Mr. Steinik: Brown Capital Management was founded in 1983 by Ed Brown, who is known for coining growth at a reasonable price investing - an investment style we apply to all of our services. As part of this philosophy, we seek exceptional growth companies at reasonable valuations. In 1999 we stretched GARP, investing internationally with the launch of our Brown Capital International Equity Fund. We are proud of our decade-long heritage as an international equity service, which continues to generate strong performance. Over the past 12 months, as of Sept. 30, 2009, the international fund has returned 34.1% versus the benchmark MSCI EAFE Index at 28.4%, and a 29% for the Morningstar Large Growth category, our peer group.
Our team-managed process involves the input of three members, Maurice Haywood, Stewart Gronek and myself. We've been working together as a team for over three years. In addition, we leverage the full firepower of eight other portfolio managers/analysts that oversee the breadth of offerings at Brown Capital.
TWST: Tell us about your strong performance versus your fund's benchmarks. To what do you attribute this better performance during a difficult 12 months?
Mr. Steinik: Basically, it comes down to stock selection across the board, but I'd specifically highlight two areas: first, financials and second, energy stocks. In financials we avoided many of the highly leveraged financial firms with significant exposure to high-risk credit derivatives and collateralized debt obligations, and instead allocated capital to niche opportunities that are positioned for structural top-line growth and margin expansion. In energy and materials, we maintain our conviction to avoid this space during the bubble, which peaked mid-2008. Companies in these sectors did not meet our criteria and, by avoiding them in the downturn, we set ourselves up for a strong 12-month period.
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