Mortgage Securities Fund

Overview

The Brown Advisory Mortgage Securities Fund seeks to maximize total return consistent with preservation of capital by supplementing a high-quality portfolio of agency mortgage-backed securities with loan-level diligence and an opportunistic allocation to other segments of the structured products market. ​

The Fund managers employ a strategy centered around individual security analysis that aims to maximize total return over the intermediate term and beyond by identifying underappreciated loan characteristics or inexpensive call options, which can slow the speed of refinancing and enhance a bond’s yield.​

Our investment philosophy is grounded in the following principles.​

Bottom-Up Research

  • We employ a fundamental, bottom-up approach to mortgage lending focusing on the strengths, weaknesses and prepayment dynamics of individual loans, supported by proprietary models and third‑party data, to identify opportunities to generate alpha and manage risk. ​

Active Management

  • We supplement our team’s best ideas in the portfolio with a conscious mitigation of prepayment risk inherent to mortgage-backed securities​

Credit Quality Distribution (%)

(As of Dec 31, 2025)

Fund Benchmark
AAA/Aaa 2.9 —
AA/Aa 101.0 100.0
AA- – —
BBB – —
High Yield – —
Not Rated 0.5 —
A 0.1 —
Cash -4.6 —
Source: FactSet®. Credit quality is calculated using ratings assigned by Moody’s. If Moody’s does not rate a holding then Standard & Poor’s is used. If Moody’s and Standard & Poor’s do not rate a holding then Fitch is used. A bond is considered investment grade if its credit rating is BBB- or higher according to Standard & Poor’s; more specifically, a rating of “AAA” represents the highest credit quality with minimal risk of default and a rating of “BB” or below represents speculative financial security. High Yield, if noted, includes holdings that are rated BB+ or lower according to Moody’s. Not Rated category, if noted, includes holdings that are not rated by any rating agencies. Quality distribution allocations include cash and equivalents and are subject to change at any time and should not be considered recommendations 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. Figures may not total 100% due to rounding.​​

Duration Distribution (%)

(As of Dec 31, 2025)

Fund Benchmark
< 1 Year 3.1 1.1
1 to 3 Years 13.6 17.0
3 to 5 Years 24.3 19.5
5 to 7 Years 21.4 22.5
7 to 10 Years 40.6 40.0
> 10 Years -3.0 –
Source: FactSet®. Duration distribution allocations include cash and equivalents and are subject to change at any time and should not be considered recommendations 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. Figures may not total 100% due to rounding.​​

Portfolio Diversification

(As of Dec 31, 2025)

Sector Fund Benchmark
Cash & Equivalents -4.4 —
Corporate — —
Mortgage 98.2 100.0
CMBS 5.4 —
ABS 5.5 —
Municipal 0.1 —
Unassigned — —
SBA — —
U.S. Government — —
Government Futures -4.8 —
Source: Advent Portfolio Exchange® for Fund data, FactSet® for benchmark data. Portfolio diversification includes cash and equivalents and are subject to change at any time. Figures may not total 100% due to rounding. Cash balances can be negative to reflect economic exposure to derivatives and other forward contracts.​

Characteristics

(As of Dec 31, 2025)

Portfolio Attribute Fund Benchmark
Average life (yrs) 7.2 7.0
Effective Duration (years) 5.8 5.6
30-Day SEC Yield (%) (Investor Share Class) 4.11 —
# of Holdings 325 1,051
Yield to Worst (%) 4.8 4.6
Source: FactSet®. Characteristics are applicable to the Institutional share class only, include cash and equivalents, and are calculated gross of fees unless noted otherwise. ​ 

Mutual fund investing involves risk. Principal loss is possible. Past performance is no guarantee of future results. ​ 

Carefully consider a fund’s investment objectives, risks, charges and expenses before investing. Click here for a current prospectus and click here for a current SAI. Please read and consider it carefully before investing. You may obtain a hardcopy of the prospectus by calling 1-800-540-6807.​ 

