Brown Brothers Harriman Trust, based in New York City, launched the BBH Core Select mutual fund in 1998 as a small trailer fund to help younger members of its wealthy families manage smaller sums.
Business has been so good at the fund that BBH cut the net expense ratio on the Core Select mutual fund to 1.0%, from 1.19%, BBH Trust said on Monday. The gross expense ratio, 1.21%, remains the same. With about $330 million in assets under management, Core Select has grown about five fold since it was first launched 12 years ago, said Michael Keller, a co-manager on the fund.
Industry observers said that BBH’s move sounded consistent with competition in the mutual fund market, especially among equity funds. “It is probably increasingly intense on the equity side,” said Sean Collins, senior director of industry and financial analysis for the Washington, D.C.-based Investment Company Institute. “Equity funds are seeing outflows. There is probably going to be intense competition for the money that is there.”
BBH originally used the fund in the confines of its wealth management business, mainly as a trailer fund for clients with smaller sums that they wanted managed. It aims to achieve absolute returns over time, while preserving capital, according to Wyatt Courtney, a product specialist at BBH. It is also tightly concentrated, with 25 to 30 holdings. Typically, actively managed funds hold about 50 names, generally with market capitalizations greater than $5 billion, and which are based in North America.
Keller said the new net expense ratio is “competitive and fair, given the research intensity of our process.”