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Thinking Aloud is a podcast series where Brown Advisory’s investment professionals unpack an idea that has recently shaped their perspective. Each episode features an informal conversation with a Brown Advisory expert about their insight, gathered from a book or article, a conversation, speaker, conference, podcast, compelling data point, or even a personal event. At its heart, the podcast invites you to explore how broad insights can challenge assumptions, deepen understanding, and inspire more intentional decision‑making. We hope each episode encourages you to stay curious, reflect on what influences your own thinking, and remain open to learning from the world around you.
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The views expressed are those of the author and Brown Advisory as of the date referenced and are subject to change at any time based on market or other conditions. These views are not intended to be and should not be relied upon as investment advice and are not intended to be a forecast of future events or a guarantee of future results. Past performance is not a guarantee of future performance and you may not get back the amount invested. The information contained herein has been prepared from sources believed reliable but is not guaranteed by us as to its timeliness or accuracy, and is not a complete summary or statement of all available data. This piece is for informational purposes only.
The information provided in this material is not intended to be and should not be considered to be a recommendation or suggestion to engage in or refrain from a particular course of action or to make or hold a particular investment or pursue a particular investment strategy, including whether or not to buy, sell, or hold any of the securities mentioned. It should not be assumed that investments in such securities have been or will be profitable. To the extent specific securities are mentioned, they have been selected by the author on an objective basis to illustrate views expressed in the commentary and do not represent all of the securities purchased, sold or recommended for advisory clients.
Sustainable investment considerations are one of multiple informational inputs into the investment process, alongside data on traditional financial factors, and so are not the sole driver of decision making. Sustainable investment analysis may not be performed for every holding in the fund. Sustainable investment considerations that are material will vary by investment style, sector/industry, market trends and client objectives. The Fund seeks to identify companies that it believes may be desirable based on our analysis of sustainable investment related risks and opportunities, but investors may differ in their views. As a result, the Fund may invest in companies that do not reflect the beliefs and values of any particular investor. The Fund may also invest in companies that would otherwise be excluded from other funds that focus on sustainable investment risks. Security selection will be impacted by the combined focus on sustainable investment research assessments and fundamental research assessments including the return forecasts. The Fund incorporates data from third parties in its research process but does not make investment decisions based on third-party data alone.
Cary (00:01): Hello, I'm Carey Buxton, a partner at Brown Advisory, and I'd like to welcome you to Thinking Aloud, a Brown Advisory podcast about the ideas that change how investors think and why that matters. The quality of investment outcomes is driven by the decisions behind them. This podcast looks upstream at the ideas and experiences that shape how those decisions are made. We hope these conversations spark reflection, encourage new ways of thinking, and remind us that there's always more to learn.
Daniela (00:38): Hello listeners, and welcome to the fourth episode of Thinking Aloud. My name is Daniela Lampru, and I sit on the business development team here at Brown Advisory. Today I'm lucky enough to be joined by Amy Hauter, portfolio manager of our US taxable fixed income strategies. Amy, how are you?
Amy (00:53): I'm good. Looking forward to discussion today. Thanks for having me.
Daniela (00:56): Well, Amy, I'm eager to really just dive in because what I've noticed thus far is in this series how quickly our topics can be shared in this forum and extend beyond just the markets. What's on your mind?
Amy (01:07): Yeah, there's a lot happening in the world right now that reminds all of us how uncertain the future can be in markets, geopolitics, policy, AI, and everyday life. You know, an idea that I keep coming back to is optionality, or said another way, preparing for more than one future outcome. You know, in investing, that sounds very technical, and I don't mean it in a technical sense, but I, what I've been thinking about is more of a mindset. To me, it means doing the work upfront, being thoughtful about a range of possible outcomes, and making decisions that still leave you room to respond when things don't unfold exactly as expected. You know, that resonates with me both as an investor and as a relatively new mom. My son, Dylan, he's 4, although he would quickly correct me and say he's still 3 for a few more weeks. He certainly keeps me honest at all turns. But becoming a parent for the first time is incredibly rewarding, but it's also very humbling. You go into it with what you think is enough life experience, an established career, and a sense that you know how to prepare. And then you should realize very quickly that no matter how organized or disciplined or how much research you've done, the day-to-day rarely follows the exact path that you've had in mind. Parenting can sometimes feel like risk management in real time. You are constantly thinking about what could go wrong, what matters most, where do I need a backup plan, where can I let things go. You certainly cannot hedge everything, so you learn to focus on what really matters. And that's really the bridge for me in parenting and investing. You can't eliminate uncertainty, but you can decide what matters most, where you need a margin of safety, and how to preserve enough flexibility to adapt.
Daniela (02:38): You mentioned both your professional and your personal life. Can you expand on that just a little bit?
