Baron WealthBuilder Fund Q1 2022 Shareholder Letter

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Fund Letters
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Summary

  • Baron is an asset management firm focused on delivering growth equity investment solutions known for a long-term, fundamental, active approach to growth investing.
  • The Baron WealthBuilder Fund (the “Fund”) declined 13.37% (Institutional Shares).
  • The current investment environment is distinct from recent prior downturns.
  • While all underlying funds declined in the period, not all funds had poorrelative performance.

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Dear Baron WealthBuilder Fund Shareholder:

PERFORMANCE

We are disappointed with Baron WealthBuilder Fund’s (the “Fund”) performance over the prior quarter. The Fund declined 13.37% (Institutional Shares). The S&P 500 Index (the “Index”) and MSCI ACWI Index (“MSCI ACWI”) posted more modest declines of 4.60% and 5.36%, respectively. The Morningstar Allocation–85%+ Equity Category (the “Peer Group”) average declined 6.52%.

This quarter’s return contributed to trailing 12-month performance that failed to meet our long-term goals on either an absolute or relative basis. While the Fund protected capital during a very volatile 12-month period, its returns were -0.18% while the Index and MSCI ACWI rose 15.65% and 7.28%, respectively.

Baron

Wealth

Builder

Fund

Retail

Shares1,2

Baron

Wealth

Builder

Fund

Institutional

Shares1,2

Baron

Wealth

Builder

Fund TA

Shares1,2

S&P

500

Index1

MSCI

ACWI

Index1

Three Months3

(13.45)%

(13.37)%

(13.37)%

(4.60)%

(5.36)%

One Year

(0.41)%

(0.18)%

(0.12)%

15.65%

7.28%

Three Years

23.34%

23.66%

23.62%

18.92%

13.75%

Since Inception

(December 29,

2017)

18.85%

19.12%

19.12%

15.25%

9.93%

Performance listed in the above table is net of annual operating expenses. Annual expense ratio for the Retail Shares, Institutional Shares, and TA Shares as of December 31, 2021 was 1.33%, 1.08%, and 1.08%, respectively, but the net annual expense ratio was 1.30%, 1.05%, and 1.05% (includes acquired fund fees of 1.00%, net of the Adviser’s fee waivers), respectively. The performance data quoted represents past performance. Past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate; an investor’s shares, when redeemed, may be worth more or less than their original cost. BAMCO, Inc. (‘BAMCO” or the “Adviser”) has agreed that, pursuant to a contract expiring on August 29, 2032, unless renewed for another 11-year term, it will reimburse certain expenses of the Fund, limiting net annual operating expenses (portfolio transaction costs, interest, dividend, acquired fund fees and expenses and extraordinary expenses are not subject to the operating expense limitation) to 0.30% of average daily nest assets of Retail Shares, 0.05% of average daily net assets of Institutional Shares and 0.05% of average daily net assets of TA Shares, without which performance would have been lower. Current performance may be lower or higher than the performance data quoted. For performance information current to the most recent month end, visit www.BaronFunds.com or call 1-800-99BARON.

1The S&P 500 Index measures the performance of 500 widely held large cap U.S. companies. The MSCI ACWI Index is an unmanaged, free float- adjusted market capitalization weighted index reflected in US dollars that measures the equity market performance of large- and mid-cap securities across developed and emerging markets. MSCI is the source and owner of the trademarks, service marks and copyrights related to the MSCI Indexes. The indexes and the Fund include reinvestment of dividends, net of withholding taxes, which positively impact the performance results. The indexes are unmanaged. Index performance is not Fund performance; one cannot invest directly into an index.

2The performance data in the table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.

3Not annualized.


While we continuously reevaluate the composition of the Fund and have made marginal changes to the portfolio over the past quarter (and throughout the prior 12 months), the investment philosophy of Baron WealthBuilder Fund and its underlying Baron mutual fund holdings has not changed. In fact, the investment philosophy for Baron Capital has not changed since its founding 40 years ago. And it is this investment approach that has resulted in our family of funds performing quite well throughout its history. As of 3/31/2022, 15 of 17 Baron Funds, representing 98.5% of Baron Funds’ assets under management (AUM) have outperformed their respective passive benchmarks since their inceptions. In addition, 14 of those funds, representing 98.4% of Baron Funds’ AUM, rank in the top 18% of their respective Morningstar categories; and 11 funds, representing 73.6% of AUM, rank in the top 10%.

