Investment Criteria

Mondrian Investment Partners Limited

Mondrian Investment Partners is a value-oriented defensive manager. Mondrian adopts a team approach towards building long-term, detailed dividend discount models. Its strategy attempts to preserve capital during protracted global market declines. The investment team is highly experienced and has been very stable, with a low turnover of professional staff.

Mondrian Investment Partners invests in stocks where rigorous dividend discount analysis isolates value in terms of the long-term flow of dividends. Dividend yield and future real growth play a central role in its decision making process and over time the dividend component is expected to be a meaningful portion of total return. Mondrian seeks to provide a rate of return meaningfully greater than inflation. Portfolio strategy is based on in-depth, fundamental, independent analysis at the company, currency and country levels. Company valuations include detailed modeling of companies’ balance sheets, cash flow statements and income statements, which feed into the four-stage dividend discount model. Company visits play an essential part in Mondrian’s research process. Currency valuations are based on long-term analysis of purchasing power parity. Country valuations take account of in-house analysis of the economic, demographic and sociopolitical environment, and ultimately also take the form of a four-stage dividend discount model. Mondrian uses the same dividend discount valuation model and discount rate across all markets, industries and stocks. This allows for a consistent basis of comparison within its decision-making framework.

Walter Scott and Partners Limited

Walter Scott invests in companies that meet our principal criterion – stocks that we believe are capable of wealth generation of 20% compounded. We seek out companies that generate consistently high levels of cash from their activities, reflecting highly successful and repeatable businesses. We seek companies whose businesses serve their customers successfully, and keep doing so year after year. Investment return derives from compounding, and so we invest our clients’ assets in companies that generate high rates of internal return that can lead to high levels of investor return. The key criteria used are namely: growth, financial health with an emphasis upon internal cash generation, market leadership, barriers to entry in the market and sustainability of the business franchise. 

Stock research and selection has three elements:

  • financial analysis using the firm’s proprietary spreadsheets
  • business analysis, looking at the company, its market, competition and so on
  • discussion within the firm’s research meetings

We screen for businesses with return characteristics that meet out investment criteria using a number of tools, including annual reports and company visits. The impact is significant as it provides an analytical picture of the company’s health and its potential as a wealth generating contribution to the portfolio. Additionally, we use a minimum market cap of $1 billion as a limit below which it is not worth looking at a stock for portfolios. There is no upper limit for size. Portfolios have a mid to large cap bias. The investment team monitors all holdings via a daily pricing report looking at Price/Earnings, Price/Book, Price/Cash flow and yield. A detailed weekly report monitors growth rates, profitability ratios and valuation metrics using our earnings forecasts. We ask ourselves one question continuously: does this stock have the potential to deliver 7% to 10% real returns over the long term from this valuation and price? 

Learn more about how to invest in BBH Mutual Funds.

There is no affiliation between ALPS Distributors, Inc., BBH, Mondrian, and Walter Scott.



© 2009 - Brown Brothers Harriman & Co.

Consult your prospectus for more information. To obtain a recent prospectus, please contact the BBH Fund Information Service, Brown Brothers Harriman ("BBH"), 140 Broadway, New York, NY 10005. (800) 575-1265, or email us a literature request (bbhfunds@bbh.com). You should consider the fund's investment objectives, risks, charges, and expenses carefully before you invest. Information about these and other important subjects is in the fund's prospectus, which you should read carefully before investing.

Investments in the BBH's Proprietary Mutual Funds (collectively, "BBH Funds") are neither insured nor guaranteed by the U.S. Government. Securities products are subject to investment risks, including possible loss of the principal invested. Shares of the BBH Funds are not deposits or obligations of, or guaranteed by, Brown Brothers Harriman & Co. ("BBH"), or any other bank or depository institution. Shares of the BBH Funds are not insured by the Federal Deposit Insurance Corporation (FDIC) or any other federal, state or government agency.

BBH provides investment advice and portfolio management to the BBH Funds through a separately identifiable department (the "Investment Adviser"). The Investment Advisor is registered with the U.S. Securities and Exchange Commission under the Investment Advisers Act of 1940. BBH acts as the Fund Administrator and is located at 140 Broadway, New York, NY 10005. Shares of the Fund are distributed by ALPS Distributors, Inc. and is located at 1290 Broadway, Suite 1100, Denver, CO 80203.

Effective October 5, 2012, BBH Broad Market Fund has been renamed to BBH Limited Duration Fund.

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