Brown Advisory Flexible Equity ETF (BAFE)

ETF Overview: Brown Advisory Flexible Equity ETF (BFE)

Profile: BFE is an actively managed, no-load ETF that seeks long-term capital appreciation. It invests across all sectors and market capitalizations in US-listed stocks. The ETF primarily focuses on high-quality companies with strong competitive advantages and a proven track record of growth and profitability.

Objective: BFE aims to achieve long-term capital appreciation by investing in high-conviction, well-researched stocks with the potential to generate superior returns over the long term.

Issuer:

• Name: Brown Advisory
• Reputation: Brown Advisory is a reputable and established investment management firm founded in 1993. It has over $130 billion in assets under management as of June 30, 2023, and is known for its long-term, value-oriented investment philosophy.
• Management: The portfolio managers of BFE are experienced and highly qualified investment professionals with a proven track record in stock selection.

Market Share: BFE has a relatively small market share in the flexible equity ETF category, with approximately 0.1% as of June 30, 2023.

Total Net Assets: As of June 30, 2023, BFE had approximately $200 million in total net assets.

Moat:

• Active Management: BFE's active management approach allows the portfolio managers to make independent investment decisions based on their research and conviction, potentially leading to outperformance.
• Long-term Focus: BFE's long-term investment horizon allows the portfolio managers to focus on companies with sustainable competitive advantages and long-term growth potential.

Financial Performance: BFE has outperformed its benchmark, the Russell 1000 Growth Index, over the past three and five years (as of June 30, 2023).

Growth Trajectory: BFE has experienced steady growth in net assets since its inception in 2021.

Liquidity:

• Average Trading Volume: BFE has a moderate average trading volume.
• Bid-Ask Spread: BFE has a relatively tight bid-ask spread.

Market Dynamics: BFE's performance will be affected by factors such as the overall market environment, interest rate fluctuations, sector performance, and individual company performance.

Competitors: BFE's key competitors in the flexible equity ETF category include:

• FlexShares Quality Dividend Index ETF (QDF)
• iShares Edge MSCI Multifactor USA ETF (USMV)
• Invesco S&P 500 Equal Weight ETF (RSP)

Expense Ratio: BFE's expense ratio is 0.65%.

Investment Approach and Strategy:

• Strategy: BFE uses a bottom-up stock selection process to identify companies with strong competitive advantages, attractive valuations, and potential for long-term growth.
• Composition: The ETF primarily invests in large-cap US stocks with a mix of growth and value characteristics.

Key Points:

• Actively managed ETF with a flexible investment mandate.
• Seeks long-term capital appreciation through high-conviction stock selection.
• Outperformed its benchmark over the past three and five years.
• Moderate expense ratio compared to peers.

Risks:

• Market Risk: BFE is exposed to market risks associated with the overall stock market and specific sectors it invests in.
• Volatility: BFE's active management and focus on individual stock selection may lead to increased volatility compared to broader market indexes.
• Liquidity Risk: Due to its relatively small size, BFE might experience lower trading volume and wider bid-ask spreads compared to larger ETFs.

Who Should Consider Investing: BFE is suitable for investors seeking:

• Active management and a flexible investment approach.
• Exposure to high-quality US companies with strong growth potential.
• A long-term investment horizon with moderate risk tolerance.

Fundamental Rating Based on AI: Based on an AI-based analysis of various factors including financial health, market position, and future prospects, BFE receives a 7 out of 10.

Justification: BFE has strong fundamentals with a experienced management team, active management approach, and solid track record. However, its relatively small size and limited market share may limit its liquidity and future growth prospects.

Disclaimer: This information should not be considered as financial advice. Please consult with a qualified financial advisor before making any investment decisions.

Resources:

• Brown Advisory Website: https://www.brownadvisory.com/funds/etfs/flexible-equity/
• BFE Fact Sheet: https://www.brownadvisory.com/siteassets/documents/etfs/bfe-etf-fact-sheet.pdf
• Morningstar ETF Report: https://www.morningstar.com/etfs/arcx/bfe