As of 3/31/2022, the Morningstar Allocation–85%+ Equity Category consisted of 188, 168, and 165 share classes for the 1-year, 3-year, and since inception (12/29/2017) periods. Morningstar ranked Baron WealthBuilder Fund Institutional Share Class in the 95th, 1st, and 1st percentiles, respectively. On an absolute basis, Morningstar ranked Baron WealthBuilder Fund Institutional Share Class as the 181st, 1st, and 1st best performing share class in its category for the 1-year, 3-year, and since inception (12/29/2017) periods, respectively.

As of 3/31/2022, the annualized returns of the Morningstar Allocation–85%+ Equity Category Average were 4.52%, 12.59%, and 8.45% for the 1-year, 3-year, and since inception 12/29/2017) periods, respectively.

© 2022 Morningstar. All Rights Reserved. The Morningstar information contained herein: (1) is proprietary to Morningstar and/or its content providers; may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.


The Fund’s long-term track record is very good. Its annualized return over the prior three years is 23.66%. That compares to 18.92% for the Index. Over the prior three years and since the Fund’s inception, it ranks as number one fund in the Morningstar Allocation-85% Equity Category.

But Baron WealthBuilder Fund’s composition is quite different than its primary Index. The Fund was designed to provide investors exposure to Baron Fund investments across market caps, geographies, and sectors. We focus on growth equity investing. We believe this area and our approach provide higher return potential with better risk management than other styles of investing. But when this segment is out of favor (like in the current period), it is not unexpected that we could trail the Index. Each of the underlying funds’ primary benchmark growth indexes trailed the Index in the most recent quarter. We do not anticipate this environment to persist indefinitely.

The current investment environment is distinct from recent prior downturns. Since markets peaked in November 2021, a host of macroeconomic issues have given investors pause. Higher-than-anticipated inflation, rising interest rates, and supply-chain issues across multiple industries all weighed on investments. Additionally, the Russian invasion of sovereign Ukraine has exasperated simmering concerns about food and energy supplies, mass refugees, and a destabilized global economy (not to mention the huge humanitarian impact on those trapped by the invading army). Unlike the last (brief) downturn at the start of the COVID-19 pandemic, when investments declined significantly but largely in unison, this market retreat has been more concentrated. Today’s macroeconomic concerns disproportionally impacted growth companies and caused investor rotation towards value-oriented businesses. There is greater discounting of future revenue streams, more expensive financing for business initiatives, and operational challenges for companies taking on entrenched incumbents. As a result, our smaller-market cap, higher-growth and non-U.S. investments suffered in this environment. Conversely, the Index benefited from better performance in sectors like Energy, Materials, and Utilities. We have an unfavorable view about limited growth prospects and competitive advantages for companies in these sectors, and the underlying funds have largely avoided them.

Our high-growth underlying Baron Funds suffered in this environment. Baron Fifth Avenue Growth, Baron Opportunity, and Baron Global Advantage Funds declined between 16% and 23% in the quarter. These declines were despite each fund owning stocks of businesses with projected one-year sales growth exceeding 20%. Fundamentals of most of these holdings have remained intact. Businesses held in these funds have largely performed. Snowflake Inc. (SNOW), Zscaler, Inc. (ZS), and Adyen N.V. (ADYEN), grew revenue last year 106%, 60%, and 46%, respectively. We believe substantial growth will continue. Yet, their stocks were each down approximately 25% in the quarter. These funds took steps to exit positions where the fundamentals have changed or the prospects are not as certain. Baron WealthBuilder has also marginally lowered its exposure to underlying higher-growth Baron Funds given the market environment.

