Brown Advisory Growth Equity Fund

Scorecard
3 / 5 Stars
Lipper
2 2 4 5 5
Zacks Investment Research
5 (Strong Sell)
Standard & Poor's
3 / 5 Stars
TheStreet.com
C- (Hold)

U.S. News evaluated 464 Large Growth Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.

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Note: Profile written for different share class.

Performance

The fund has returned 18.02 percent over the past year, 11.88 percent over the past three years, 18.58 percent over the past five years, and 8.34 percent over the past decade.

Trailing Returns Updated 06.30.2014
Year to date 1.5%
1 Year 18.0%
3 Years (Annualized) 11.9%
5 Years (Annualized) 18.6%
10 Years (Annualized) 8.3%

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Summary

Most of the companies in the portfolio are recognizable: think Google, Apple, and Costco. But name recognition isn’t everything—above all, the price has to be right for the fund managers to bite. Although the fund is categorized as large-cap growth, manager Kenneth Stuzin also pays attention to stock valuation.

As of July 03, 2014, the fund has assets totaling almost $2.79 billion invested in 33 different holdings. Its portfolio consists of large-cap domestic stocks with smaller amounts of international holdings.

Fund managers took advantage of rock-bottom prices during the financial crisis and snapped up what they describe as “high-quality companies at bargain-basement prices.” Big winners for the fund over the past year include Intuitive Surgical, a healthcare firm that develops surgical robots; Salesforce.com, a subscription-based business software distributor; and NetApp Inc., a computer storage and data management company. Two of the fund’s worst performers, ABB and Amphenol, are some of the newest acquisitions, but fund manager Kenneth Stuzin plans to hold on to the faltering stocks for now and says he’s even increased his stakes a bit as of early October 2010. He’s betting on ABB, a leader in the energy industry, to rally as it grows to meet increasing demands for electricity in emerging economies. The fund has returned 18.02 percent over the past year and 11.88 percent over the past three years.

This fund maintains a fairly concenctrated portfolio of just a few dozen stocks. Since its 1999 inception, the fund has fared moderately well, beating the S&P 500 and its category over the past decade. The fund has returned 18.58 percent over the past five years and 8.34 percent over the past decade.

Investment Strategy

This large-growth fund seeks capital appreciation by investing in large-cap domestic growth stocks. According to the fund’s annual report, managers look for companies that have large and growing revenue opportunities—at least a 14 percent quarterly annualized growth rate or better—for a unique product or service. The fund generally has a lower turnover rate than the category average, which indicates the fund’s longer-term investment horizon of about four to five years. “We’re not thematic investors. This is a stock picker’s fund,” manager Kenneth Stuzin says. Stuzin also relies on what he calls “Darwinian capitalism” and says that for every new name the fund ushers in, a preexisting holding is sold. “One in, one out forces us to focus,” Stuzin says. “People tend to focus on things that demand their attention—stocks that go up a lot and stocks that go down a lot. But stocks that are cruising along, if we don’t focus on those they can create tomorrow’s fundamentally-driven problems.”

Role in Portfolio

Morningstar has not assigned a role to this fund.

Management

Kenneth Stuzin chairs a committee of analysts responsible for managing the fund. Prior to joining Brown Advisory in 1996, Stuzin was vice president and U.S. large-cap portfolio manager at J.P. Morgan Investment Management.

Fees

Brown Advisory Growth Equity Fund has an expense ratio of 1.15 percent.

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Risk

A large equity share concentrated in about 30 to 35 names in select sectors makes the fund more susceptible to market volatility.

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