Fund Profile

Brown Advisory US Smaller Companies 26 November 2021

Disclaimer

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.

Overview
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Overview

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

06 Jul 2024 America for growth, Japan for value
Different investment styles are needed for different regions…
03 Jul 2024 A really great stockmarket, the best, some tell me the best they’ve ever seen
US equities should be the bedrock of any diversified portfolio…
19 Jul 2024 Brown Advisory US Smaller Companies
Chris Berrier
Join this webinar as part of our July online series 'Small caps - take two' hosted by the team at Kepler Trust Intelligence...
calendar Register now
21 Jun 2024 Ready for lift-off?
Managers at our small-cap event discuss the potential for smaller companies…
07 Jun 2024 Monthly round-up of investment trust news - #1
Jo and Ryan discuss the latest news in the investment trust world...
20 Jun 2024 Brown Advisory US Smaller Companies
Chris Berrier
Join this webinar as part of our week-long June online series 'Small caps - a lost decade' hosted by the team at Kepler Trust Intelligence...
29 May 2024 It’s a small world after all
A recent rally in smaller companies could be the start of a long-term recovery…
20 May 2024 Investing in US small-caps with BASC manager Christopher Berrier - Podcast: Trust Issues #31
We discuss opportunities for investors in the US small-cap sector with BASC manager Christopher Berrier...
14 May 2024 Playing the long game
Why BASC is well-positioned for the turning point in US small-caps…
09 Feb 2024 A bigger slice of pecan pie
The US deserves a higher allocation by UK investors, with BASC well-positioned to take advantage of depressed small-cap valuations…
03 Jan 2024 Probably better asking an octopus
Our investment trust experts uncurl a tentacle each and choose their ‘top picks’ for 2024…
22 Dec 2023 Is greed good?
With the Fear and Greed Index ending the year on a high, is investor optimism justified…?
08 Dec 2023 Fund Analysis
BASC’s manager believes low valuations may offer a starting point for long-term outperformance…
06 Dec 2023 Investing in US small caps with investment trusts
Closed-ended funds provide a simple way to access US smaller companies...
21 Sep 2023 Results analysis: Brown Advisory US Smaller Companies
BASC has outperformed its benchmark since Brown Advisory took the helm in 2021, but US smaller companies remain undervalued…
06 Sep 2023 You should be dancing…
North America should be a core part of any portfolio…
28 Jul 2023 It’s Déjà vu all over again
US stocks continue to trade at high valuations. Is that warranted and are there other options for investors looking to get exposure to the world’s largest economy?
19 Jul 2023 Simply the Best
Investing in high quality companies was a successful strategy for many years, but has its time passed?
12 May 2023 By the dawn’s early light
Could the news that inflation fell in the US in April herald a brighter outlook for investors?
05 Apr 2023 The opportunity in struggling smaller companies
As smaller companies valuations struggle, Brown Advisory US Smaller Companies' risk-aware approach to growth investing looks timely…
27 Feb 2023 Fund Analysis
BASC: small cap quality growth in the world’s largest equity market...
25 Nov 2022 Investing in small caps? Don’t pick up any cigarette butts
Value may be in vogue but it’s ultimately growth that delivers returns for shareholders…
29 Sep 2022 Results analysis: Brown Advisory US Smaller Companies
BASC’s managers took advantage of falling markets, in a tough year for small caps…
28 Sep 2022 Mind the gap
While chaos reigns in the short-term for markets, some investors see a growing disconnect between prices and reality...
28 Sep 2022 Slides and Audio: Brown Advisory US Smaller Companies
Download the presentation and listen to the audio from our 'Growth at an unreasonable price' event from 21 September...
07 Sep 2022 American muscle
Beating US indices is a monumental task. We examine the closed- and open-ended North American sectors to see how they have fared…
31 Aug 2022 Growth at an unreasonable price
Growth has taken a beating as inflation fears have soared, but the tide may be turning and we have six speakers at our next event ready to tell us why…
04 Aug 2022 Keeping to quality
BASC’s approach looks well set up to support small cap investors in tough times…
01 Jul 2022 Fund Analysis
BASC’s wide discount could prove an interesting long-term entry point…
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..
View all

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Current Site Kepler Trust Intelligence is produced by the investment companies team at Kepler Partners and is the UK’s premier source of detailed qualitative research on investment trusts. Absolute Hedge is a market leading UCITS research database providing proprietary research on funds, themes and strategies in the UCITS space. Kepler Liquid Strategies is a Dublin domiciled UCITS fund platform featuring a number of best-of-breed fund managers. Kepler Partners is a corporate advisory and asset raising boutique specialising in the regulated funds market in Europe and investment trusts in the UK.