Our underlying Baron Funds investing in smaller sized companies like Baron Discovery, Baron Small Cap and Baron Growth Funds had meaningful contraction in multiples despite continued growth in many businesses. For example, investors have shunned housing-related companies due to fear of a potential slowdown in new construction and remodeling. The difficult comparisons and macro environment may result in temporarily lower sales growth (not yet experienced). However, we believe these businesses now possess advantages in their respective categories that makes it difficult for other companies to offer a competitive alternative. Floor & Decor Holdings, Inc. (FND), Trex Company, Inc. (TREX), and SiteOne Landscape Supply, Inc. (SITE) all have improved positioning and increased market shares in large addressable markets. Yet, these investments detracted from performance.

Global events also disproportionately impacted the Baron Emerging Markets Fund. Once promising investments in Russian financial businesses like Sberbank of Russia PJSC (OTC:AKSJF) and TCS Group Holding PLC have become effectively worthless following the severe economic sanctions placed on that country following its invasion of Ukraine. Further, that underlying fund’s holdings in Chinese companies have also been significantly impacted following that country’s “zero COVID” policy and speculation about their support of Russia. We believe these external factors will eventually fade. The Chinese government has already indicated a more favorable approach to its private sector. The predominant themes Baron Emerging Markets Fund focuses on, like China value-added, digitalization, EM consumer, automation/robotics, and digitalization, remain intact.

While all underlying funds declined in the period, not all funds had poor relative performance. Baron Partners (the Fund’s largest holding), Baron Focused Growth and Baron Real Estate Income Funds exceeded their respective benchmarks. Baron Partners and Focused Growth Funds had investments in Disruptive Growth businesses such as Tesla, Inc. (TSLA) that were able to grow despite challenging supply chains. Their Financials and Real/ Irreplaceable Asset companies benefited from a macro trend of higher rates and inflation. Tesla reported deliveries that met expectations, despite a government-mandated factory shutdown in China as a COVID variant spread there. Additionally, new facilities in Berlin, Germany and Austin, Texas have been slower to ramp production than anticipated because of supply-chain issues. Despite these external pressures, the company delivered 68% more vehicles than the previous year. Investors rewarded it for growth while other manufacturers faltered. We believe growth could further accelerate once these external pressures pass. The company’s vertical integration and leading technology platform make it well positioned to dominate the automobile industry. Its improving efficiency should result in expanding margins. We believe the 310,000 vehicles delivered this quarter is only the beginning of the opportunity that lies ahead. These three underlying Baron Funds also had investments in Financials and Real/ Irreplaceable Asset type businesses that provided some stability. Many of these companies benefited from the macro backdrop of increasing rates and higher inflation. An example is Arch Capital Group Ltd. (ACGL) The company accelerated writing premiums while competitors retrenched. An historically conservative management team put Arch in a good position to initiate more business when industry pricing improved (as exists in the current market). Their mortgage insurance business provided reliable revenue when property and casualty was less attractive in previous years.

We encourage you to read the various quarterly letters found in this report for a deeper understanding of the underlying Baron Funds that make up Baron WealthBuilder Fund.

Table II - Baron Funds Performance As of March 31, 2022

Baron Funds Performance As of March 31, 2022

* Not annualized.† Performance is calculated from the time the Fund was added to Baron WealthBuilder Fund: Baron Durable Advantage Fund – 3/13/2018; Baron Global Advantage Fund – 1/9/2018; Baron Health Care Fund – 10/18/2018; Baron FinTech Fund – 2/27/2020 and Baron Real Estate Income Fund – 5/17/2021. Performance data quoted represents past performance. Past performance is no guarantee of future results. The indexes are unmanaged. The index performance is not Fund performance; one cannot invest directly into an index.

FUND STRUCTUREAND INVESTMENT STRATEGY

The Fund’s three-year performance characteristics were significantly impacted this quarter. The rotation away from growth companies caused a material drop in alpha and Sharpe ratio and increased downside capture. Three-year alpha fell from 5.10% to 0.70%. Sharpe ratio fell from 1.58 to 0.93 and downside capture rose from 94.61% to 112.95%. We believe these results are temporary and caused because the Fund is significantly different than the Index (active share was 84.8%). We believe the underlying Baron Funds’ performance characteristics are a better representation of results. 74.0% of the Fund’s assets are in underlying portfolios with a three-year alpha greater than 2.0%. 60.3% of the Fund’s assets are in underlying portfolios with a downside capture less than 100%. And 38.7% of the Fund’s assets are in underlying portfolios with a three-year Sharpe ratio greater than 1.0.

