Baron Funds: A Guide To Investing In Their Success

Baron Funds are a collection of 16 no-load mutual funds managed by Baron Capital, a New York City investment management firm founded by Ronald Stephen Baron. With approximately US$45 billion in assets under management (AUM), Baron Capital is known for its long-term strategy in growth equity investments. The firm typically holds stocks for 4-5 years, and sometimes for up to 15 years, investing in companies with strong management teams and growth opportunities. Baron Funds are carefully constructed for the long term, with the objective of outpacing inflation and helping investors meet their financial goals. The funds are designed for institutional investors, including government entities, qualified plans, and financial institutions.

Baron Capital's investment approach

Baron Capital is a long-term investor, adopting a business owner mindset and focusing on each company's fundamentals and future potential. They do not concern themselves with short-term market fluctuations, such as interest rates, inflation, or the overall economy. Instead, they conduct in-depth research to identify and monitor investments that offer above-average, long-term, risk-adjusted results.

The research team at Baron Capital is the most important source of ideas. The team's structure encourages collaboration and includes sector and industry specialists with expertise in their coverage areas. Portfolio managers may also have specific geographic, industry, or market cap expertise. The research process involves several steps: identifying the growth opportunity, developing and testing an investment thesis, and then verifying and valuing it. This process includes extensive due diligence, meetings with management, and analysis of financial statements and company materials.

When constructing portfolios, Baron Capital takes a bottom-up approach, selecting stocks based on their conviction about each business's future growth prospects. They do not rely on benchmarks or macroeconomic frameworks but do consider how macro factors might affect their portfolio companies. Position sizes are determined by a risk/return analysis, end market exposures, regulatory implications, and portfolio construction guidelines.

Baron Capital has a strong risk management culture, viewing risk as the probability of an adverse outcome leading to permanent capital loss. They manage risk at the firm, security, and portfolio levels, including environmental, social, and governance factors.

Baron Capital's long-term investment horizon helps to mitigate risk and adds a margin of safety. They are less reactive to short-term price fluctuations and market noise, instead seeking to invest in companies that can thrive in challenging circumstances.

Baron Funds' investment team

Baron Capital's investment approach is united under a single investment style and objective. The company is made up of long-term investors in secular growth businesses with durable competitive advantages that are run by great management teams.

The Baron Capital portfolio managers and research analysts are the most important source of idea generation. With a strong foundation in research, the investment team has developed deep industry expertise and knowledge about the companies in the industries they cover. The research process is geared towards identifying and monitoring investments that will deliver above-average, long-term, and risk-adjusted results.

The investment team at Baron Capital is led by the Chairman, CEO, and Portfolio Manager, who has 42 years of experience at Baron Capital and 54 years of total experience. The team also includes several other key members: two Co-Presidents, both with 20+ years of experience at the company; two SVPs and Co-CIOs, one with 27 years of experience at Baron Capital and the other with 12; and a Chief Operating Officer with 17 years of experience at the company.

The investment team at Baron Capital is supported by a group of Vice Presidents with a range of responsibilities, including research, portfolio management, and compliance. The team also includes a Chief Marketing Officer, a Head of Business Development, and a Head of IT Infrastructure.

Investment options for non-US investors

Baron Capital offers a range of investment options for non-US investors looking to invest in the equity market. These include:

• SICAV funds
• Separate accounts
• Collective investment trusts
• Baron USA Partners Fund

These investment vehicles provide non-US investors with diverse strategies to access the equity market and pursue their financial goals. It is important to carefully consider your investment objectives, risk tolerance, and conduct thorough research before making any investment decisions.

One of the key offerings by Baron Capital is the Baron Growth Fund, which focuses on investing in mid- and small-cap stocks with strong growth potential. This fund is ideal for investors seeking exposure to smaller companies within the US market. The fund has a long-term perspective, aiming to hold stocks for more than five years to fully realize their potential.

Additionally, Baron Capital's investment approach is united by a single investment style and objective. They focus on long-term investments in secular growth businesses with durable competitive advantages and strong management teams. Their portfolio managers and research analysts play a crucial role in idea generation, leveraging their deep industry expertise to identify and monitor investments with the potential for above-average, long-term, risk-adjusted results.

When considering investment options, it is always recommended to consult with a financial professional to ensure that your specific needs and circumstances are taken into account.

Annual Baron Investment Conference

Baron Capital is a company that offers a wide range of growth equity solutions in a variety of investment vehicles. The company hosts an annual investment conference, which is a unique experience for Baron Funds shareholders and financial professional clients. The conference features CEOs of highly successful companies, Baron Capital investment professionals, and live entertainment.

The 31st Annual Baron Investment Conference will be held on Friday, November 15, 2024. The conference will begin at 8:00 a.m. ET, and attendees are encouraged to arrive early to get checked in, have breakfast, and find their seats. Check-in kiosks will open at 6:30 a.m., and breakfast with the Baron Capital Investment Team will be served from 7:00 a.m. to 7:45 a.m.

To be eligible to attend the conference, individuals must be shareholders of Baron Funds or financial professional clients of Baron Capital. Shareholders must have a minimum investment value of $40,000 in Baron Funds as of June 30, 2024, and accounts with a minimum investment value of $80,000 may bring a spouse or other family member. Attendees must be at least 18 years old, and children are not allowed.

The conference will be held at Lincoln Center in New York City, and attendees can refer to the Lincoln Center website for accessibility information. The accessible entrance and exit are located on the Concourse level (Founders Hall) and provide elevator access to all seating areas. Lincoln Center also provides wheelchair seating in designated areas, and attendees can specify their accessibility requirements during the online registration process.

The dress code for the conference is comfortable clothing appropriate for a professional setting. While there is no official dress code, attendees tend to dress more formally. Attendees may bring a coat and other personal items such as a handbag or umbrella, but items larger than a backpack, including luggage, are not permitted.

Baron Capital's long-term strategy

Baron Capital's investment approach is characterised by a long-term horizon, with a focus on in-depth, bottom-up research and a value-oriented purchase discipline. The company typically holds investments for an average of over five years, aiming to identify and monitor investments that deliver above-average, long-term, risk-adjusted results.

Every Baron Capital portfolio is constructed from the bottom up, with each stock selected based on the company's conviction about its future growth prospects. The company has a strong risk management culture, viewing risk as the probability of an adverse outcome leading to a permanent loss of capital.

Baron Capital offers a diverse range of growth equity solutions, including mutual funds, SICAV funds, separate accounts, collective investment trusts, and the Baron USA Partners Fund. The company's assets total over $40 billion, with most of its holdings in mutual funds.

One of Baron Capital's notable investments is in Elon Musk's ventures, including xAI and SpaceX. The company has also invested in Tesla, with about 29% of its assets in the car company. Baron Partners fund has generated an average annual return of almost 16% since 2003.

Overall, Baron Capital's long-term strategy is characterised by its focus on growth businesses, long-term investments, and risk management, aiming to help investors meet their financial goals and outperform inflation.

Frequently asked questions