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Baird Trust Large Cap Equity Strategy

Baird Trust - Large Cap Equity SMA 2025 Q4

Strategy Overview

The Large Cap Equity strategy invests in high-quality companies with the perspective of a long-term business owner. We seek companies that have sustainable competitive advantages, are led by shareholder-oriented management teams and are trading at compelling valuations. We aim to own these businesses for many years to capture the powerful effects of long-term compounding. The strategy will hold 25-30 individual positions and remain fully invested. 

“A stock is not just a ticker symbol or an electronic blip; it is an ownership interest in an actual business, with an underlying value that does not depend on its share price.”

— Benjamin Graham

Strategy Highlights

  • 30-year track record
  • Portfolio of 25 – 30 Individual Large Cap Equity Holdings
  • High-Quality Emphasis
  • Long-Term Business Owner Focus
  • Low Turnover which makes our strategy very tax efficient and minimizes capital gains
LCE Strategy Overview

“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”

— Warren Buffett

Our Investment Philosophy

The bedrock of our investment philosophy is to think and act like long-term business owners. We believe wealth is built over long periods of time rather than overnight. Our approach to investing is heavily influenced by the timeless principles and wisdom of Warren Buffett, Chairman of Berkshire Hathaway, and Benjamin Graham, the Father of Value Investing. We believe most large concentrations of wealth are the result of long-term ownership of a successful business. Our aim is to replicate this phenomenon while mitigating risk through diversification. We don’t think of shares of stock as trading chips to be shuffled around. Rather, we view each of our investments as the opportunity to be a long-term owner of a fractional share of an outstanding business.

When we analyze a business, we think in terms of five to ten years and our average holding period for a stock is over ten years. All our investment decisions are driven by three key criteria: business, management and price.

Business: We look for companies that have understandable and sustainable competitive advantages. These advantages must be durable far into the future. Additionally, we strive to own companies with ample free cash flow generation, consistent profitability and conservatively financed balance sheets.

Management: We aim to partner with management teams that sustain and enhance the company’s competitive advantage through intelligent capital allocation decisions. Furthermore, management’s incentives must be aligned with those of shareholders, enabling them to act like owners rather than employees.

Price: We demand a purchase price that is at a discount to our estimate of the business’ intrinsic value based on future free cash flow generation.

Strategic Withdrawal

The Baird Trust Large Cap Equity Strategy has a track record of long-term compounding that gives investors the ability to take strategic withdrawals, while still growing principal.

The 4% withdrawal rule is a commonly referenced guideline in retirement planning. It suggests that retirees can withdraw 4% of their investment portfolio in the first year of retirement and adjust that amount for inflation each year, with a reasonable likelihood that their assets will last for a 30‑year retirement horizon. This guideline is rooted in long‑term historical market data and is designed to balance sustainable income with the preservation of principal. Many of our clients are in retirement or approaching retirement and are seeking to create a reliable income stream to support their lifestyle, making this guidance especially relevant.

This document illustrates a scenario in which the annual withdrawal rate is increased from 4% to 5%. Even at this higher withdrawal rate, the portfolio continued to grow over the past 30 years, demonstrating the strength and resilience of the underlying investment strategy.  


5% Strategic Withdrawal

“Our favorite holding period is forever.”

— Warren Buffett

Long Term Ownership, Compounding & Consistent Outperformance (15 minutes)

Join Mark Nickel, President of Baird Trust, with Andy Means, CFA®, Director of Equity Investments, and John Watkins, CFA®, Equity Portfolio Manager, as they discuss the philosophy, process, and discipline behind our Large Cap Equity strategy—our flagship portfolio with over 30 years of strong results.

 

Meet the Team That Manages Baird Trust's Large Cap Equity Strategy (11 minutes)

What makes Baird Trust’s large-cap equity strategy different? Baird Trust’s Director of Equity Investments Andy Means, CFA®, and Equity Portfolio Manager John Watkins, CFA®, discuss their unique approach to investing, why they don’t create a market outlook, how (and when) they take on an underperforming stock position and much more.

Baird Trust Large Cap Equity Strategy Overview (4 minutes)

Watch Andy Means & John Watkins discuss how they manage the portfolio and what they look for in companies.

Baird Trust Quarterly Newsletters

Baird Trust produces quarterly newsletters based on the markets, the political environment, and how these things can affect your investment portfolios.  Here are some of the most recent ones, as well as some of our favorites.

Disclosure – The Morningstar Universe (Category Peer Performance) used for comparative analysis are constructed by Morningstar and data is provided to Baird Trust by Morningstar Direct.  The Morningstar Categories are based on Morningstar’s global Style Box model, which classifies funds and separate accounts according to the market-cap and investment style of the securities in which funds and separate accounts invest over a three-year period.  This ensures that investment styles are treated equally.  Morningstar engages in a formal category review process organized by Category Group, which is reviewed twice each year.  Baird Trust does not have any affiliation with Morningstar and does not have influence over the process Morningstar uses to determine this ranking. The rating shown represents a 10-year period (01/01/2016 – 12/31/2025) as published by Morningstar on February 4, 2026.  We do not compensate Morningstar to obtain this rating.