Baron WealthBuilder Fund closely mimics how we would incrementally invest across our various funds and strategies. The Fund allows investors to diversify across Baron Funds, gain exposure to various market caps, sectors, and geographies in a single product, and benefit from our rebalancing in a tax efficient manner. The portfolio managers of each underlying Baron Fund abide by the same core investment process and philosophy, focused on proprietary research to discover competitively advantaged businesses with immense opportunities and exceptional management teams. These businesses are led by executives who we think are talented and ethical.

The makeup of the underlying investments is very different from the Fund’s key indexes. We feel the diversity in regions and sectors should mitigate risk while providing strong absolute returns. While holding nearly the same number of securities as its primary benchmark (496 in the underlying funds vs. 502 in the Index), the similarity ends there. The holdings in the underlying funds have a lower dividend yield on average (0.5% vs. 1.4% for the Index), with companies electing to reinvest earnings in their businesses for growth. And the approach is working; the projected earnings per share growth rate over the next three to five years is 21.4% for the Fund’s underlying holdings vs. 13.9% for the Index. We think that many of our investments could exceed external projections. Many of these businesses have depressed margins as they sacrifice current profitability for more sustainable and higher long-term growth. We believe higher and prolonged growth should reward long-term investors.

The Fund also favors higher-growth sectors and companies with unique attributes and competitive advantages. Consumer Discretionary, Information Technology, and Health Care are the top three sectors by weight in the Fund. Companies in these sectors possess some of the highest growth rates in the global economy. The portfolio is also distinct in its industry weightings. The Index has a higher share of companies in industries that we believe have lower growth prospects and fewer defensible advantages. The Index has a greater weight in technology hardware storage & peripherals, semiconductors & semiconductor equipment, banks, and oil gas & consumable fuels. The Fund favors higher-growth and competitively advantaged industries like (electronic and autonomous) automobiles, hotels restaurants & leisure, and IT services. We believe companies in these industries have greater growth potential and advantages that can be maintained over the long term.

The Fund has exposure to non-U.S. companies while the Index’s constituents are solely domestic. We believe geographic diversity provides benefits, such as lower volatility over time. The Fund is also differentiated from the global coverage of the MSCI ACWI Index. The U.S. is 61.3% of the MSCI ACWI Index compared to 85.7% for the Fund. The non-U.S. exposure for the MSCI ACWI Index is skewed towards slower growth developed countries, whereas the Fund seeks faster growth in emerging economies. Of the Fund’s non-U.S. exposure, 38.0% was in emerging and other countries. These countries represented 28.9% of the MSCI ACWI Index’s non-U.S. investments. The MSCI ACWI Index had larger exposure to lower growth economies like Japan and France. Of its non-U.S. investments, Japan and France represented 14.1% and 7.2%, respectively, of the MSCI ACWI Index while they represented only 1.0% and 0.5% for the Fund, respectively. Instead, the Fund favors emerging and fast-growing economies like China and India. Of its non-U.S. investments, China and India represented 12.0% and 9.3% of the Fund, respectively, while they represented 8.6% and 3.7% for the MSCI ACWI Index, respectively.

We believe the portfolio allocation among the underlying Baron Funds, their exposure to various industries, and their geographic diversification should continue to produce good returns over the long term.

Table III - Performance based characteristics for the 3-year period ended March 31, 2022

Baron

WealthBuilder Fund

S&P

500

Index

Morningstar

Allocation

85%+

Equity

Category

Alpha (%) – Annualized

0.70

0.00

–5.49

Beta

1.25

1.00

0.95

Sharpe Ratio

0.93

1.02

0.62

Standard Deviation (%) – Annualized

24.50

17.76

17.38

Upside Capture (%)

118.39

100.00

82.86

Downside Capture (%)

112.95

100.00

103.56

Source: FactSet SPAR. Except for Standard Deviation and Sharpe Ratio, theperformance based characteristics above were calculated relative to the S&P 500 Index. The index is unmanaged. Index performance is not Fund performance; one cannot invest directly into an index.

