“Thoughtful Investing” is a dedication to rigorous, fundamental research to gain a deeper understanding of the businesses, issuers and managers in which we invest our clients’ capital. It is the patience to allow the quality of strategies, companies and allocators to compound our clients’ capital over time. It is the humility needed to make objective, unbiased decisions—even under pressure—and to learn from our mistakes. It is an appreciation of context so that ideas can be kept in proper perspective. It is a focus on sustainable investing as a means to outperform. Thoughtful investing is the belief that teams—through diversity, collaboration and a willingness to challenge one another—best deliver the first-rate performance that we promise to each and every client.
Multi-Asset Portfolio Solutions
For our private clients, endowments, foundations and charities, portfolio management teams build investment programs tailored to their specific needs, circumstances and goals.
We do not use cookie-cutter model portfolios, but rather invest across asset classes in accordance with each client’s long-term objectives and tolerance for risk. While we do not use models to construct portfolios, it can be helpful to aggregate similar portfolios to gain a sense of general performance.
The Investment Solutions Group (ISG) supports our team of portfolio managers and analysts. With expertise centered on asset allocation and manager research, the ISG team uses rigorous fundamental analysis to analyze and monitor external managers across geographies and asset classes. With more than 100 managers on its “recommended” list—gleaned from more than 1,000 assessments annually—the ISG team’s exactitude helps ensure that clients end up with best-in-class solutions across the entire public market asset spectrum in their portfolios.
REPRESENTATIVE PERFORMANCE
On a net-of-fees basis, our U.S. and U.K. teams have delivered strong relative performance in the trailing one-, three- and five-year periods.
ISG Team Members
Brown Advisory's Three Bucket Approach:
A BALANCE OF LIQUIDITY, STABILITY AND GROWTH IS ESSENTIAL.
OPERATING ACCOUNT
Provides liquidity
Invested in cash and cash equivalents—reserved for near-term needs.
CORE PORTFOLIO
Pursues long-term targets
Core mix of stability and growth assets—the foundation of an investment program. Allocations will vary depending on client circumstance.
OPPORTUNISTIC ALLOCATION
Allows timely investments
Generally characterized by greater potential risk and reward—typically involves a near-term catalyst, although the time horizon is generally at least one year.
As CIO for International Private Client, Endowments and Foundations, Christopher (Kif) Hancock speaks continually with some of the most thoughtful investors across asset classes and around the world. In his periodic Hearing, Seeing and Thinking (HST) publication, Kif analyzes the forces shaping the markets—in the latest edition of HST, he does a deep dive into the global banking system.
CHRISTOPHER HANCOCK, CFA
CIO for International Private Client, Endowments and Foundations
PRIVATE INVESTMENT PROGRAM PERFORMANCE
Our private multimanager vehicles have performed strongly versus their public market equivalent benchmarks since inception.
Private Investment Solutions
Since day one, private investment expertise has been a pillar of our ability to create value for clients—many of our first clients were founders and executives who built significant private companies and were in the process of going public.
Private assets are proving to be increasingly important in driving long-term investment performance. We continue to refine and expand our private investment offerings so that we can deliver a fully integrated private market platform to clients.
Today, we have clients who invest in our fund-of-funds, NextGen Venture Partners and direct company investment programs.
BROWN ADVISORY PRIVATE INVESTMENT PLATFORM
FUND-OF-FUNDS
Our multimanager strategies offer clients access to concentrated portfolios of high-conviction ideas across private market asset classes—including venture capital, buyout, real estate and private credit. Our flagship fund-of-funds program, Private Equity Partners (PEP), celebrated its 10th anniversary last year.
NEXTGEN VENTURE PARTNERS
We launch and scale private market strategies to meet client demand across thematic investment opportunities. NextGen Venture Partners, our early-stage investment strategy powered by the collective knowledge of a vast entrepreneur network, is celebrating its fifth anniversary as part of Brown Advisory.
DIRECT COMPANY INVESTMENTS
We invest directly in companies and entrepreneurs throughout the company lifecycle—from early- to growth-stage. We make direct investment opportunities available to individuals, families and institutions who seek to generate investment alpha in concentrated private market positions.
