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Equities Fixed Income External Managers Private Equity and Real Estate Sustainable Investing

Equities

We follow a philosophy that low-turnover, concentrated portfolios derived from sound bottom-up fundamental research provide an opportunity for attractive performance results over time. We have a culture and firm equity ownership structure that help us attract and retain professionals who share those beliefs, and we follow a repeatable investment process that helps us stay true to our philosophy.

Brown Advisory Equity Strategies

Fixed Income

We follow a philosophy that fixed income strategies built from a foundation of stability coupled with fundamental credit research can seek to generate alpha and control risk. We have a culture and firm equity ownership structure that attract and retain professionals who share those beliefs, and we follow a repeatable investment process that helps us stay true to our philosophy.

Brown Advisory Fixed Income Strategies

External Managers

Investment Solutions Group

The Investment Solutions Group is an investment-management team within Brown Advisory that specializes in asset allocation, manager selection, hedge funds and other alternative investment strategies. Dedicated to open-architecture solutions, our team has established a strong track record of identifying high-quality, third-party investment managers across the hedge fund, long-only and private equity universes. We leverage this expertise to help clients assemble portfolios that we believe best fit their needs and goals, offering clients a range of solutions from complete portfolio management to fulfillment of specific hedge-fund and alternative-asset mandates.

Private Equity and Real Estate

Private Equity and Real Estate

Brown Advisory has incorporated private equity and real estate investments in client portfolios since our founding. Today, we can provide that exposure in three distinct ways.

Feeder Funds and Multimanager Funds
We introduce clients to investment opportunities in early- and late-stage venture capital and buyout funds, as well as select real estate funds. We also construct these feeder funds into multimanager funds through our Private Equity Partners (PEP) and Real Estate Partners (REP) vehicles to make private equity investing as easy as possible for our clients.

Customized Private Equity Portfolios
For most clients, private equity is one component of a balanced portfolio that we manage. Other clients, however, come to us specifically for custom-built private equity and real estate portfolios.

Sustainable Investing

Sustainable Investing Strategies

  • Multi-Manager Strategies
  • For clients seeking an open-architecture solution, we have access to several of the premier sustainable managers in the industry - all vetted by internal research.
  • Private Equity
  • Our private equity team is focused on evaluating the growing universe of private impact investments to identify standout opportunities that target various issues of particular concern to our clients. To date, we have placed assets in investments targeting a variety of impact themes such as community impact, microfinance, education technology, sustainable real estate, water initiatives and others.*
  • *Many alternative investments by regulation may only be sold to Accredited Investors (institutions with at least $5 million in assets) or Qualified Purchasers (institutions with at least $25 million in investments).

Customized Portfolios

This diverse assortment of solutions will meet many clients’ sustainability objectives; however, we understand the continued evolution of this space and seek to be able to react quickly to client needs.

For clients with unique missions, value-aligned investing programs, or who simply wish to ensure that they do not own certain controversial companies or have access to certain industries, we offer the following customized options:

Additional Screening: To the extent we have reliable data and can build rules into our compliance systems, we can add specific screens to a separate account to restrict companies (e.g. oil and gas providers) or industries (e.g. tobacco or weaponry).

Customized and Thematic Portfolios: Within a separate account, we can work together to solve for a sustainability need. From a universe of securities researched from both the bottom-up and for their ESG profile, we can assemble a custom portfolio of securities designed to meet many specific sustainable goals or outcomes.

Investment Insights and Thoughts from Brown Advisory
Fixed Income The Fed Meeting: It’s All about Expectations
Thomas Graff, CFA
June 14, 2018

On Wednesday, the Federal Open Market Committee concluded its June meeting. There was a lot to digest: Another 25bp rate hike, clearer signals about two more hikes in 2018, a new set of economic projections, and Fed Chairman Powell’s press conference. Here are some of our team’s initial thoughts.

The rate hike was no surprise

This rate hike was widely expected. Before the meeting, most investors also foresaw another hike in September, and were split on another in December. Now, expectations will likely solidify around two more hikes this year.

To state the obvious, market prices are based on expectations. We are less concerned about additional Fed rate hikes if they are expected and telegraphed. We are more focused on the Fed’s “reaction function”—in other words, on the events and trends that might disrupt the Fed’s current pattern. What are the intervening events that might interrupt the Fed’s plans—causing them to either halt its hikes or accelerate them?

The “dot plot” shows little change

The Fed’s reaction function is a big reason why the new Summary of Economic Projections (SEP) is worth some additional scrutiny. This report includes the infamous "dot plot," a chart that depicts each FOMC member's view on where the Fed's rate target should be based on his or her economic outlook.

The media often focuses on the median viewpoint among FOMC members, which can shroud the Fed’s broader view. In this report, the median FOMC view on the year-end rate moved from 2.125% (implying three total hikes this year) to 2.375% (implying four). But the shift was due to a single member moving their forecast—all other members’ views were unchanged.

The Fed seems comfortable with inflation trends

Lately, inflation indicators have nudged higher, but Powell did not signal more aggressive hikes to stem inflation. He suggested that the uptick is likely due to transitory factors from 2017 rebounding, and stated that “if we thought inflation would take off, we would be showing higher rates.” The lack of major movement in the dot plot suggests that the committee largely agrees with this view.

Along with consistency, there’s uncertainty

Despite the consistency in messaging this year, there are clearly events that could derail the Fed’s current path. He largely deflected questions on how a bigger deficit, rising corporate leverage or a potential trade war might impact the economy. At the same time, he stated that the Fed was likely nearing a “neutral” rate that is neither stimulating nor constricting the economy.

We need to acknowledge that the Fed may not be able to stay “neutral” and may have to speed up or slow down its trajectory if events unfold in an unexpected way. When you consider that monetary policy is also near neutral, it all adds up to a narrow margin of error for the Fed.

Conclusion: Don’t play the expectations game

Bond investors need to respect that uncertainty may impact interest rates and economic growth. Rather than placing bets on uncertain economic outcomes, we prefer to focus on fundamental credit analysis and remain flexible. Flexible investors can watch for moments when a big consensus swing opens up an attractive entry point for a solid investment.

The views expressed are those of Brown Advisory as of the date referenced and are subject to change at any time based on market or other conditions. These views are not intended to be and should not be relied upon as investment advice and are not intended to be a forecast of future events or a guarantee of future results. Past performance is not a guarantee of future performance and you may not get back the amount invested.

The information provided in this material 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 or asset classes mentioned. It should not be assumed that investments in such securities or asset classes have been or will be profitable. To the extent specific securities are mentioned, they have been selected by the author on an objective basis to illustrate views expressed in the commentary and do not represent all of the securities purchased, sold or recommended for advisory clients. The information contained herein has been prepared from sources believed reliable but is not guaranteed by us as to its timeliness or accuracy, and is not a complete summary or statement of all available data. This piece is intended solely for our clients and prospective clients, is for informational purposes only, and is not individually tailored for or directed to any particular client or prospective client.

AUTHOR

Thomas Graff, CFA

Fixed Income Investment Team