RCS - Brown Advisory US - Results analysis from Kepler Trust Intelligence

Brown Advisory Us Smaller CompaniesAnnouncement

03/10/2025 11:00

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RNS Number : 0247C  Brown Advisory US Smaller Cos. PLC  03 October 2025

Brown Advisory US Smaller Companies (BASC)

03/10/2025

Results analysis from Kepler Trust Intelligence

Brown Advisory US Smaller Companies' (BASC) results for the financial year
ending 30/06/2025 show an NAV and share price total return of -3.7% and -1.0%
respectively, compared to a total return of -0.7% for the benchmark Russell
2000. Sterling investors suffered from a weak dollar, and in USD terms the
Russell 2000 returned 7.7% compared to the sterling return noted above.

BASC's underperformance mainly occurred in the first half of the year, with
speculative and non-profitable stocks not held in the portfolio driving the
benchmark's return. Over the long-term BASC's manager tends to be underweight
in financials, preferring companies with less volatile and more sustainable
earnings. This underweight cost some relative performance during the year as
financials performed relatively well. BASC's overweight positions in
industrials and information technology, and underweight in energy, all made
positive contributions to performance, as did positive stock selection in the
more out of favour healthcare sector.

Kepler View

Clearly recent performance has been disappointing but it's important to note
that the main reason for this is that the stock market has chosen not to
reward compounding growth quality companies, and instead favour high growth
and more speculative businesses, rather than underperformance being explained
by a series of companies with disappointing operational results. The BASC
board has introduced a performance-related tender offer, which will give all
investors the chance to realise their entire holding should performance lag
the benchmark in the five years to the end of June 2028, and this, in our
view, is a more measured way to address underperformance than to force change
on an investment process that, over time, has delivered good performance.

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