BBH U.S. Large Cap Equity Monthly Update – July 2022

July 31, 2022
Portfolio Manager, Nicholas Haffenreffer, discusses how the U.S. Large Cap Equity portfolio companies performed over the most recent month-end.

July provided some welcome relief for equity investors following a particularly challenging first half of the year. For the month, the BBH US Large Cap Equity Composite (“US Large Cap Equity” or “the Strategy”) gained 9.49% compared to a gain of 9.22% for the benchmark S&P 500 Index. This modest outperformance was driven by positive security selection in the Health Care, Consumer Staples, and Industrials sectors. On an absolute basis, the Information Technology sector rebounded sharply and was the Strategy’s largest contributor. The top performer for the period was (AMZN), gaining 27.06%, while the sole detractor was Progressive (PGR), declining -0.96%. There were no new purchases or sales during the month, but we increased our positions in Microsoft (MSFT) and Pool Corp (POOL) and reduced our holdings in Sherwin-Williams (SHW). At month-end, the Strategy held 30 positions and 1.49% in cash.

Following a sharp decline in the second quarter, shares of Amazon staged a strong recovery leading up to and following its second quarter report. This helped alleviate investor concerns regarding a slowdown in e-commerce growth, excess capacity in the logistics network, and the durability of Amazon Web Services’ growth in a slowing economy. While Amazon is not immune to economic cycles and its core businesses require significant capital investment, we continue to view the company as a uniquely compelling collection of secular growth businesses. With dominant market share in e-commerce and cloud computing, Amazon’s long-term strategy of reinvesting in the business sustains its competitive advantages. This strategy enables it to continue to take share from legacy formats, technologies, and competitors. Over time, we expect reported free cash flow and return on invested capital (ROIC) to better reflect the quality of Amazon’s underlying businesses.

Progressive has been among the Strategy’s best performing holdings on a year-to-date and trailing 12-month basis. The defensive nature of its essential products (primarily auto insurance) and its fundamental competitive advantages based on superior data analytics and direct distribution channels leave it well-positioned in these uncertain times. While an increase in severity and frequency of claims has depressed underwriting profits on an industry-wide basis, Progressive continues to outperform its peer group and to generate attractive returns. Additionally, its balance sheet remains liquid and well-capitalized with a fixed income portfolio positioned to benefit from higher rates. We continue to believe Progressive will outgrow the industry and take market share as its leadership on policy rate increases and the company’s underwriting discipline supports a return to historic levels of profitability and growth.

The balance between durable economic growth and taming inflation remains fragile. July’s strong equity performance reflects a degree of incremental confidence on this front. Looking at the remainder of the year, we believe earnings growth will take center stage. Consensus estimates remain, in our view, optimistic. Our portfolio holdings are not immune to inflationary pressures or economic cycles, but we believe they are well positioned compared to the broader market. As a whole, the portfolio’s earnings growth, cash flows, and balance sheet health are superior to that of the S&P 500. Our focus remains on the long-term economic value generated by the companies in our clients’ portfolios.


Total Returns

Average Annual Total Returns

As of 7/31/2022

1 Mo.*

3 Mo.*


1 Yr.

3 Yr.

5 Yr.

10 Yr.


BBH US Large
Cap Equity
(Gross of Fees)









BBH US Large
Cap Equity
(Net of Fees)









S&P 500 Index









As of 6/30/2022 1 Mo.* 3 Mo.* YTD* 1 Yr. 3 Yr. 5 Yr. 10 Yr. Since
BBH US Large
Cap Equity
(Gross of Fees)
-7.69% -15.06% -21.58% -10.35% 7.39% 8.58% 10.57% 9.75%
BBH US Large
Cap Equity
(Net of Fees)
-7.77% -15.28% -21.98% -11.24% 6.33% 7.51% 9.48% 8.67%
S&P 500 Index -8.25% -16.10% -19.96% -10.62% 10.60% 11.31% 12.96% 9.13%
* Returns 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 July 31, 2022

Common Stocks


Cash & Cash Equivalents


Representative Account
Portfolio Characteristics
As of July 31, 2022

Composite Assets (mil) $899.8

Number of Securities Held


Average P/E


Average Market Cap (bil)


Turnover (Rolling 12-Months)


Exclude cash equivalents

Representative Account
Sector Weighting
As of July 31, 2022

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 July 31, 2022

Alphabet Inc


Berkshire Hathaway Inc


Mastercard Inc


Arthur J Gallagher & Co


Microsoft Corp

4.6% Inc


Linde PLC


Copart Inc


Zoetis Inc


Alcon Inc




Reported as a percentage of total portfolio.

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.


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 is ‘non-diversified’ and 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 are presented gross of fees and do not include cash and cash equivalents. Performance of the Representative account is available upon request.

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. Actual returns will be reduced by such 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. 2022. All rights reserved.  IM-11518-2022-08-11

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