Amy (02:43): Yeah, and I think becoming a mom has made this idea much more tangible for me. As a parent, you can have the schedule, you can have extra clothes packed, the childcare plan, or the work calendar. Then something changes, and it will most certainly change. Your child gets sick or they don't nap. You have a meeting that moves in the morning and inevitably goes sideways. You know, those examples are small, but they do teach you something. Preparation still matters, but not because it guarantees the day will go perfectly. It matters because it gives you more flexibility when it doesn't. That has been a really big shift in how I think about this. I used to think that flexibility meant being less prepared or less decisive. Now I think it's almost the opposite. Flexibility often comes from preparation. You know, within fixed income, we do a lot of work to understand the economy, interest rates, credit, inflation, policy, and market conditions. But we also have to be really honest about what we can't control, and that's the outcome. So we need to build portfolios and processes that can really adapt as the facts change.
Daniela (03:41): So optionality, preparedness, flexibility, they're all fundamentally interconnected. And within that, optionality isn't abandoning planning, it's more about creating plans that can adapt. How do you build that within portfolios and practice and in your day-to-day?
Amy (03:55): Yeah, exactly. Optionality is not about abandoning planning, like as you said, it's about making better plans, plans that are more thoughtful but not fragile. In practice, I think adaptability starts with asking better questions on the outset, not just what do we think will happen, but also what if we're wrong? What if we're right, but we're early? What if the market gets there, but in a completely different way than we expected? What would cause us to change our mind? You know, that applies in portfolios, but that also applies in life. As a mom, adaptability might mean knowing which parts of the day are truly important and which parts can be moved. There are certain things that you have to protect: health, safety, family priorities, being present when it matters. But there are also things that you can flex. In investing, it's very similar. You need to know which risks you are comfortable taking, which risks you are being compensated for, and where you need to preserve flexibility. One thing parenting teaches you is patience, not passive patience, but active patience. It's the ability to stay calm, keep perspective, and not overreact to every small change, no matter how big the meltdown may feel in the moment. Investing is similar. Markets move very quickly and increasingly can be pushed around by a single headline or policy comment, geopolitical development, or a shift in sentiment. In this environment, you have to be disciplined. You don't want to react to every market move, but you also don't want to be so rigid that you ignore information that actually matters. In fixed income, patience can be extremely valuable because yield, liquidity, and market dislocations can create meaningful opportunities, but only if you've really provided yourself that flexibility, which gives you the ability to move and act in those moments. You know, active patience means staying grounded enough not to chase every move, but while also being prepared enough to take advantage of opportunities when the market gives them to you.
Daniela (05:33): A disciplined approach, but not a rigid one. How do you balance conviction within that?
Amy (05:37): Yeah, I'm glad you framed it that way, because I think it's an important part of the concept. It's not indecision. It's not really sitting on the sidelines forever. It's not refusing to have a view. To me, it's more thoughtful preparation. It means doing enough work upfront so that you can be decisive and not rigid. Conviction should come from research, understanding the credit, understanding the structure, having discipline, following the process. Rigidity in my mind comes from becoming too attached to being right. So the balance is have a view, but know what would change your mind. That's a phrase I think about a lot. If you know it would change your mind, new information becomes useful instead of threatening. You're not constantly reacting to every headline, but you're also not ignoring data that matters. You know, if I think about an analogy that comes to mind from parenting, it's how much rope do you give as your child grows? It can feel overwhelming to raise a child today. There's so much access to information, social media, conflicting and numerous headlines, and now a world changing very quickly because of AI. I think a lot of parents, myself included, have an instinct to want to protect your child from all of it, almost wrap them in bubble wrap or insulate them. But that's not the answer. Kids need experiences. They need to learn. They need to make mistakes. They have to build judgment. They need to develop resilience. So you learn to give a little bit more rope at a time, but with guidance and boundaries. That's the real parallel to investing. In a portfolio, we are constantly asking ourselves, how much room do we give an investment thesis to play out? How much volatility are we willing to live with? What would change our mind? That's the balance between conviction and flexibility. You don't want to overreact to every bump in the road, but you also don't want to ignore new information that changes that risk-reward or be so committed to a view that you miss the point where the facts may have changed.
Daniela (07:14): So what I'm hearing from you is that preparedness matters more than prediction. Is that how you see it?
Amy (07:19): Yeah, I think that's right. You know, prediction has a role. We need to have views. We certainly need to form judgments about the economy, about interest rates, credit conditions, and valuations. But markets are humbling. They remind you over and over and over again that even thoughtful forecasts can be wrong early or incomplete. So yes, I'd say preparedness matters more than prediction, but that doesn't mean you stop making forecasts. It just means that you don't become overly dependent on one forecast being exactly right.