Table IV - Sector exposures as of March 31, 2022

% of Net Assets S&P 500 Index MSCI ACWI Index
Consumer Discretionary 25.20% 12.00% 11.70%
Information Technology 21.8 28 22.4
Health Care 14.1 13.6 11.9
Financials 12.8 11.1 14.6
Industrials 11.1 7.9 9.5
Communication Services 6 9.4 8.1
Real Estate 5.7 2.7 2.7
Materials 1.4 2.6 5
Consumer Staples 0.8 6.1 6.9
Energy 0.3 3.9 4.3
Unclassified 0.1
Utilities 0.1 2.7 2.9

Table V - Country exposures as of March 31, 2022

% of Net Assets S&P 500 Index MSCI ACWI Index
United States 85.70% 100.00% 61.30%
United Kingdom 2.2 3.7
China 1.7 3.3
Canada 1.6 3.2
Netherlands 1.4 1.1
India 1.3 1.4
Sweden 0.7 0.9
Israel 0.6 0.2
Argentina 0.5 0.1
Ireland 0.5 0.1
Other 3.2 24.7

Table VI - Fund of fund holdings as of March 31, 2022

% of Net Assets

Baron Partners Fund 15.80%
Baron Growth Fund 13.2
Baron Asset Fund 13
Baron Small Cap Fund 12.1
Baron Real Estate Fund 5.4
Baron Focused Growth Fund 5.4
Baron Global Advantage Fund 4.9
Baron Opportunity Fund 4.9
Baron Fifth Avenue Growth Fund 4.7
Baron Discovery Fund 4.6
Baron Emerging Markets Fund 3.6
Baron Health Care Fund 3
Baron FinTech Fund 2.6
Baron International Growth Fund 2.6
Baron Real Estate Income Fund 2.1
Baron Durable Advantage Fund 2.1

Thank you for joining us as fellow shareholders in Baron WealthBuilder Fund. We continue to work hard to justify your confidence and trust in our stewardship of your hard-earned savings. We remain dedicated to providing you with the information we would like to have if our roles were reversed. We hope this letter enables you to make an informed decision about whether this Fund remains an appropriate investment.

Respectfully,

Ronald Baron, CEO and Portfolio Manager

Michael Baron, Co-Portfolio Manager


Baron Funds (Institutional Shares) and Benchmark Performance 3/31/2022

Fund

Primary Benchmark

Return since fund inception

Return since fund inception

Inception Date

1 Year AAR

3 Year AAR

5 Year AAR

10 Year AAR

Annual Expense Ratio

Net Assets

SMALL CAP

Baron Growth Fund

Russell 2000 Growth Index

13.64%

8.19%

12/31/1994

3.17%

16.96%

16.93%

14.35%

1.03%(3)

$8.21 billion

Baron Small Cap Fund

Russell 2000 Growth Index

10.76%

6.57%

9/30/1997

-4.87%

14.59%

15.10%

12.92%

1.03%(3)

$4.60 billion

Baron Discovery Fund†

Russell 2000 Growth Index

15.86%

9.48%

9/30/2013

-18.31%

15.62%

17.76%

N/A

1.05%(3)

$1.54 billion

SMALL/MID CAP

Baron Focused Growth Fund(1)

Russell 2500 Growth Index

14.32%

8.60%

5/31/1996

9.47%

41.57%

31.02%

19.00%

1.05%(4)

$796.61 million

MID CAP

Baron Asset Fund†

Russell Midcap Growth Index

11.92%

10.57%(2)

6/12/1987

-1.34%

14.26%

15.60%

14.14%

1.03%(3)

$5.38 billion

LARGE CAP

Baron Fifth Avenue Growth Fund

Russell 1000 Growth Index

10.21%

12.04%

4/30/2004

-10.75%

14.43%

17.15%

14.48%

0.75%/0.75%(3)(6)

$575.35 million

Baron Durable Advantage Fund

S&P 500 Index

15.81%

15.25%

12/29/2017

15.07%

20.57%

N/A

N/A

1.48%/0.70%(3)(7)

