BBH U.S. Large Cap Equity Monthly Update – May 2023

May 31, 2023
  • Investment Management
Portfolio Manager, Nicholas Haffenreffer, discusses how the U.S. Large Cap Equity portfolio companies performed over the most recent month-end.

Equity returns were mixed during May as better-than-expected first quarter earnings and enthusiasm regarding artificial intelligence (AI) were tempered by debt ceiling anxiety and higher interest rates. The BBH US Large Cap Equity Composite (“US Large Cap Equity” or “the Strategy”) was unchanged for the month, declining -0.04%, modestly underperforming the benchmark S&P 500’s gain of 0.43%. Communication Services and Information Technology were the Strategy’s best performing sectors for the month, and Consumer Staples was the weakest sector, largely mirroring the benchmark’s sector performance. At the security level, (AMZN) was the Strategy’s best performer and NIKE (NKE) was the weakest performer.

The increased focus on AI led to strong outperformance by the NASDAQ, up 5.9% for the month, and positively impacted AI beneficiaries such as Amazon. We believe Amazon Web Services (AWS) is a key “picks and shovels” provider to customers who want to either build AI products using AWS infrastructure or derive business insights by leveraging AWS’s internally built AI tools. AI workloads carry a higher profit margin than standard workloads, so growth in AI-related applications is margin accretive for AWS and Amazon as a whole. While we expect news surrounding AI use cases, regulation, and products to continue contributing to market volatility, our general view is we are well positioned to participate in AI related growth in a rational manner while largely avoiding risks associated with picking individual product winners.

NIKE shares underperformed in May due to decreased consumer demand and expected promotional intensity, particularly in the U.S. market. Recent results from industry peers and retailers suggest inventory levels remain elevated, compelling the need for higher promotional intensity to clear excess inventory while consumer demand for athletic footwear and apparel is softening. As overall consumer demand has appeared resilient thus far, pockets of weakness are emerging as consumption shifts from goods to services. Simultaneously, elevated inflation, lower tax refunds, and the lapsing of COVID-era benefits are disproportionately impacting lower income consumers. While we recognize these cyclical headwinds, we remain confident NIKE is uniquely positioned among athletic sportswear manufactures to effectively navigate these challenges through its unrivaled brand, dominant market share, and direct to consumer distribution network.

One of the more notable characteristics of the equity market’s performance year-to-date is how narrow it has been; while the S&P 500 rose 9.6% through month end, the equal weighted index declined -0.6%. The primary source of this imbalance was the extraordinary recovery of the Technology sector as illustrated by the NASDAQ composite’s year-to-date gain of 24.1%. Equally remarkable is that more than 100% of this year’s gains have come from the index’s top 10 weights (a historical outlier by a wide margin). This dynamic is unsustainable and reason for caution. Our focus remains on prudent portfolio construction, intentional diversification, and regular rebalancing. We continue to identify opportunities to invest in businesses characterized by durable cash flow and earnings growth, healthy balance sheets, and attractive valuations. From this perspective, we believe the Strategy is well-positioned to generate attractive returns and preserve capital throughout the business cycle.


Total Returns Average Annual Total Returns

As of 05/31/2023

1 Mo.

3 Mo.


1 Yr.

3 Yr.

5 Yr.

10 Yr.

Since Inception

BBH US Large Cap Equity Composite (Gross of Fees)









BBH US Large Cap Equity Composite (Net of Fees)









S&P 500 Index









As of 03/31/2023

1 Mo.

3 Mo.


1 Yr.

3 Yr.

5 Yr.

10 Yr.

Since Inception

BBH US Large Cap Equity Composite (Gross of Fees)









BBH US Large Cap Equity Composite (Net of Fees)









S&P 500 Index









Returns of less than one year are not annualized.

The BBH US Large Cap Equity Composite inception date is 10/01/2005.

Sources: BBH & Co. and S&P

Past performance does not guarantee future results.

The S&P 500 is an unmanaged weighted index of 500 stocks providing a broad indicator of stock price movements. The composition of the index is materially different than the Strategy’s holdings. The index is not available for direct investment.

Representative Account
Equity Weighting
As of May 31, 2023

Common Stocks


Cash & Cash Equivalents




Representative Account
Sector Weighting
As of May 31, 2023

Communication Services


Consumer Discretionary


Consumer Staples






Health Care




Information Technology




Real Estate






Reported as a percentage of portfolio securities, excluding Cash and Cash Equivalents.

Representative Account
Top 10 Companies
As of May 31, 2023

Berkshire Hathaway Inc


Alphabet Inc


Microsoft Corp


Linde PLC


Mastercard Inc


Alcon Inc 


Arthur J Gallagher & Co


Waste Management Inc


Oracle Corp


KLA Corp




Reported as a percentage of total portfolio.

Representative Account
Portfolio Characteristics
As of May 31, 2023

Composite Assets (mil)


Number of Securities Held


Average P/E


Average Market Cap (bil)


Turnover (Rolling 12-Months)


Excludes cash equivalents.

Holdings are subject to change. Totals may not sum due to rounding.

Price/Earnings (P/E) ratio is a company’s current share price divided by earnings per-share.

Turnover ratio is the rate of trading in a portfolio; higher values imply more frequent trading.

Opinions, forecasts, and discussions about investment strategies represent the author’s views as of the date of this commentary and are subject to change without notice. References to specific securities, asset classes, and financial markets are for illustrative purposes only and are not intended to be, and should not be interpreted as recommendations.

