Overview
The Brown Advisory Global Leaders Fund seeks to achieve long-term capital appreciation by investing primarily in global equities. The Fund seeks to own leading global companies in any sector or country that the portfolio managers believe are capable of compounding excess economic returns over time, by following a fundamental, bottom-up, research intensive investment selection process.
At the heart of our approach is the belief that high-quality companies that deliver superior outcomes for their customers, have strong leadership positions and high return on invested capital (ROIC) can generate outstanding shareholder returns for investors. We look to purchase these companies at discounts to intrinsic value for our clients.
Our investment philosophy is grounded in the following principles:
A 2-Step Investment Process:
We employ two distinct processes when investing: investment selection and capital allocation. Most investment managers focus on the investment side, or the “treasure hunt,” but we have seen that spending equal time on determining how much capital to put behind each investment can be a significant contributor to performance over time.
As long-term investors we want to own businesses that compound their attractive economics long into the future. We find such businesses in companies that do something special for their customers and those which are dominant players in their industries, with the potential to generate high and sustainable returns on invested capital.
Our capital allocation process in turn is repeatable and built to help us to put the most capital behind our highest conviction positions. To be most effective in doing so we also use a behavioral coach to help us address human biases in decision making.
A Capital Preservation Mindset:
As investors, we firmly believe in the importance of self-improvement. This is demonstrated within our capital allocation process through our work with a team of behavioral coaches who provide reflection and insights into our investment process. This helps us to unearth any systematic behavioral biases we may be exhibiting.
We have spent a considerable amount of time thinking about how human behavior can damage our clients’ capital and how we can create a repeatable process to increase investment skills by minimizing the negative outcomes of behavioral biases.
The goal of including behavioral analysis is to systematically improve skills by avoiding bias pitfalls and explicitly avoiding losers.
Sustainable Investment Research:
We believe that sustainable investing is inseparable from business opportunities and risks. Sustainable investment research is integral to our investment strategy and helps us to find companies that align with our investment philosophy. Our research process enables us to identify high-quality businesses that are using sustainable investing to drive competitive advantages and manage risks effectively over time. We therefore integrate the views of our research analysts, specialized in sustainable investment research, at every step of the investment process with the intention of improving performance and mitigating risk.
In seeking to identify companies focusing on sustainable business practices to drive their competitive advantages, we look for companies with Sustainable Business Advantages (SBAs). Specifically, we look for SBA drivers that can potentially improve a company’s performance over time by (1) growing revenues faster than peers, (2) reducing cost and hence improving margin structure, and (3) enhancing franchise value (such as brand strength or customer loyalty).