$47.90 million

ALL CAP

Baron Partners Fund(1)

Russell Midcap Growth Index

16.62%

10.32%

1/31/1992

24.51%

56.69%

39.02%

25.80%

1.11%(4)(5)

$8.04 billion

Baron Opportunity Fund

Russell 3000 Growth Index

9.80%

6.82%

2/29/2000

-6.52%

27.39%

27.19%

17.26%

1.05%(3)

$1.26 billion

INTERNATIONAL

Baron Emerging Markets Fund

MSCI EM Index

4.30%

2.32%

12/31/2010

-19.20%

3.44%

4.68%

5.31%

1.08%(4)

$7.65 billion

Baron Global Advantage Fund†

MSCI ACWI Index

15.26%

10.21%

4/30/2012

-20.62%

17.25%

20.20%

N/A

0.90%(4)(8)

$1.73 billion

Baron International Growth Fund

MSCI ACWI ex USA Index

10.91%

7.45%

12/31/2008

-8.35%

10.80%

10.23%

8.42%

0.96%/0.95%(4)(9)

$632.97 million

Baron New Asia Fund

MSCI AC Asia ex Japan Index

-13.80%*

-10.93%*

7/30/2021

N/A

N/A

N/A

N/A

8.59%/1.20%(4)(10)

$4.05 million

SECTOR

Baron Real Estate Fund†

MSCI USA IMI Extended Real Estate Index

15.85%

12.27%

12/31/2009

-0.09%

24.76%

17.08%

15.14%

1.05%(4)

$1.86 billion

Baron Real Estate Income Fund

MSCI US REIT Index

15.86%

9.14%

12/29/2017

16.97%

21.24%

N/A

N/A

1.08%/0.80%(4)(11)

$145.85 million

Baron Health Care Fund†

Russell 3000 Health Care Index

19.20%

15.01%

4/30/2018

3.62%

21.98%

N/A

N/A

0.89%/0.85%(4)(12)

$214.20 million

Baron FinTech Fund†

S&P 500 Index

16.68%

18.09%

12/31/2019

-2.62%

N/A

N/A

N/A

1.18%/0.95%(4)(13)

$52.01 million

Baron Technology Fund

MSCI ACWI Information Technology Index

-16.40%*

-10.28%*

12/31/2021

N/A

N/A

N/A

N/A

1.73%/0.95%(4)(14)

$3.87 million

EQUITY ALLOCATION

Baron WealthBuilder Fund

S&P 500 Index

19.12%

15.25%

12/29/2017

-0.18%

23.66%

N/A

N/A

1.08%/1.05%(4)(15)

$524.96 million

(1)Reflects the actual fees and expenses that were charged when the Funds were partnerships. The predecessor partnerships charged a 20% performance fee (Baron Partners Fund) or a 15% performance fee (Baron Focused Growth Fund) after reaching a certain performance benchmark. If the annual returns for the Funds did not reflect the performance fee for the years the predecessor partnerships charged a performance fee, returns would be higher. The Funds’ shareholders are not charged a performance fee.

(2)For the period June 30, 1987 to March 31, 2022.

(3)As of 9/30/2021.

(4)As of 12/31/2021.

(5)Comprised of operating expenses of 1.05% and interest expenses of 0.06%.

(6)Annual expense ratio was 0.75%, but the net annual expense ratio was 0.75% (net of Adviser’s fee waivers). Expense reimbursement was less than 0.01%.

(7)Annual expense ratio was 1.48%, but the net annual expense ratio was 0.70% (net of Adviser’s fee waivers).

(8)Annual expense ratio was 0.90%, but the net annual expense ratio was 0.90% (net of Adviser’s fee waivers). Expense reimbursement was less than 0.01%.

(9)Annual expense ratio was 0.96%, but the net annual expense ratio was 0.95% (net of Adviser’s fee waivers).

(10)Annual expense ratio was 8.59%, but the net annual expense ratio was 1.20% (net of Adviser’s fee waivers).

(11)Annual expense ratio was 1.08%, but the net annual expense ratio was 0.80% (net of Adviser’s fee waivers).