Daniela (07:43): When I hear forecast, I immediately think risk. How does risk fit into that framework?
Amy (07:49): Yeah, risk is central to the idea, and it's obviously very critical in my markets in fixed income. A lot of the job is understanding downside risk. Of course, we care about upside return, but we also care very deeply about what could go wrong, how much room for error we have, and whether we're being paid appropriately for the risk that we're taking. Do we have enough liquidity? I think optionality helps you think about risk in a more complete way. It's not just what is the expected return, it's also what range of outcomes are we exposed to and do we have the flexibility to respond if that shifts? It feels especially relevant in this current environment. You know, political and policy uncertainty has become a much bigger driver of markets, and I don't mean that in a partisan way. I mean investors are having to process a wider range range of possible outcomes around fiscal policy, deficits, tariffs, regulation, geopolitics, central bank policy, and really the interaction between all of those things. And we've seen how quickly markets can react to tariff headlines, conflict in the Middle East, mixed policy signals, and even concerns around the amount of debt issuance tied to AI infrastructure. Within our markets, those issues show up very quickly in rates, the yield curve, credit spreads, inflation expectations, liquidity, and really overall risk sentiment. That makes investing more complex because it's not always enough to have a single clean economic forecast. Policy can change quickly. Headlines can change. Market expectations can reprice quickly. So risk management today is not just about saying, hey, here's our forecast. It's really about asking, how resilient are we if that path is different?
Daniela (09:13): So optionality in the way that you are defining it is far more multifaceted than people may think. Where else do you think people underestimate this optionality?
Amy (09:21): Yeah, it's a good question. I think people probably often underestimate the value of optionality when markets are calm. Liquidity can feel less important, diversification can feel less urgent, and flexibility can almost look inefficient when things are calm. But optionality is usually most valuable when the environment changes, and by then it can be harder or even more expensive to create that optionality in portfolios. I think a really good example is the onset of COVID and the impact to the fixed income markets. When the pandemic hit, markets moved incredibly quickly. Almost overnight, liquidity became one of the most important considerations. The first question was a defensive one. Do we have enough liquidity in the portfolio and flexibility to navigate this level of uncertainty? But pretty quickly, things started to evolve. Periods of volatility, as I said earlier, and market dislocation can create meaningful opportunities, but only if you have preserved that ability to act in those moments. So during that period, we looked across portfolios and see where we could lean in and play some offense. We started reducing parts of our securitized exposure, in some cases at losses, and not because they were fundamentally impaired. Liquidity had just impacted levels because nothing was really trading. But we did this so we could reallocate into high-quality corporate bonds that had repriced dramatically. You know, these were A-rated companies coming to market at spreads around 300 basis points over Treasuries, names that in more normal market environments might trade closer to 25 to 50 basis points over. In certain cases, we felt the market was paying us a very significant premium for uncertainty, even though in our view, the underlying companies had strong balance sheets and the ability to weather the storm. You know, that experience really brought optionality to life for me. No one could have predicted the exact path of the global pandemic, you know, how quickly the markets would seize up, how quickly liquidity dried up, or how quickly the policy response would follow. But because we had liquidity diversification and really that ability to be nimble, we could move from defense to offense when those opportunities emerged. And that's really what I mean by preparing during the calm. The ability to respond during volatility often comes from those decisions that you have made before that volatility arrived. And I think that's true in life too. You don't fully understand the value of the buffer or the backup plan or the trusted team until something unexpected happens. I felt that very clearly becoming a new mom. You can go down so many rabbit holes researching every milestone, reading every parenting book, and prepare as much as you possibly can. And some of that certainly helps, but nothing fully prepares you until you're actually living it. Both parenting and investing have taught me that some lessons are intellectual until they become lived experience. Once you've lived through that uncertainty, you prepare very differently the next time.
Daniela (11:52): You mentioned teams just now. How does this play into being on, and in your case, leading a team?
Amy (11:58): Yeah, I think teams create optionality too. You've got that diversity of perspective. That diversity of thought creates, I guess, what you could call intellectual optionality. It helps reduce blind spots. A strong team gives you more than one lens to a problem. You know, we have people with different sector and asset class expertise. We have people that have lived through different market cycles, some with more depth in the geopolitical landscape, which has certainly been incredibly useful to help us navigate the more recent market dynamics. We have people that are more quantitatively driven and help us think more about the data and details more intricately with ways we can better optimize on the margin. And we have sustainability experts that help us think about risks that may not show up immediately in the numbers, but could have real-time or future impacts to the investments that we are making. I think a good example is housing, you know, whether through mortgages or related sectors, you can look at a mortgage-backed security through a traditional fixed income lens. You got yields, structure, duration, prepayment risk, liquidity, but there are other layers too. With natural disasters becoming more frequent and severe, physical climate risk can matter to how we think about housing markets, insurance costs, regional exposure, and long-term collateral quality. The point that I'm making is not that any one person has the full answer. The value is that the team expands the range of questions that we ask ourselves when we're considering an investment. But it only works if there's trust. People have to feel comfortable challenging each other. The best teams are certainly not the teams where everyone agrees all the time. It's very much how our process and discussions work. We have analysts and portfolio managers across different strategies and sectors, all bringing their own perspectives to our research and strategy meetings. That means we're not relying on one person's view or one narrow read of the market. We're stress testing ideas from multiple angles, you know, credits, rates, liquidity, valuation, client impact. That gives us a broader view of what could happen and helps us make better decisions.
