Brown Advisory International Value Select ETF (BAIV)

The Brown Advisory International Value Select ETF (BAIV) is an actively managed fund that invests in established large and mid-cap companies in developed markets outside the United States, emphasizing stocks that appear undervalued relative to their long-term earning power and competitive position.

Geographic reach and market exposure

BAIV focuses on companies domiciled and listed in the developed markets of Europe, Asia-Pacific, and other established economies, excluding the United States. This means the fund holds stocks on the London Stock Exchange, Deutsche Börse, Tokyo Stock Exchange, and other major global venues. The developed-market universe — which includes the UK, Germany, France, Japan, Australia, Canada, and others — contains many of the world’s oldest, largest, and most stable businesses. Banks, pharmaceutical companies, consumer-goods manufacturers, energy companies, and industrial firms from these regions form the core of the fund’s opportunity set.

By excluding the United States, BAIV offers a degree of geographic diversification that complements U.S.-focused portfolios. American investors and funds naturally home-bias toward U.S. stocks, so BAIV caters to those seeking broader global exposure. The developed-market focus (as opposed to emerging markets) tilts the portfolio toward lower volatility and more established business models, though this also means potentially slower nominal growth.

The value discipline and manager selection

BAIV’s managers employ a value discipline: they seek companies trading at low prices relative to fundamental metrics like earnings, book value, or cash flow, and where the team identifies durable competitive advantages or underestimated future profitability. Unlike a passive index that holds every large company in a region, BAIV’s active process involves judgment — evaluating management quality, the durability of competitive moats, balance-sheet strength, and whether the market’s pessimism about a company is justified or deserved.

During periods of value outperformance — when boring, cheap stocks and defensive sectors gain market favour — BAIV typically outperforms broad international indices. During growth-driven rallies when expensive technology and momentum stocks dominate returns, an international value fund often lags. This cyclical dynamic reflects the fundamental tension in value investing: waiting for a rebound requires patience, and that rebound may take years to materialize. Over a full market cycle, the fund’s success hinges on whether the team’s stock selection genuinely identifies mispriced opportunities before the market recognizes them.

Currency and valuation cycles

BAIV’s returns are influenced not only by the stock prices of its holdings but also by currency movements. Because the fund is unhedged, a weakening U.S. dollar enhances returns to U.S. investors (the foreign stocks’ prices translate into more dollars), while a strengthening dollar dampens returns. In periods of U.S. economic strength and rising dollar, BAIV faces a headwind even if the underlying stocks perform well. Conversely, during periods of dollar weakness or risk appetite for foreign assets, currency movements can boost performance substantially.

Valuations in international markets also cycle. After years of underperformance relative to U.S. stocks, international markets can experience sharp rallies as investors rotate capital. Conversely, after a period of international outperformance, the cycle often reverses. BAIV’s value discipline means the fund may benefit disproportionately from international mean reversion — a shift toward valuation normality — but it also means the fund will lag if global capital continues to concentrate in the most expensive markets (typically the U.S.).

Risks, costs, and research approach

BAIV carries equity market risk (it will fall sharply in broad global stock-market declines), as well as currency risk, geopolitical risk (regulatory changes, corporate governance issues, or political events in specific countries), and the risk of active-management underperformance. The expense ratio is higher than a passive international index fund, reflecting Brown Advisory’s active management and research process.

Prospective investors should review the fund’s holdings and top positions on Brown Advisory’s website to understand the geographic mix and sector allocations. Comparing BAIV’s rolling returns against a passive international equity index (such as the EAFE or MSCI World ex-USA) over 3-, 5-, and 10-year periods reveals whether the active approach has justified its fees. During bear markets, noting how BAIV’s drawdown compares to its benchmark clarifies the degree to which active management moderated losses. For investors seeking international diversification with a quality and value tilt, and with confidence in active management, BAIV serves as a complement to domestic equity exposure.