(12)Annual expense ratio was 0.89%, but the net annual expense ratio was 0.85% (net of Adviser’s fee waivers).

(13)Annual expense ratio was 1.18%, but the net annual expense ratio was 0.95% (net of Adviser’s fee waivers).

(14)Expense ratios are estimated for the current fiscal year.

(15)Annual expense ratio was 1.08%, but the net annual expense ratio was 1.05% (includes acquired fund fees and expenses, net of the Adviser’s fee waivers).

*Not annualized.

The Fund’s historical performance was impacted by gains from IPOs. There is no guarantee that these results can be repeated or that the Fund’s level of participation in IPOs will be the same in the future.


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Additional disclosure: Investors should consider the investment objectives, risks, and charges and expenses of the investment carefully before investing. The prospectus and summary prospectus contain this and other information about the Funds. You may obtain them from its distributor, Baron Capital, Inc., by calling 1-800-99BARON or visiting www.BaronFunds.com. Please read them carefully before investing.

Risks: The Fund is a non-diversified fund because it invests, at any given time, in the securities of a select number of Baron mutual funds (the “Underlying Funds”), representing specific investment strategies. The Fund can invest in funds holding U.S. and international stocks; small-cap, small to mid-cap, large-cap, all-cap stocks; and specialty stocks. Each of the Underlying Funds has its own investment risks, and those risks can affect the value of the Fund’s investments and therefore the value of the Fund’s shares. To the extent that the Fund invests more of its assets in one Underlying Fund than in another, it will have greater exposure to the risks of that Underlying Fund. For further information regarding the investment risks of the Underlying Funds, please refer to the Underlying Funds’ prospectus.

The discussions of the companies herein are not intended as advice to any person regarding the advisability of investing in any particular security. The views expressed in this report reflect those of the respective portfolio managers only through the end of the period stated in this report. The portfolio manager’s views are not intended as recommendations or investment advice to any person reading this report and are subject to change at any time based on market and other conditions and Baron has no obligation to update them. This report does not constitute an offer to sell or a solicitation of any offer to buy securities of Baron WealthBuilder Fund by anyone in any jurisdiction where it would be unlawful under the laws of that jurisdiction to make such offer or solicitation.

