold that stock, after capital gains taxes, they might have $80 or less to donate to charity. A better solution would be to gift that stock directly. The donor would be eligible for a tax deduction for the full $100 fair-market value of the stock (again, subject to income limitations). The charity could sell the stock for $100 and because it is tax-exempt would not need to pay any capital gains tax, thus benefiting from the full $100 donated.

Beyond this basic equation, there are other ways we have helped clients leverage appreciated holdings for charitable purposes. For example, if a client is attached to a family legacy holding that provides a healthy dividend, they might want to place that stock in a private foundation or even a charitable lead trust and direct those dividends to charities of their choice. This would remove the risk of the concentrated position from their personal portfolio while still allowing them to use the position to accomplish philanthropic objectives.

It is a privilege to help our clients make an impact in the world. By being thoughtful about each specific step in the philanthropic process, we aim to help them maximize that impact.

 

 

Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties.

The views expressed are those of the author 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 and should not be relied upon as investment advice and 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. The information provided in this material is not intended to be and should not be considered to be a recommendation or suggestion to engage in or refrain from a particular course of action or to make or hold a particular investment or pursue a particular investment strategy, including whether or not to buy, sell, or hold 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. 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, is for informational purposes only, and is not individually tailored for or directed to any particular client or prospective client.


⚑ Topics: Asset Allocation, Equities, Planning and Strategic Advice

Other articles in this publication include:

 

Introduction: How We Advise Clients With Concentrated Positions
⚑ Topics: Asset Allocation, Equities, Planning and Strategic Advice

Investment Planning Options
By Jane Korhonen, CFA, Portfolio Manager
⚑ Topics: Asset Allocation, Equities

Family Wealth Transfer Options
By Stuart Dorsett, Strategic Advisor and Head of Carolinas Office
⚑ Topics: Planning and Strategic Advice

Building A Portfolio To Offset Position Risk
By Tim Hathaway, CFA, Director of Equity Research and Theresa Balaran, Portfolio Manager
⚑ Topics: Asset Allocation, Equities

 

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