Click here for index and financial term definitions​ 

Diversification does not assure a profit, nor does it protect against a loss in a declining market.​ 

The information provided 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.​ 

Mortgage-backed securities (MBS) are bonds secured by a mortgage or collection of mortgages. Diversification does not assure a profit nor protect against loss in a declining market. Investing involves risk. Principal loss is possible. Investors should consult a tax professional for advice and information concerning the tax features of mortgage backed securities and fixed coupon bonds. Unlike traditional fixed-coupon bonds that pay semiannual coupons, MBS distribute monthly payments of interest and principal, and the coupon amount may vary each month. Because of the general complexity of mortgage-backed securities, and the difficulty that can accompany assessing the creditworthiness of an issuer, they may not be suitable for all individual investors.​ 

Investments in debt securities typically decrease in value when interest rates rise. This risk is usually greater for longer-term debt securities. Investments in Asset-Backed and Mortgage-Backed securities include additional risks that investor should be aware of including credit risk, prepayment risk, possible illiquidity and default, as well as increased susceptibility to adverse economic developments. Certain fixed income securities held by the Fund may be difficult (or impossible) to sell at the time and at the price the Advisor would like. As a result, the Fund may have to hold these securities longer than it would like and may forego other investment opportunities. Issuers may experience an acceleration in prepayments of mortgage loans or other receivables backing the issuers’ fixed income securities when interest rates decline, which can shorten the maturity of the security, force the Fund to invest in securities with lower interest rates, and reduce the Fund’s return. Issuers may decrease prepayments of principal when interest rates increase, extending the maturity of a fixed income security and causing the value of the security to decline. Investing involves risk. Principal loss is possible. Investors should consult a tax professional for advice and information concerning the tax features of mortgage backed securities and fixed coupon bonds.​ 

©2025 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. Morningstar Rating™ is a trademark of Morningstar, Inc. Morningstar Rating™ is for the Investor share class only; other classes may have different performance characteristics. “The Morningstar Rating™ for funds, or “star rating”, is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product’s monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating™ for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating™ metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.” Brown Advisory Mortgage Securities Fund was rated against the following numbers of U.S. domiciled Government Mortgage-Backed Bond funds over the following time periods: 130 funds in the last three years, 129 funds in the last five years and 111 funds in the last ten years for the period ending 12/31/2025. With respect to these U.S. Government Mortgage-Backed Bond funds, Brown Advisory Mortgage Securities Fund received a Morningstar Rating of 3 stars, 4 stars and 4 stars for the three, five and ten-year periods, respectively.​ 

1Fund net assets provided by U.S. Bank and are as of the last day of the quarter and include all share classes. ​ 

FactSet® is a registered trademark of FactSet Research Systems, Inc.​ 

Advent Portfolio Exchange® is a registered trademark of Advent Software, Inc​ 

The Brown Advisory Funds are distributed by ALPS Distributors, Inc. 1290 Broadway, Suite 1100, Denver, CO 80203. which is not affiliated with Brown Advisory LLC.

Average Annual Total Returns % (As of Dec 31, 2025)

Share Class Three Months One Year Three Year Five Year Ten Year Since Inception
Investor (BIAZX), Inception: 12/26/2013 1.51 7.98 4.50 0.33 1.81 2.03
Bloomberg Mortgage Backed Securities Index 1.71 8.58 4.90 0.15 1.59 1.97
Gross Expense Ratio: 0.51% (Investor), 0.46% (Institutional).
Net Expense Ratio: 0.51% (Investor), 0.46% (Institutional).

The benchmark index shown represents the Fund's performance benchmark index, which is different from the Fund's regulatory benchmark index. The Fund’s regulatory benchmark index is the Bloomberg Municipal Bond Index and it is included in the Fund's prospectus. The Fund’s prospectus can be obtained by contacting the Fund at 1-800 645-3923 or by visiting the Fund’s website.​


​Source: U.S. Bank. Performance data quoted represents past performance and is no guarantee of future results. Performance for periods greater than one year is annualized. Current performance may be lower or higher than the performance data quoted. Investment return and principal value will fluctuate so that an investor's shares, may be worth more or less than original cost. Performance for other share classes will vary. For the most recent month end performance, please call 1-800-540-6807.

