Brown Advisory has agreed to a reduced tiered management fee replacing the current fee arrangements on Brown Advisory US Smaller Companies. This is effective from and backdated to 1 January 2025.

The management fee will be calculated based on the lower of capitalisation and NAV, rather than NAV as is currently the case; and the fee on the first £200m of assets will be reduced to 0.65%, from 0.7% (then 0.6% of the next £300m and 0.5% thereafter).

[We think that this is the optimal fee arrangement for most trusts.]

Conditional tender offer

The board has decided that should long-term performance not be satisfactory for shareholders there should be a mechanism for them to realise up to 100% of the issued share capital in the company at close to the prevailing NAV. Accordingly, If NAV returns over the five years ended 30 June 2028 don’t beat the sterling-adjusted Russell 2000 Total Return Index, the board intends to offer shareholders a one-off opportunity to tender some or all their shares at close to the prevailing NAV, less costs.

The board points out that the manager outperformed the benchmark in the period from taking over the company on 1 April 2021 to 30 June 2023 by 3.3%.

This redemption option will sit alongside the existing three-year continuation vote, which will be next held at the AGM in November 2026.

BASC : Brown Advisory US Smaller cuts fee and introduces conditional tender offer