Left to right: Keith Stone, Private Equity Portfolio Manager; Elise Liberto, Private Equity Portfolio Manager; Peter Whitney, CFA, CAIA, Head of Private Investment Research; Jon Bassett, Managing Partner, NextGen Venture Partners; Jacob Hodes, CIO for Private Investments
Institutional Investment Management
In our actively managed equity and fixed income portfolios, we strive to generate outperformance through rigorous research, high-conviction ideas and a repeatable process that is focused on long-term, risk-adjusted returns.
We believe that a bottom-up, fundamental approach to investing delivers outperformance over time. This belief remains as strong today as when we began investing on behalf of clients 25 years ago. Our independence as a firm supports this approach: We are able to focus intently on creating, and adhering to, the investment philosophy and processes that we believe will deliver results for our clients over the long term.
Our institutional clients hire us to build and manage portfolios of companies and issuers, often with high active share, based on the collective, collaborative assessment—which not infrequently involves heated debate—of our investment team. Especially during volatile markets, as we experienced during the past year, our bottom-up approach, founded on valuation discipline, presents buying opportunities; volatility yields opportunity as we strive to optimize performance.
SELECT STRATEGY PERFORMANCE RELATIVE TO BENCHMARKS
On a net-of-fees basis, the 12 strategies below have delivered meaningful annualized outperformance over their benchmark since inception.
Benchmarks | Flex: S&P 500 | SCG: Russell 2000 Growth | LCG: Russell 1000 Growth | SCFV: Russell 2000 Value | LCSG: Russell 1000 Growth | MCG: Russell Midcap Growth | SCFI: Bloomberg U.S. Agg. | CFI: Bloomberg U.S. Agg.| GL: FTSE All-World Net | SSCC: Russell 2000 Total Return | GF: FTSE All-World Developed | GSTRB: Bloomberg Global Aggregate (1-10 Y) (USD Hedged)
Left to right: Ryan Myerberg, Portfolio Manager and Co-Head of Global Taxable Fixed Income; Anna Rudgard, Fixed Income ESG Research Analyst; Yacine El-Mohri, Global Financials Credit Research Analyst; Henry Hou, CFA, Strategic Advisor
" We have the privilege of working with really thoughtful clients around the world. Their diverse perspectives are an important part of the feedback loop as we push ourselves to outperform and deliver a best-in-class experience that is meaningful to each client."
NICOLE NESBITT
Head of U.S. Institutional Sales and Service
For our sustainable strategies, our bottom-up research process includes ESG analysis—from risk and opportunity perspectives—as part of our intensive pursuit to understand companies and issuers thoroughly and to identify factors that the market may have overlooked. Our clients tell us—both verbally and by entrusting their assets to us—that the performance track record of our sustainable investing strategies, some more than 10 years long, has validated our claim that thinking about sustainability issues can be additive to investment decision-making. In the U.K., Europe and Asia, 78% of new assets during 2022 were in sustainable strategies.
We have invested significantly in our global fixed income platform over the past several years. Last year, we launched the Global Sustainable Total Return Bond strategy, which is designed to serve as a core fixed income strategy for investors. Taking a global, sustainable and dynamic approach to fixed income, the strategy seeks to offer investors access to an attractive stream of income and risk-adjusted returns while simultaneously generating a positive impact on global sustainability issues. It aims to deliver total returns over an economic cycle and act as a complement and counterbalance to equities in client portfolios.
UN PRI Conference 2022
We continue to widen the aperture and expand our capabilities to deliver fixed income options to clients globally.
Lisa Fillingame Abraham, Director of Fixed Income ESG Research, spoke at the PRI Conference in Barcelona on “The New Geopolitics of Responsible Investment.” Lisa is a global thought leader on investing in sovereign bonds and has originated a research framework to help understand geopolitical risks that uses ESG factors and associated risk indicators.
Why Does Our Independence Matter
for Professional Investor Clients?
To understand why Brown Advisory’s independence—in terms of both firm structure and investment decision-making—matters to the institutional clients for whom we manage single equity and fixed income strategies, we asked colleagues who focus on these clients in three different regions: John Davis, CFA, Director of U.S. Financial Intermediaries in Baltimore; Madison Freeze, Regional Investment Consultant in Austin; and Charlie van Straubenzee, Head of European Institutional Sales in London.