 
Mutual fund investing involves risk. Principal loss is possible. Past performance is no guarantee of future results. ​ 

Carefully consider a fund’s investment objectives, risks, charges and expenses before investing. Click here for a current prospectus and click here for a current SAI. Please read and consider it carefully before investing. You may obtain a hardcopy of the prospectus by calling 1-800-540-6807.​ 

Click here for index and financial term definitions​ 

Diversification does not assure a profit, nor does it protect against a loss in a declining market.​ 

The information provided 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.​ 

Mortgage-backed securities (MBS) are bonds secured by a mortgage or collection of mortgages. Diversification does not assure a profit nor protect against loss in a declining market. Investing involves risk. Principal loss is possible. Investors should consult a tax professional for advice and information concerning the tax features of mortgage backed securities and fixed coupon bonds. Unlike traditional fixed-coupon bonds that pay semiannual coupons, MBS distribute monthly payments of interest and principal, and the coupon amount may vary each month. Because of the general complexity of mortgage-backed securities, and the difficulty that can accompany assessing the creditworthiness of an issuer, they may not be suitable for all individual investors.​ 

Investments in debt securities typically decrease in value when interest rates rise. This risk is usually greater for longer-term debt securities. Investments in Asset-Backed and Mortgage-Backed securities include additional risks that investor should be aware of including credit risk, prepayment risk, possible illiquidity and default, as well as increased susceptibility to adverse economic developments. Certain fixed income securities held by the Fund may be difficult (or impossible) to sell at the time and at the price the Advisor would like. As a result, the Fund may have to hold these securities longer than it would like and may forego other investment opportunities. Issuers may experience an acceleration in prepayments of mortgage loans or other receivables backing the issuers’ fixed income securities when interest rates decline, which can shorten the maturity of the security, force the Fund to invest in securities with lower interest rates, and reduce the Fund’s return. Issuers may decrease prepayments of principal when interest rates increase, extending the maturity of a fixed income security and causing the value of the security to decline. Investing involves risk. Principal loss is possible. Investors should consult a tax professional for advice and information concerning the tax features of mortgage backed securities and fixed coupon bonds.​ 

©2025 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. Morningstar Rating™ is a trademark of Morningstar, Inc. Morningstar Rating™ is for the Investor share class only; other classes may have different performance characteristics. “The Morningstar Rating™ for funds, or “star rating”, is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product’s monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating™ for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating™ metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.” Brown Advisory Mortgage Securities Fund was rated against the following numbers of U.S. domiciled Government Mortgage-Backed Bond funds over the following time periods: 130 funds in the last three years, 129 funds in the last five years and 111 funds in the last ten years for the period ending 12/31/2025. With respect to these U.S. Government Mortgage-Backed Bond funds, Brown Advisory Mortgage Securities Fund received a Morningstar Rating of 3 stars, 4 stars and 4 stars for the three, five and ten-year periods, respectively.​ 

1Fund net assets provided by U.S. Bank and are as of the last day of the quarter and include all share classes. ​ 

FactSet® is a registered trademark of FactSet Research Systems, Inc.​ 

Advent Portfolio Exchange® is a registered trademark of Advent Software, Inc​ 

The Brown Advisory Funds are distributed by ALPS Distributors, Inc. 1290 Broadway, Suite 1100, Denver, CO 80203. which is not affiliated with Brown Advisory LLC.

