fund

Rated

This is one of our rated funds. They’re the ones our experts believe will do well for investors over the longer term. Top of the class!

Brown Advisory US Sustainable Growth B GBP

A US large-cap equity fund, which incorporates sustainable screening.

  • 1824.00p
    Price (Inc)

    These are the shares in the fund that pay out an income to clients. The income is made up of the total dividends – the money a company can pay out to its investors – from the companies in the fund.

  • 1824.00p
    Price (Acc)

    These are the shares in the fund that don’t pay out an income to clients. Any dividends – the money a company can pay out to its investors – are reinvested into companies in the fund. Despite no income, the shares should be worth more over time. Good incentive, eh?

  • 0.00%

    Initial charge

    Some funds charge you when you first invest, which is aptly known as the initial charge. They’re usually between 3-5% but at Bestinvest, we usually don’t charge you a penny!

  • 0.75%
    Annual management charge

    This is how much the fund management company charges to run the fund. It’s like paying a babysitter, dog sitter or house sitter (that makes well-informed, heavily researched changes to improve your baby/dog/house when needed).

  • 0.90%
    Ongoing charges

    This stands for Ongoing Charges Figure. It’s the cost of running a fund and includes admin fees, manager fees, administration costs, etc.

  • 0.30%
    Yield

    How much the fund is currently paying out in income to investors. It’s NOT to be confused with the overall growth of a fund – a very different thing indeed. It’s also NOT a guarantee of future pay-outs, just a snapshot. This is more what it’s not than what it is…

Prices as at 25 May 2020, fund data last updated 23 August 2019

The objective of this fund is long-term outperformance of the Russell 1000 Growth index and peer group via a concentrated portfolio of US companies with outstanding business models and sustainability drivers. Brown Advisory believes that sustainable business advantages can drive attractive long-term revenue growth, cost reduction and enhance franchise value. The fund process incorporates a negative exclusion screen and their fundamental stock research incorporates ESG. The screen excludes companies that derive the majority of their revenues from alcohol, gambling, pornography, tobacco, military equipment, fossil fuels and use animal testing for non-medical purposes.

Fund summary

Sector North America
Structure OFFSHORE FUND
Launched August, 2017
Size £532m
Yield 0.30%
Charging basis Income
Dividends paid November

Charges

Standard initial charge 0.00%
Initial charge via Bestinvest 0.00%
Additional bid/offer spread 0.00%
Annual management charge 0.75%
Ongoing charges figure 0.90%

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Investment process

The investment process of this fund is five steps focused on bottom-up, fundamental stock selection. Step 1 is idea generation. The investable universe is more than 1,000 companies listed on US exchanges (including ADRs) that have a market cap over $2 billion and pass the ethical screens highlighted. They generally seek companies with durable business models whose historical earnings growth rate exceeds that of the benchmark. Approx. 80 new ideas are approved for more detailed research each year. Step 2 is detailed due diligence. The managers and analysts assess the fundamental risks of a company – a quantitative and qualitative approach. They look for experienced management teams and companies with competitive business advantages, before building a buy side/ downside valuation framework. Stage 3 is the decision process. Once the investment thesis has been finalised, approximately 20-30 companies are taken forward for group discussion. The range in the company’s valuation model (best case and worst case) versus the current share price guides final portfolio decisions - this helps mitigate emotions from investment decisions. They then back test companies against the exclusion screens again to avoid certain controversial business involvement. Step 4 is portfolio management. Typical position size is 1%-5%, which will be reflective of analyst and manager conviction of sector and stock, based on the bottom-up scenario projections, current valuation versus their model, event driven considerations. They describe themselves as sector agnostic, but strive for economic balance and diversification. They have a long-term ownership philosophy so focus on heavy up-front research to identify positions, with self-imposed one in one out portfolio management discipline and portfolio optimisation focused on matching position sizes to upside/ downside profiles. Step 5 is ongoing monitoring and sell discipline. There are four main reasons why they sell a stock: 1) Fundamental breakdown - growth drivers do not materialise or strategy/ management change. 2) Breakdown of sustainability advantages or ESG risks appear. 3) Valuation becomes excessive. 4) Alternative opportunities offer more compelling growth – most common.

Brown Advisory is an experienced and specialist US equity boutique that is highly regarded for its bottom-up analysis and performance. This fund is part of a mirror strategy, which has been run in the US since 2009, and has one of the longest track records in the US ESG/Sustainable peer group. The investment style for this highly concentrated portfolio is very growth orientated, which will result in performance that reflects those growth orientated sectors such as technology. We view the fund as mid-green on the ethical and sustainable investing scale.

Manager research

Average monthly relative returns

  • 15/16 0.56%
  • 16/17 0.06%
  • 17/18 0.58%
  • 18/19 0.64%
  • 19/20 0.00%

Bestinvest MRI

  • 3 years 0.00%
  • 5 years 0.00%
  • Career 0.35%
  • 3 years 0.00%
  • 5 years 0.00%
  • Career 98.90%

Performance figures are based on the average of monthly percentage returns relative to the benchmark index.

Karina Funk/ David Powell

Karina Funk, CFA, is a portfolio manager and Head of Sustainable Investing at Brown Advisory. Funk joined Brown Advisory in 2009 and has extensive environmentally-oriented investment experience spanning early-stage ventures to debt and public equities. She was previously an equity research analyst for Winslow Management Co, a principal at Charles River Ventures, and an investment manager at the Massachusetts Renewable Energy Trust. Funk attended École Polytechnique in France (Postgraduate Diploma,1998), MIT (MS in Civil & Environemental Engineering, 1997 and a MS in Technology & Policy, 1997) and Purdue University (BS in Chemical Engineering, 1994). David Powell, CFA, is a portfolio manager. Powell joined Brown Advisory in 1999 as an equity research analyst with responsibility for identifying and recommending investment opportunities in the industrials and energy sectors. Prior to joining the firm, he held a position in investor relations at T. Rowe Price. He graduated from Bowdoin College (BA, 1997)

Track record

Karina Funk/ David Powell has 7.8 years experience of managing mutual funds in this sector. Over this period the average monthly return relative to the benchmark index has been +0.35%. During the worst period of relative performance (from September 2013 - July 2014) there was a decline of 8% relative to the index. The worst absolute loss has been 10%. Statistically, we estimate the probability that this fund manager is adding value, rather than being lucky, is 99%.

Periods of worst performance

Absolute -10.00% (August 2018 - December 2018)
Relative -8.00% (September 2013 - July 2014)

About the MRI

Our unique indicator: the Bestinvest Manager Record Index (MRI) measures the likelihood that the fund manager is adding value through their decisions. It is based on their performance record over the course of their career, adjusted for the amount of risk taken. MRI is an important contributor to our fund rating system but it is also vital to take account of qualitative factors. It is also very important to select funds to form a cohesive portfolio with an appropriate overall risk level.

Allocation

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Portfolio

30-40 stocks. 1-5% position size. 45-50% in top 10.

Constraints

Ethical screens. Min market cap $2bn. Max 15% in ADRs.

Key Investor Information - Income

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Key Investor Information - Accumulation

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