Ranking information provided is calculated for the Retail Share Class and is as of 3/31/2022. The number of share classes in each category may vary depending on the date that Baron downloaded information from Morningstar Direct. Morningstar calculates its category average performance and rankings using its Fractional Weighting methodology. Morningstar rankings are based on total returns and do not include sales charges. Total returns account for management, administrative, and 12b-1 fees and other costs automatically deducted from fund assets. The Morningstar Large Growth Category consisted of 1,236, 1,025, and 765 share classes for the 1-, 5-, and 10-year periods. Morningstar ranked Baron Opportunity Fund in the 92nd, 2nd, 10th, and 5th percentiles for the 1-, 5-, 10-year, and since inception periods, respectively. The Fund launched 2/29/2000, and the category consisted of 259 share classes. Morningstar ranked Baron Partners Fund in the 1st, 1st, 1st, and 1st percentiles for the 1-, 5-, 10-year, and since conversion periods, respectively. The Fund converted into a mutual Fund 4/30/2003, and the category consisted of 405 share classes. The Morningstar Mid-Cap Growth Category consisted of 592, 503, and 386 share classes for the 1-, 5-, and 10-year periods. Morningstar ranked Baron Asset Fund in the 43rd, 40th, 23rd and 18th percentiles for the 1-, 5-, 10-year, and since inception periods, respectively. The Fund launched 6/12/1987, and the category consisted of 18 share classes. Morningstar ranked Baron Growth Fund in the 20th, 23rd, 20th, and 1st percentiles for the 1-, 5-, 10-year, and since inception periods, respectively. The Fund launched 12/31/1994, and the category consisted of 53 share classes. Morningstar ranked Baron Focused Growth Fund in the 3rd, 1st, 1st, and 1st percentiles for the 1-, 5-, 10-year, and since conversion periods, respectively. The Fund converted into a mutual Fund 6/30/2008, and the category consisted of 311 share classes. The Morningstar Small Growth Category consisted of 614, 521, and 391 share classes for the 1-, 5-, and 10-year time periods. Morningstar ranked Baron Small Cap Fund in the 35th, 38th, 42nd, and 14th percentiles for the 1-, 5-, 10-year, and since inception periods, respectively. The Fund launched 9/30/1997, and the category consisted of 89 share classes. Morningstar ranked Baron Discovery Fund in the 89th, 16th, and 4th percentiles for the 1-, 5-year, and since inception periods, respectively. The Fund launched 9/30/2013, and the category consisted of 430 share classes. The Morningstar Real Estate Category consisted of 255, 205, and 149 share classes for the 1-, 5-, and 10-year time periods. Morningstar ranked Baron Real Estate Fund in the 96th, 1st, 1st, and 1st percentiles for the 1-, 5-, 10-year, and since inception periods, respectively. The Fund launched 12/31/2009, and the category consisted of 127 share classes. Morningstar ranked Baron Real Estate Income Fund in the 85th and 1st percentiles for the 1-year and since inception periods, respectively. The Fund launched 12/29/2017, and the category consisted of 219 share classes. The Morningstar Foreign Large Growth Category consisted of 454, 339, 224, and 197 share classes for the 1-, 5-, 10-year, and since inception (12/31/2008) periods. Morningstar ranked Baron International Growth Fund in the 68th, 31st, 25th, and 13th percentiles, respectively. The Morningstar Diversified Emerging Markets Category consisted of 805, 625, 352, and 277 share classes for the 1-, 5-, 10-year, and since inception (12/31/2010) periods. Morningstar ranked Baron Emerging Markets Fund in the 85th, 72nd, 16th, and 10th percentiles, respectively. The Morningstar World Large-Stock Growth Category consisted of 356, 265, and 169 share classes for the 1-, 5-year, and since inception (4/30/2012) periods. Morningstar ranked Baron Global Advantage Fund in the 94th, 3rd, and 7th percentiles, respectively. The Morningstar Health Category consisted of 167 and 138 share classes for the 1-year and since inception (4/30/2018) periods. Morningstar ranked Baron Health Care Fund in the 48th and 2nd percentiles, respectively. The Morningstar Allocation—85%+ Equity Category consisted of 188 and 165 share classes for the 1-year and since inception (12/29/2017) periods. Morningstar ranked Baron WealthBuilder Fund in the 96th and 2nd percentiles, respectively.

© 2022 Morningstar. All Rights Reserved. The Morningstar information contained herein: (1) is proprietary to Morningstar and/ or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

Active Share: a term used to describe the share of a portfolio’s holdings that differ from that portfolio’s benchmark index. It is calculated by comparing the weight of each holding in the Fund to that holding’s weight in the benchmark. Positions with either a positive or negative weighting versus the benchmark have Active Share. An Active Share of 100% implies zero overlap with the benchmark. Active Share was introduced in 2006 in a study by Yale academics, M. Cremers and A. Petajisto, as a measure of active portfolio management. Alpha measures the difference between a fund’s actual returns and its expected performance, given its level of risk as measured by beta. Beta measures a fund’s sensitivity to market movements. The beta of the market is 1.00 by definition. EPS Growth Rate (3-5-year forecast) indicates the long term forecasted EPS growth of the companies in the portfolio, calculated using the weighted average of the available 3-to-5 year forecasted growth rates for each of the stocks in the portfolio provided by FactSet Estimates. The EPS Growth rate does not forecast the Fund’s performance. Sharpe Ratio is a risk-adjusted performance statistic that measures reward per unit of risk. The higher the Sharpe ratio, the better a fund’s risk adjusted performance. Upside Capture explains how well a fund performs in time periods where the benchmark’s returns are greater than zero. Downside Capture measures how well a fund performs in time periods where the benchmark’s returns are less than zero. Standard Deviation (Std. Dev) measures the degree to which a fund’s performance has varied from its average performance over a particular time period. The greater the standard deviation, the greater a fund’s volatility (risk).

BAMCO, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Baron Capital, Inc. is a broker-dealer registered with the SEC and member of the Financial Industry Regulatory Authority, Inc. (FINRA)

© Baron

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