This fund was launched in the UK in 2014, and a retail share class in 2016, but a parallel version has been managed by the same team for more than 20 years in the United States. The fund has been run by Maneesh Bajaj since 2017. Its strategy is unconstrained, meaning Maneesh is free to select companies from across the market-cap spectrum. This has enabled the fund to become one of the few to regularly outperform the S&P 500 over long periods of time.
Our opinion
Finding funds with long-term outperformance of the S&P 500 is very difficult and this strategy has been doing just that for more than 25 years. The fund has gone through a successful transition period, giving us confidence this can continue. Supported by a strong team of analysts, the Brown Advisory US Flexible Equity fund has delivered good returns in both up and down markets. A strong candidate for those looking for a core US equity fund.
Company description
Brown Advisory, as it is today, was formed in 1993, but has a 200-year investment heritage and a wide variety of funds offering exposure to the US market. Based in Baltimore and Washington D.C., but with offices elsewhere the US, Brown Advisory opened its London office in 2008. The majority of the company’s 400+ full-time employees own stock in the firm, maximising alignment with client interests.
Fund manager
Maneesh Bajaj took sole control of this fund in 2019, having stepped up to co-manager in 2017. He took over from industry veteran R. Hutchings Vernon (Hutch) who managed the fund strategy for more than twenty years. Maneesh joined the company in March 2006 as a senior analyst. He is also an active member of the technology research team and was previously a strategy consultant at New York-based McKinsey & Co. Maneesh is a CFA charterholder, and is backed by Brown’s team of 21 analysts and fund managers.
Maneesh BajajFund manager
Investment process
As the name suggests, the strategy of this fund is flexible, with a bias to attractive valuations but still looking for growing companies. Maneesh primarily seeks out undervalued medium to large improving businesses, which rewards the fund with good liquidity (ability to buy and sell easily) and decent growth prospects. Maneesh invests in a wide universe of US stocks and the portfolio has a low turnover. Companies with recent management change offer particular appeal.
ESG
ESG - Integrated
Maneesh has access to Brown Advisory’s prominent and growing ESG research team, to help him avoid exposure to material ESG risks. This team gathers its own proprietary information from a variety of sources including company calls, corporate reports, industry journals and expert networks, to identify risks related to ESG factors. These could include excessive pay, environmental issues or data security, for example. This work is then integrated into the stock selection process, aiming to avoid those with excessive ESG risk, as well as identify those that are willing to engage with Brown Advisory to improve their practices.
Risk
Brown Advisory US Flexible equity is likely to underperform if the market becomes too focused on growth stocks, or one specialised area of the market, as the fund will always be more diversified. This was the case in 1999, with the technology boom, and again in 2007 when commodities were strong. The manager's approach tends to result in the fund falling less when markets go down, which offers a cushion for more cautious investors.
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