Equities Fixed Income External Managers Private Equity and Real Estate Sustainable Investing


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.

Brown Advisory Equity Strategies

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.

Brown Advisory Fixed Income Strategies

External Managers

Investment Solutions Group

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.

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.

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.

Investment Insights and Thoughts from Brown Advisory
Equities Four Companies Are Spending Hundreds of Billions Building The Cloud
John Canning, CFA
August 20, 2018

The titans of technology have continually led the news cycle in recent years, as their reach has extended—for better or worse—into every corner of our lives. The big tech companies also have been generating exceptional stock returns: Facebook, Google, Microsoft and Amazon have together driven an outsized proportion of S&P 500® Index returns over the past several years.

These four companies are traditionally viewed as “asset-light” business models, but more recently their capital expenditures have skyrocketed. This trend has led to some questions about the future—are above-average returns on capital at these companies sustainable? Is their profitability in jeopardy? For now, we see the growth in cap ex at these firms in a positive light, because the assets they are building are, in our view, essential components of their long-term competitive moats.

The magnitude of the growth in cap ex for these firms is staggering (all data in this article sourced from Factset):

  • Between 2015 and 2019, Facebook, Google, Amazon and Microsoft are on track to drive 79% of all incremental cap ex of S&P 500 Index companies.
  • The four firms are expected to grow cap ex at over 31% per year, while the rest of the S&P 500 Index companies grow their capital spending by only 0.5% per year.
  • When all is said and done, the four firms are expected to be driving about 11% of all capital expenditures across the S&P 500 Index universe by the end of 2019.

Amazon, Facebook, Google, Microsoft Capital Expenditure Growth Trend, 2015-2019E

Four Companies Are Expected To Represent 11% of S&P 500 Index Cap Ex by 2019

Amazon, Facebook, Google, Microsoft Capital Expenditure Growth Trend, 2015-2019E

Source: Factset as of 7/31/18.

At first glance these numbers may seem like a mistake; after all, software and internet companies don’t build factories or manage massive logistical networks. But in fact, these companies are building data centers—the effective equivalent of factories and cargo networks for the internet—at a breakneck clip, because they are increasingly shouldering the burden of the entire economy’s enterprise data and application needs, not to mention the storage and management of the world’s texts, emails, photos and videos (excluding China, which is another topic entirely). As companies across the economy become more comfortable moving their key business applications to the cloud, and platforms like Facebook, Instagram, YouTube and Twitch continue their exponential growth, it is no wonder that these four firms are on pace to grow aggregate cap ex—largely driven by data center spending—from $23 billion in 2015 to a whopping $68 billion in 2019.

This shift is meaningful for these firms’ business models, as their aggregate cap ex has risen from 5.5% of sales in 2012 to 12% in 2018. But we view this rising capital intensity as less of a concern about profitability, and more of a positive sign for their ability to sustain market leadership well into the future. For one, the assets they are building will make it extremely hard if not impossible for other entrants to come along and compete on equal footing to deliver data storage and processing capacity. Moreover, they are in optimal position for the coming wave of artificial intelligence (AI) innovation. Various forms of AI have been theoretically possible for decades, but AI is now finally applicable in practical terms thanks to the scale of today’s datasets and the reduced cost of storage and processing; in fact, infrastructure to enable AI is one of the drivers behind the growth in cap ex we have been discussing. These four firms are leveraging their scale and making massive investments in AI capabilities, in an effort to enhance their value to enterprise customers, and make them even more reluctant to look elsewhere for a primary technology solution.

Technology is driven by innovation and disruption, so we can never be sure what surprises lay ahead for the sector or for the companies we’ve discussed here. But we believe that the heavy capital investments being made by these firms are leading to important assets that can support the long-term sustainability of their business models. 

The views expressed are those of 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 or asset classes mentioned. It should not be assumed that investments in such securities or asset classes 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.

The S&P 500® Index represents the large-cap segment of the U.S. equity markets and consists of approximately 500 leading companies in leading industries of the U.S. economy. Criteria evaluated include market capitalization, financial viability, liquidity, public float, sector representation and corporate structure. An index constituent must also be considered a U.S. company. Standard & Poor’s, S&P®, and S&P 500® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”), a subsidiary of S&P Global Inc.