How do you talk about the firm’s independent structure with clients and prospective clients?
Madison: Our independence is our biggest differentiator. It's the foundation of how we start discussing the firm and who we are. Clients really care about our widespread ownership—the fact that we all have an ownership stake—and how it leads to collaboration.
John: Yes, collaboration and alignment really matter to clients. And they see that our ownership structure creates a sense of intensity in how we approach the investment process.
Madison: I would add that clients really appreciate that being independent means that we are not focused on quarterly results, that we are in this together with them for the long term.
Charlie: Right—as a private company, we have the advantage of being able to have a long-term mindset without being beholden to the next quarter's results. We don't work on commission—we do well when our clients do well. We are aligned in investing in each other's futures.
John: Exactly. Clients appreciate that we are their partners. We don't just talk about alignment; we exhibit it. Clients don't want us to come to them every week with a new strategy; they know that we will only share ideas that we are planning to support over the long term. We're constantly trying to do what's right for the client. Independence allows us to do that.
How does independence factor into the investment process?
Charlie: We can afford to be long-term oriented. Global Leaders is a good example. During COVID-19, a lot of company valuations fell dramatically, prompting shorter-term investors to sell out. We added to a number of positions on the basis that the environment was temporary, and those have been some of our best-performing holdings since. We can ignore short-term noise and stick with tomorrow’s winners.
John: We believe in our process, asking whether a company or issuer will be a good investment over the long term. We give ourselves time to do diligent analysis and then we let that analysis play out.
Madison: We have the good fortune to be able to focus on quality not quantity—on best ideas, not just getting names into portfolios. We can be partners with the companies and issuers we’re investing in. Because of our long-term philosophy, we can create a meaningful dialogue with management teams; we’re not just transactional investors.
Charlie: Partnership is key. We partner with the companies and issuers we invest in, and we also partner with our clients. For example, we think very hard about how we can help clients achieve their ESG goals. This is something we’ve been doing for many years—it’s not just a trend that we jumped on. I remember for the first five years after we launched Large-Cap Sustainable Growth, now arguably the flagship strategy in its asset class, we could barely find an investor who was interested. They kept asking us: Is it a growth strategy or is it a sustainable strategy? The answer was: both! We stuck to it and demonstrated that it is possible for ESG integration to drive performance.
How does the firm’s flat management structure—which flows from our ownership structure—fit in for clients?
Madison: Clients appreciate that our flat structure can give us a research edge—portfolio managers and analysts are all involved in the investment dialogue. It comes back to our collaborative approach: Fundamental, ESG and investigative analysts are assessing a company or issuer from different perspectives, which gives us a more complete picture of the risks and opportunities.
John: We talk a lot about diversity of thought, and this really resonates with clients. We look at holdings and potential holdings from multiple angles. Everyone around the table has a voice.
Reflecting on Brown Advisory’s culture more broadly, what do clients especially care about?
John: Each person on the team makes a difference. We're able to strike a balance between having a global footprint while still being small and nimble.
Madison: Even though we are a small team, we are very diverse, with lots of nationalities, languages and cultural backgrounds.
Charlie: Even though we are a small team, we are very diverse, with lots of nationalities, languages and cultural backgrounds.
Madison: And our team orientation really matters for clients—not only in how we collaborate with each other, but in the consultative approach we take with our clients. For example, clients are trying to understand what it means for them to build an ESG portfolio, so they love our ability to connect them with thought leaders—like Katherine Kroll, Amy Hauter and Lisa Abraham. The fact that our colleagues are willing to contribute time to educate clients and help them grow—beyond just executing an investment mandate—makes a difference.
John: I think our creativity matters too. If they can't find something in the marketplace, we process their feedback and work diligently to develop a potential solution. For example, that was one of the driving forces behind the Large-Cap Sustainable Value strategy that we recently launched.
Charlie: I'd say clients care about the relationships we build and our commitment to help them succeed. This resonates with investors all over the globe. Our presence in Frankfurt, Singapore and now Japan shows a real commitment to the DACH [Germany, Austria and Switzerland] and APAC [Asia Pacific] regions. Likewise, we've made significant investments in our global equity and global sustainable fixed income platforms. Frankly, being private makes it easier to invest in the future. We can do what is best for our clients and invest in the long term; we don't have to report quarterly financial results to outside shareholders.
