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Equities Fixed Income External Managers 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.

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 Toll Collection
Maneesh Bajaj, CFA
July 31, 2018

The Flexible Equity Strategy’s Maneesh Bajaj discusses the power of “tollbooth” business models and how they fit into the strategy’s overall philosophy of seeking out durable companies with attractive economics. This approach to finding companies with staying power has helped Flexible Equity outperform notably over its 30-year history and during the recent period as Maneesh has partnered with Hutch Vernon in managing the strategy.

Most of us experience tollbooths (or the modern automated equivalents) as a simple, unavoidable fact of life. If there is a clearly superior route to get from point A to point B, we take it—and if there is a small toll charged for that route, we most likely pay the toll rather than choose an inferior route. The operator of the toll system, meanwhile, is in a highly enviable position—it can simply sit back and enjoy the reward of its strategically advantageous position.

This concept has been a powerful strategic metaphor over the years for investors like Warren Buffett and others who focus heavily on finding business models with distinct and sustainable advantages. In managing the Flexible Equity Strategy, my partner, Hutch Vernon, and I are highly attracted to “tollbooth companies” that collect steady streams of revenue via excellent strategic positioning, durable competitive advantages and high barriers to entry that prevent new participants from dislodging them.

Source: FactSet. The portfolio information provided is based on a representative Brown Advisory Flexible Equity account as of 06/30/2018 and is provided as supplemental information. Composite performance is based on the Brown Advisory Institutional Flexible Equity Composite, managed by Brown Advisory Institutional. Brown Advisory Institutional is a division of Brown Advisory LLC and Brown Advisory Institutional is a GIPS compliant firm. Returns greater than one year are annualized. Past performance is not indicative of future results. Please see the Brown Advisory Institutional Flexible Equity Composite performance disclosure on the back cover for additional information and a complete list of terms and definitions.

We are long-term investors, so for us, buying a stock is equivalent to buying a business. Companies with these tollbooth characteristics have the potential to generate attractive and reliable cash flows for shareholders for very long periods of time. Over the years, we have found these opportunities in many different industry sectors, from financial services to health care to technology. As of June 30, 2018, these companies represented over 30% of our portfolio.

Three Keys to Success for Tollbooth Companies

Not every company can pull off a winning tollbooth business model. Broadly speak