Fund Profile

Brown Advisory US Smaller Companies 26 November 2021


This is a non-independent marketing communication commissioned by Brown Advisory. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

BASC has performed strongly under its new manager…

Brown Advisory US Smaller Companies (BASC) has made a strong start to its life under the new portfolio manager. Chris Berrier of Brown Advisory was named the new manager in late 2020, and management responsibilities transitioned on 1 April 2021 following the retirement of Jupiter’s Robert Siddles. As we discuss under the Performance section, the trust has outperformed under the new strategy, despite choppy markets.

Chris’s strategy uses bottom-up analysis to select the best long-term growth opportunities in the US small cap universe. His goal is to find companies with durable earnings, strong governance and good operational gearing and allow them to compound over time. As a result, Chris has constructed a portfolio of high-quality growth companies which should also perform well on the downside relative to the small cap universe – an ‘all-weather portfolio’ in Chris’ phrase.

If the proof of the pudding is in the eating, then the historic track record of the strategy in the open-ended space is one of strong outperformance and lower risk than the market. Since launch in 2007, the Brown Advisory US Smaller Companies UCITS fund that Chris manages has generated 2.25% of alpha per annum versus the Russell 2000 Growth Index (the open-ended fund benchmark), also outperforming the Russell 2000 Index (the benchmark of the trust).

Despite its recent outperformance and strong pedigree, BASC’s discount widened over the summer, and it was one of the cheapest trusts in the North America and North American Smaller Companies sectors until a rally in the shares brought the discount in to 1.9% as of 23/11/2021.

Analyst's View

This looks like a great opportunity to get access to a premium strategy in an area of high growth potential on a small discount to NAV. Chris’s track record in the open-ended space is impressive, particularly given the difficulty of generating outperformance in the US market, which has long been documented. His success seems based on a repeatable process, with a clear definition of the sort of company in which he seeks to invest.

Chris has been helped by a stylistic tailwind for most of his tenure as a portfolio manager, with growth outperforming value. However, it is notable that he has outperformed the growth index as well as the style-neutral index during this period. In fact, in periods over the past two years it has been lower quality growth companies which have outperformed, including early-stage companies and more speculative business models – areas he typically avoids. In addition, since taking over management, the trust has also successfully dealt with a value rally – another headwind. BASC’s strategy will also come into its own when the market favours quality growth. We think this could be a feature of the post-pandemic markets now the euphoria of the reopening trade has worn off and economies have to rebuild. Notably quality outperformed globally in the aftermath of the 2007/2008 crisis.

bull bear
Excellent long-term track record in a tough market for active managers
Stylistic tilt to growth could lead to underperformance if value outperforms
One of few trusts to focus on a high growth market with lots of long-term secular growth stories
Small-caps could underperform if the US enters a recession
Discount could represent good long-term entry point
Trust does not pay a dividend
Continue to Portfolio

Fund History

17 Mar 2022 It's the end of the world as we know it
We examine five potential themes for investors seeking long-term returns in a troubled and uncertain world...
26 Nov 2021 Fund Analysis
BASC has performed strongly under its new manager…
17 Nov 2021 How Do You Like Them Apples
Judging whether the US market is expensive is not as easy as many make it out to be…
02 Nov 2021 Results analysis: Brown Advisory US Smaller Companies
BASC has made a solid start under the new manager, generating significant outperformance….
06 Oct 2021 Slides and Audio: Brown Advisory US Smaller Companies
Download the presentation and listen to the audio from our 'Now that's what I call a discount!' Autumn conference on 30 September...
29 Sep 2021 Quick out of the blocks
Following a change of management earlier this year, Brown Advisory US Smaller Companies has recorded a strong start under its new leadership. Here, we profile some of the companies that have driven this momentum…
23 Sep 2021 Now that's what I call a discount 2021!
For the second year running we examine trusts on discounts which, in our view, don't make sense...
15 Sep 2021 Bargains galore
We review our discounted opportunities portfolio, with one constituent rallying more than 30% in just two months…
24 Jun 2021 Sizing up US smaller companies
Knowledge is power when it comes to investing in US smaller companies. In this article we examine the way US asset manager Brown Advisory leverages its networks to gain an informational advantage…
18 May 2021 Allow us to reintroduce ourselves
Following a bold decision by its board, Jupiter US Smaller Companies is now known as Brown Advisory US Smaller Companies. Here, we introduce the new manager and explore the US based firm’s stellar track record in the space…
30 Apr 2021 Slides and Audio: Jupiter US Smaller Companies
Our research team at Kepler Trust Intelligence hosted a Q&A webinar with Chris Berrier, the new lead manager of the trust at Brown Advisory...
28 Apr 2021 Fund Analysis
JUS’s new manager brings a new strategy, and scope for the discount to narrow…
22 Apr 2021 FAANGs for the memories
The massive outperformance of mega-cap tech last year could become a thing of the past if anti-trust legislation and negative sentiment starts to bite...
09 Dec 2020 Flash update: Jupiter US Smaller Companies
Brown Advisory has been appointed to manage Jupiter US Smaller Companies, utilizing their small cap growth strategy…
14 May 2020 Sea change
While global giants like Amazon still hold the weather gauge, we examine the long term prospects for a shift in the prevailing wind...
11 Sep 2019 Nanny knows best: how regulation is influencing returns
New research suggests disruption is threatened by increased regulation, with clear consequences for investment strategists...
14 May 2019 Fund Analysis
Jupiter US Smaller Companies Trust, run by Robert Siddles for the past 18 years, looks to invest in the areas of the market that lacks positive sentiment...
31 Oct 2018 The Trump effect
Two years after the shock election of Donald Trump, we take a look at what the Trump administration has really meant for US markets and the trusts that invest in them...
30 Oct 2018 Fund Analysis
Performance has been dull over the medium term, however, 2018 has seen an extraordinary turnaround for the trust...
26 Apr 2018 Fund Analysis
Jupiter US Smaller Companies (JUS) aims to achieve long-term capital growth for shareholders from a diversified portfolio primarily of quoted US smaller and medium-sized companies..
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