Daniela (13:44): So with that foundation of a strong team with multiple perspectives accustomed to being constantly prepared, how does this play into portfolios?
Amy (13:52): Yeah, there's a few tangible ways, and I talked about a couple of them, but you know, I'll go over them again. Liquidity is certainly one of them. You know, The early COVID era reinforced that for me, as I mentioned. But I would think about liquidity as just one piece of a broader toolkit. Another is diversification, and not diversification for the sake of it, but thoughtful diversification across various risks. You don't want every part of the portfolio depending on the same economic outcome, the same rate path, or the same credit environment. Another is risk sizing. You may like an idea, but the size of that position should reflect the uncertainty around it. That's one way to express conviction without allowing one view to dominate the portfolio. I'd also point to valuation discipline. You know, optionality improves when you don't overpay for risk. If spreads are not compensating you, or if the downside is too asymmetric, sometimes the best decision is to wait for a better entry point. You know, and I'd say valuation discipline has been especially important recently with credit spreads remaining tight and valuations rich for such a long, prolonged period of time. This is something that we're constantly reassessing. Where are we being paid to take these risks and where are we not? And lastly, I'd say scenario analysis is important, and we've touched on this a little bit, but we're constantly thinking about how the portfolio may behave across different environments— higher rates, lower rates, wider spreads, tighter financial conditions, policy surprises, or changes in liquidity. You know, the goal is not to eliminate risk. The goal is to take risk intentionally. So my team, my co-PM and I are not trying to predict the future with perfect precision. What we're trying to do is build portfolios that are thoughtful, resilient, and able to adapt across different environments.
Daniela (15:23): Maybe we can go back to the parenting parallel that you touched on earlier in this conversation. How has parenting changed the way that you think about things like uncertainty, risk, optionality?
Amy (15:34): Yeah, parenting has made uncertainty feel much more immediate. I live with it in a very practical way every single day with a young child. Things change constantly. What worked yesterday may not work today. Yesterday, blueberries are all that they would eat. Today, they are the worst food in the entire world. A perfect plan can fall apart quickly, but you just learn to prioritize. You learn to adjust and keep perspective. And I don't wanna make it sound easy. There are trade-offs. There's certainly moments when you feel stretched and there's certainly moments you feel unprepared and some days you are. But I also think that, you know, parenting and being a mother has sharpened a lot of the qualities that matter in investing. You know, you have to have patience, you have to be able to prioritize, you need resilience, humility, preparation, and the ability to adapt, all of which we've talked about today. It's also made me more comfortable with imperfection. And that may sound small, but I actually think it's important. You know, in markets and in life, you're rarely operating with perfect information. So you make the best decision you can with the information you have, and then you just keep on learning. Okay.
Daniela (16:29): So takeaway for me, no blueberries for Dylan. But all seriousness, we've covered a lot today, and I know we can keep this conversation going forever, but maybe we can end on a quick rapid fire. What's one piece of advice that you would give to the listeners and maybe a quick book recommendation?
Amy (16:44): Yeah, I'll start with the advice, and I've mentioned this a couple times throughout our conversation today, but know what would change your mind. I think that advice is incredibly useful at investing and in life. It encourages humility, but it also keeps you from becoming too attached to being right. And it helps you adapt when the facts change. I think from a book perspective, and it's maybe not the most riveting book to read, but a book that relates closely to what we've discussed today is Thinking in Bets by Annie Duke. This book is about decision-making under uncertainty, which is, you know, a lot of what we talked about today. One idea though that I really like from the book is that a good decision and a good outcome are not always the same thing. You can make a thoughtful decision and still have an outcome you didn't want, or you can make a poor decision and get lucky. That distinction is really important in markets because outcomes can be very noisy, and it, it really reinforces the importance of process, humility, and continuous learning.
Daniela (17:32): Process, humility, and continuous learning. I couldn't think of a better way to end. Thank you so much for the time today, Amy.
Amy (17:37): Thanks for having me.
Cary (17:39): Thank you for listening to Thinking Aloud. Please subscribe to hear more conversations like this.