Purchase and sale information provided should not be considered as a recommendation to purchase or sell a particular security and that there is no assurance, as of the date of publication, that the securities purchased remain in a strategy’s portfolio or that securities sold have not been repurchased.


Investors should be able to withstand short-term fluctuations in the equity markets in return for potentially higher returns over the long term. The value of portfolios changes every day and can be affected by changes in interest rates, general market conditions and other political, social and economic developments. Each investor should evaluate their ability to invest for the long-term, especially during periods of downturn in the market.

The strategy may assume large positions in a small number of issuers which can increase the potential for greater price fluctuation.

Foreign investing involves special risks including currency risk, increased volatility, political risks, and differences in auditing and other financial standards.

The Representative account is managed with the same investment objectives and employs substantially the same investment philosophy and processes as the strategy. Contribution figures are of the Representative Account and do not include cash and cash equivalents

Brown Brothers Harriman Investment Management (“IM”), a division of Brown Brothers Harriman & Co (“BBH”), claims compliance with the Global Investment Performance Standards (GIPS®). GIPS® is a registered trademark of CFA Institute. CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. To receive additional information regarding IM, including a GIPS Composite Report for the strategy, contact Craig Schwalb at (212) 493-7217, or via email at

Gross of fee performance results for this composite do not reflect the deduction of investment advisory fees. Net of fees performance results reflect the deduction of the maximum investment advisory fees. Returns include all dividends and interest, other income, realize and unrealized gain, are net of all brokerage commissions and execution costs. Results will vary amount client accounts. Performance calculated in U.S. dollars.

The Composite is fully discretionary, fee-paying accounts over $5 million that invest in a portfolio of approximately 25-35 companies with market capitalizations greater than $5 billion that are headquartered in North America, as well as in certain global firms located in other developed regions. This strategy is benchmarked to the S&P 500 Index.

Brown Brothers Harriman & Co. (“BBH”) may be used as a generic term to reference the company as a whole and/or its various subsidiaries generally. This material and any products or services may be issued or provided in multiple jurisdictions by duly authorized and regulated subsidiaries. This material is for general information and reference purposes only and does not constitute legal, tax or investment advice and is not intended as an offer to sell, or a solicitation to buy securities, services or investment products. Any reference to tax matters is not intended to be used, and may not be used, for purposes of avoiding penalties under the U.S. Internal Revenue Code, or other applicable tax regimes, or for promotion, marketing or recommendation to third parties. All information has been obtained from sources believed to be reliable, but accuracy is not guaranteed, and reliance should not be placed on the information presented. This material may not be reproduced, copied or transmitted, or any of the content disclosed to third parties, without the permission of BBH. All trademarks and service marks included are the property of BBH or their respective owners. © Brown Brothers Harriman & Co. 2023. All rights reserved.

Not FDIC Insured     No Bank Guarantee     May Lose Money

IM-12945-2023-06-12        Exp. Date 07/31/2023

As of June 15, 2022 Internet Explorer 11 is not supported by

Important Information for Non-U.S. Residents

You are required to read the following important information, which, in conjunction with the Terms and Conditions, governs your use of this website. Your use of this website and its contents constitute your acceptance of this information and those Terms and Conditions. If you do not agree with this information and the Terms and Conditions, you should immediately cease use of this website. The contents of this website have not been prepared for the benefit of investors outside of the United States. This website is not intended as a solicitation of the purchase or sale of any security or other financial instrument or any investment management services for any investor who resides in a jurisdiction other than the United States1. As a general matter, Brown Brothers Harriman & Co. and its subsidiaries (“BBH”) is not licensed or registered to solicit prospective investors and offer investment advisory services in jurisdictions outside of the United States. The information on this website is not intended to be distributed to, directed at or used by any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation. Persons in respect of whom such prohibitions apply must not access the website.  Under certain circumstances, BBH may provide services to investors located outside of the United States in accordance with applicable law. The conditions under which such services may be provided will be analyzed on a case-by-case basis by BBH. BBH will only accept investors from such jurisdictions or countries where it has made a determination that such an arrangement or relationship is permissible under the laws of that jurisdiction or country. The existence of this website is not intended to be a substitute for the type of analysis described above and is not intended as a solicitation of or recommendation to any prospective investor, including those located outside of the United States. Certain BBH products or services may not be available in certain jurisdictions. By choosing to access this website from any location other than the United States, you accept full responsibility for compliance with all local laws. The website contains content that has been obtained from sources that BBH believes to be reliable as of the date presented; however, BBH cannot guarantee the accuracy of such content, assure its completeness, or warrant that such information will not be changed. The content contained herein is current as of the date of issuance and is subject to change without notice. The website’s content does not constitute investment advice and should not be used as the basis for any investment decision. There is no guarantee that any investment objectives, expectations, targets described in this website or the  performance or profitability of any investment will be achieved. You understand that investing in securities and other financial instruments involves risks that may affect the value of the securities and may result in losses, including the potential loss of the principal invested, and you assume and are able to bear all such risks.  In no event shall BBH or any other affiliated party be liable for any direct, incidental, special, consequential, indirect, lost profits, loss of business or data, or punitive damages arising out of your use of this website. By clicking accept, you confirm that you accept  to the above Important Information along with Terms and Conditions.

1BBH sponsors UCITS Funds registered in Luxembourg, in certain jurisdictions. For information on those funds, please see

captcha image

Type in the word seen on the picture

I am a current investor in another jurisdiction