Brown Advisory, an independent and privately held global investment management firm which oversees more than USD80 billion in client assets, is marking 10 years since the launch of its Large-Cap Sustainable Growth strategy.The USD3.6 billion long-only, equity growth Strategy managed by Karina Funk, CFA, and David Powell, CFA, has been one of Brown Advisory’s best performing strategies relative to its benchmark and category peers since inception, returning 16.6 per cent over 10 years compared to 15.2 per cent for the benchmark Russell 1000 Growth Index. The Strategy also outperformed the benchmark over the three-year and five-year periods. While assets in the Strategy more than doubled in 2019, the Dublin-UCITS fund for the Strategy almost tripled assets in 2019 to over USD450 million today and will mark its three-year track record in April 2020.
Logie Fitzwilliams, Head of International Business at Brown Advisory, says: “We are thrilled to see the Strategy pass this impressive 10-year milestone. This April will also mark three years since we launched our Dublin-UCITS Fund to enable our clients in the UK and Europe to access the Strategy. Over the past 12 months we have witnessed a material increase in demand for sustainable investment strategies from investors globally and we look forward to using our extensive experience in this space to work with private and institutional clients over the coming years.”
The Strategy’s investment approach seeks to identify and invest in companies that possess “Sustainable Business Advantages” (SBA) – a proprietary term for sustainability drivers that directly benefit financial performance through the combination of: revenue growth, cost improvement and enhanced franchise value.
Some of the most attractive, durable business models in the large-cap equity universe are those with sustainable drivers at their core. For many companies, a focus on energy efficiency, health and/or wellness has driven considerable sources of revenue growth. Others have evolved their operations to reduce the use of energy, water and other resources and generated considerable cost savings. SBA also considers those companies that are able to greatly enhance their brand or franchise value by helping customers solve meaningful social and environmental challenges.
It is through the combination of these levers that companies can improve their long-term returns to shareholders. Brown Advisory believes that this approach to invest in companies with outstanding business models, compelling valuations and SBAs gives the Strategy a distinct competitive advantage and drives its outperformance.
Drawing on more than two decades of experience and expertise in sustainable investing, Brown Advisory has considerably expanded its range of strategies as it continues to develop sustainable solutions for clients across a range of asset classes. This includes other equity strategies such as the recently launched Global Leaders Sustainable UCITS Fund, U.S. fixed income strategies and active ESG strategies that deliver customised solutions to clients that reflect their specific values.
Karina Funk, Co-Portfolio Manager of the Strategy and Head of Sustainable Investing at Brown Advisory, says: “We are long-term investors and as such, we feel honoured to reflect on the 10-year anniversary of our Large-Cap Sustainable Growth Strategy. We are pleased to have demonstrated that there does not have to be a trade-off between strong performance and smart investments that help address some of our society’s trickiest sustainability challenges. We remain eager and hungry to improve our ability to use a sustainability lens to add value to fundamental research and active management. We are also thankful to be working alongside phenomenal colleagues who insist on helping clients generate attractive investment returns while also achieving important environmental and social goals. At Brown Advisory, we expect to embark on another decade of developing solutions to investors’ growing demands for sustainable investing across all asset classes.”
David Powell, Co-Portfolio Manager of the Strategy at Brown Advisory, says: “We believe in the power of active portfolio management, which sets a high bar for each company in our portfolio to have compelling business models and sustainability drivers. Our investment approach relies on very deep, bottom-up fundamental research. The primary driver of our returns over the past 10 years has been our willingness to do this work to gain high conviction on a company’s fundamentals and sustainable business advantages, and own sizeable positions in a concentrated portfolio. We are proud that this approach has delivered attractive returns to investors for the past ten years.”