Top 10 Portfolio Holdings

(As of Dec 31, 2025)

Name Percentage
First American Government Obligations Fund, 3.66% 8.1
FNCL 2 1/21, 2.00% 4.9
FNMA TBA 30YR TBA 3.50% FEB, 3.50% 3.3
Fannie Mae or Freddie Mac, 3.00% 1.8
Fannie Mae or Freddie Mac, 4.00% 1.8
Total 19.8%

Source: U.S. Bank. Portfolio holdings include cash and equivalents and are subject to change at anytime. The information provided in this material is not intended to be and should not be considered tobe a recommendation or suggestion to engage in or refrain from a particular course of action or tomake or hold a particular investment or pursue a particular investment strategy, including whether ornot to buy, sell, or hold any of the securities mentioned. It should not be assumed that investments insuch securities have been or will be profitable. Numbers may not total due to rounding.​ 

Mutual fund investing involves risk. Principal loss is possible. Past performance is no guarantee of future results. ​ 

Carefully consider a fund’s investment objectives, risks, charges and expenses before investing. Click here for a current prospectus and click here for a current SAI. Please read and consider it carefully before investing. You may obtain a hardcopy of the prospectus by calling 1-800-540-6807.​ 

Click here for index and financial term definitions​ 

Diversification does not assure a profit, nor does it protect against a loss in a declining market.​ 

The information provided 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.​ 

Mortgage-backed securities (MBS) are bonds secured by a mortgage or collection of mortgages. Diversification does not assure a profit nor protect against loss in a declining market. Investing involves risk. Principal loss is possible. Investors should consult a tax professional for advice and information concerning the tax features of mortgage backed securities and fixed coupon bonds. Unlike traditional fixed-coupon bonds that pay semiannual coupons, MBS distribute monthly payments of interest and principal, and the coupon amount may vary each month. Because of the general complexity of mortgage-backed securities, and the difficulty that can accompany assessing the creditworthiness of an issuer, they may not be suitable for all individual investors.​ 

Investments in debt securities typically decrease in value when interest rates rise. This risk is usually greater for longer-term debt securities. Investments in Asset-Backed and Mortgage-Backed securities include additional risks that investor should be aware of including credit risk, prepayment risk, possible illiquidity and default, as well as increased susceptibility to adverse economic developments. Certain fixed income securities held by the Fund may be difficult (or impossible) to sell at the time and at the price the Advisor would like. As a result, the Fund may have to hold these securities longer than it would like and may forego other investment opportunities. Issuers may experience an acceleration in prepayments of mortgage loans or other receivables backing the issuers’ fixed income securities when interest rates decline, which can shorten the maturity of the security, force the Fund to invest in securities with lower interest rates, and reduce the Fund’s return. Issuers may decrease prepayments of principal when interest rates increase, extending the maturity of a fixed income security and causing the value of the security to decline. Investing involves risk. Principal loss is possible. Investors should consult a tax professional for advice and information concerning the tax features of mortgage backed securities and fixed coupon bonds.​ 

©2025 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. Morningstar Rating™ is a trademark of Morningstar, Inc. Morningstar Rating™ is for the Investor share class only; other classes may have different performance characteristics. “The Morningstar Rating™ for funds, or “star rating”, is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product’s monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating™ for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating™ metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.” Brown Advisory Mortgage Securities Fund was rated against the following numbers of U.S. domiciled Government Mortgage-Backed Bond funds over the following time periods: 130 funds in the last three years, 129 funds in the last five years and 111 funds in the last ten years for the period ending 12/31/2025. With respect to these U.S. Government Mortgage-Backed Bond funds, Brown Advisory Mortgage Securities Fund received a Morningstar Rating of 3 stars, 4 stars and 4 stars for the three, five and ten-year periods, respectively.​ 

1Fund net assets provided by U.S. Bank and are as of the last day of the quarter and include all share classes. ​ 

FactSet® is a registered trademark of FactSet Research Systems, Inc.​ 

Advent Portfolio Exchange® is a registered trademark of Advent Software, Inc​ 

The Brown Advisory Funds are distributed by ALPS Distributors, Inc. 1290 Broadway, Suite 1100, Denver, CO 80203. which is not affiliated with Brown Advisory LLC.