How’s That Working? Brown Advisory’s Investing Plays in Focus


Jul. 28 2016, Updated 9:08 a.m. ET

Performance evaluation of the Brown Advisory WMC Strategic European Equity Fund

The Brown Advisory WMC Strategic European Equity Fund Investor Shares (BIAHX) has fallen 1.5% YTD (year-to-date). However, it’s still placed third in the group of 12 funds chosen for this review.

Across all periods plotted in the graph above, the fund is placed among the top three in its peer group. We’ve graphed its performance against the Vanguard FTSE Europe ETF (VGK) and the iShares MSCI Eurozone ETF (EZU).

Let’s look at what has contributed to the fund’s superior performance YTD.

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Contribution to returns

Financials, which forms 12% of BIAHX’s portfolio, has emerged as the biggest negative contributor to the fund’s returns YTD. UBS Group (UBS) has led the negative contributors, which include Prudential (PUK) and Julius Baer Group. There have been no positive contributors.

Consumer discretionary, which also makes up 12% of the fund’s assets, has been a distant second to financials in terms of negative contributions. Switzerland-based luxury goods company Compagnie Financière Richemont has contributed the lion’s share to the sector’s poor showing. Had it not been for Compass Group, the sector would have fared even more poorly.

Industrials, the fund’s most invested sector, has done the most to reduce the drag on the fund. Finnish escalator and elevator maker Kone Oyj has been the highest positive contributor from the sector and has had help from Swiss company Geberit and Danish transportation company DSV.

Consumer staples is a close second to industrials. British American Tobacco (BTI) had led the sector, with positive contributions coming from Heineken (HEINY) and L’Oréal (LRLCY).

Investor takeaway

The unique sectoral composition of BIAHX has worked for the fund. Though it’s in the red YTD, it has far outperformed the passively managed SPDR EURO STOXX 50 ETF (FEZ). Except for materials and information technology stocks, the fund’s stock picks have done better than those making up FEZ. This speaks to the stock-picking ability of the fund’s management.

While existing investors will likely want to persist, new investors may want to have this fund on their radar. If its unique position is a bit unnerving, investors can invest in BIAHX in tandem with a passive fund.

From BIAHX, let’s move to the next fund under review, the Fidelity Advisor Europe Fund Class A (FHJUX).


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