Anything else that you would like to add?
Charlie: We pride ourselves on not being all things to all people. We want to do a handful of things really well.
John: It’s about humility. We try to listen more than we talk. Our goal is to get to know our clients really well, to build deep relationships, to understand their pain points—when we call a client, they know it is going to be a substantive conversation.
Madison: We listen before we react; we reflect on what will be best for a client’s needs. It comes back to being thoughtful.
" Our singular focus on teamwork enables our investment professionals, across equity and fixed income strategies, to gain a deeper understanding of the companies and issuers in which we invest our clients’ capital. We think our collaborative approach helps us as we strive for excellence and outperformance—today and as our clients’ needs change over time."
TIM HATHAWAY, CFA
CIO for Institutional Investments and Co-Head of Institutional Business;
CHRIS BARTLETT
CIO for Investment Risk and Co-Head of Institutional Business
David Schuster and Christopher Berrier, Portfolio Managers, Small-Cap Fundamental Value Strategy; Emmy Wachtmeister, CFA, Institutional Portfolio Analyst
Team-Based Investing Approach
As investors, first and foremost, we know that performance is paramount. We believe that teams best deliver the first-rate performance that we promise to each and every client.
Perhaps no characteristic distinguishes Brown Advisory more than this team-based approach. We believe that we are able to optimize investment decisions when we listen to an array of thoughtful perspectives, embrace diverse opinions and challenge each other’s assumptions.
Research Collaboration
Collecting and assimilating disparate points of view is central to developing an independent investment perspective. This is the driving force behind the intense collaboration that we pursue across all of our research disciplines—equities, fixed income, private investments and our external manager platform.
Collecting and assimilating disparate points of view is central to developing an independent investment perspective. This is the driving force behind the intense collaboration that we pursue across all of our research disciplines—equities, fixed income, private investments and our external manager platform.
On the equity research team, fundamental, ESG and investigative analysts collaborate to gain a nuanced understanding of businesses and the complex, global landscape in which they operate. Our coverage of Amazon is one example. Led by Eric Cha, Victoria Avara, Katherine Kroll, Angie Wilson and Lauren Cahalan, the research team assesses the company's investment risks holistically, including antitrust regulation, consumer trust and labor, as well as our fundamental upside-downside analysis. The factors are intertwined, and our view on the company benefits from continual communication among the analysts, as well as multifaceted research methods—such as interviewing third-party sellers and union experts, delving into E.U. antitrust proceedings, evaluating data center sustainability, and engaging with the management team.
Eric Cha, CFA, Equity Research Analyst; Lauren Cahalan, Investigative Research Analyst; Victoria Avara, ESG Equity Research Analyst.
"Investing in this environment is challenging. We have terrific investors throughout the firm doing deep research across public and private asset classes. Our CIOs have the responsibility of challenging and sharing their thinking, which allows us to be thoughtful and opportunistic as we all construct client portfolios."
SID AHL, CFA
CIO for U.S. Private Client, Endowments and Foundations
Investing in the Energy Transition
Erika Pagel, Chief Investment Officer for Sustainable Investing, and Elizabeth Hiss, Equity Research Analyst, are among our thought leaders on the investment implications of the energy transition. Erika hosted a NOW podcast series to explore the energy transition with policy experts and corporate innovators.
Russia's invasion of Ukraine, pandemic-driven supply chain disruptions and severe climate events are shining a spotlight on the world's "energy trilemma"—the need to ensure access to reliable, affordable and sustainable energy. In the U.S., historic public policy legislation provides catalysts for companies and governments to pursue low-carbon projects. The President of the European Commission has committed to the rapid deployment of renewables. Against this backdrop, we expect considerable capital to flow to tangible solutions—and that the global transition to clean energy represents significant, secular, long-term investment opportunities across public and private markets.
Erika Pagel, Chief Investment Officer for Sustainable Investing, and Elizabeth Hiss, Equity Research Analyst, are among our thought leaders on the investment implications of the energy transition. Erika hosted a NOW podcast series to explore the energy transition with policy experts and corporate innovators.
What's next?
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