Burney U.S. Equity Select ETF (BRES)

Burney Capital Management, founded in 2011, came into being during a period of reckoning about how large investment firms manage money. The founders, veterans of traditional asset management, set out to build a firm that would apply rigorous fundamental analysis to public-stock selection without the bureaucratic weight of the megacap asset manager. In 2018, Burney launched its first ETF — the Burney U.S. Equity Select ETF (BRES) — as a vehicle for that stock-picking discipline in exchange-traded form. The fund offered retail investors access to the same stock selection process that Burney used for its separately managed accounts, but with the transparency, liquidity, and low minimums that an ETF structure provides.

The strategy and selection process

BRES holds a concentrated portfolio of large-cap US stocks, typically 40–60 positions, selected using a fundamental-analysis approach developed in-house. Burney’s process begins with a broad universe of US companies and filters for those with durable competitive advantages, clean balance sheets, and valuations that offer a margin of safety relative to the company’s intrinsic value. The fund weights its holdings by the conviction in each idea, which means some stocks will be larger positions than others.

The core of Burney’s approach is bottom-up analysis — reading 10-Ks, speaking with management teams and industry participants, and assessing whether a company’s returns on capital justify its stock price. The managers are looking for businesses that compound shareholder value reliably, which in practice means companies with recurring revenue, low capital intensity, or sustainable moats. Turnarounds and cyclicals have been less attractive to Burney’s process, though the fund has held them when the risk-reward appeared favorable.

Unlike a passive large-cap index fund, BRES makes active bets on which stocks to own and in what proportion. It will be overweight sectors or companies the managers view as undervalued and underweight or exclude those they see as expensive or deteriorating. This is the conventional work of active stock picking — the question is whether the managers’ bets add value net of the fund’s fee.

Performance and the active-management question

Burney’s Equity Select process has a track record since the fund’s inception, and that history is the primary test of whether the active approach works. The fund has sometimes outperformed a broad US equity index and sometimes underperformed, which is the expected pattern for active managers. Over long holding periods, the question is whether the outperformance exceeds the fund’s expense ratio and any trading costs the manager incurs, and whether the fund achieves its returns with lower volatility or drawdowns than the broader market.

Active stock picking on US large-cap stocks is a notoriously challenging endeavor. The market for large-cap equities is highly efficient — many analysts cover the largest companies, pricing is transparent, and the best information is quickly incorporated into share prices. For an active manager to outperform, they must either have better information, better analytical skills, or a superior process that most investors do not employ. Burney’s proposition rests on the conviction that their deep fundamental work finds mispricing that other investors miss.

Composition and risk profile

BRES’s portfolio includes major US companies from a range of sectors — financial services, consumer staples, industrials, technology, and others. The exact mix changes as Burney’s managers exit old ideas and enter new ones, and as existing holdings rise or fall in price. Because the fund is actively managed and concentrated (with 40–60 positions), it will diverge from a broad index in its holdings, sector allocation, and risk exposure.

The fund’s tracking error — the volatility of the difference between its return and a passive benchmark — is intentional and substantial. BRES does not attempt to hug an index; it is designed to outperform, which means it will sometimes lag badly and sometimes significantly lead. Investors who buy this fund are explicitly accepting that volatility in the pursuit of excess return.

Costs and who it suits

BRES carries a higher expense ratio than a passive large-cap index fund, reflecting the cost of Burney’s research team, portfolio managers, and trading operations. Over a long time horizon, that fee is a measurable drag on returns — it must be overcome by the fund’s active outperformance to be worth it to the investor.

BRES is designed for investors who believe that active stock picking creates value, who trust Burney’s process and its managers, and who are willing to hold for years while that process plays out. It is not a core holding for someone seeking broad, low-cost market exposure — those investors are better served by a passive index fund. Instead, BRES suits allocators who want exposure to a disciplined stock-picker’s conviction ideas as a satellite position, or investors who have long time horizons and believe the active approach will justify its costs.

How to research this fund

Begin with Burney Capital Management’s own presentation of the fund’s strategy and process — the fund literature explains the selection framework and the managers’ philosophy. The prospectus details the fund’s objective, constraints, holdings, and fee structure. Review the fund’s actual holdings list to see which companies are in the portfolio and in what proportion; this reveals the managers’ current conviction.

Track BRES’s performance against appropriate benchmarks — a large-cap index fund serves as a baseline for comparison — and assess it over rolling 3-year, 5-year, and 10-year periods to understand whether outperformance is consistent or episodic. Pay attention to the fund’s turnover (how often the managers trade holdings) — high turnover can drag on returns through trading costs. Look at Burney’s other products and materials to understand the firm’s broader investment philosophy; consistency between what they say and what the fund holds is a good sign.

Finally, remember that past performance is no guarantee of future results, and active management is perpetually in question — the regulatory environment, market structure, and the skill required to outperform all shift over time.