Baron International Growth Fund (BINIX)
Fund Manager since
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Baron International Growth Fund invests primarily in non-U.S. growth companies.
Review and Outlook
Outside of the emerging markets, global equities proved quite robust during the fourth quarter and full year, particularly in the U.S., Japan, and Europe. Over the year, notwithstanding intermittent turbulence over the potential tapering of U.S. monetary support, ongoing quantitative easing met with favorable progress on several key uncertainties, providing the fuel for strong multiple expansion in most markets despite a tepid growth environment. Though several developing world economies remained locked in a decelerating fundamental economic environment during the fourth quarter, recent data points suggest a potential trough, while a synchronized recovery gained pace in the U.S., Europe, Japan, and China. We remain enthusiastic about the market friendly changes occurring in Japan, and we have gained increasing conviction in positive reforms in markets such as China and Mexico.
The Baron International Growth Fund had a good fourth quarter and strong full year. Our process of theme identification, which is an important element of idea generation and research generally, has been a siginifcant source for the Fund's performance. While, by design, we maintain broad diversification by country and sector with a focus on long-term value creation, we do modestly shift our exposure by country from time to time based on our view of the changing risk equilibrium across our markets. Over the year, growing headwinds across the emerging markets caused us to reduce such exposure in the aggregate.
For the quarter, Financials was the top performing sector, driven by a large gain in Multi Commodity Exchange of India. The Telecommunications Services and Health Care sectors were also solid contributors. For the full year, performance was driven mostly by our broadband and mobile theme, as several holdings in the related Information Technology and Telecommunication Services sectors more than doubled in price, including Opera Software ASA, Kakaku.com, Inc., 21Vianet Group, Inc., and SoftBank Corp. Additional strong performers related to this theme include Sina Corporation, NQ Mobile, Inc., Yandex NV, and Tencent Holdings Ltd. The Energy and Materials sectors were both moderate detractors in the quarter. The only detracting sector for the full year was Materials, largely due to the weak performance of Agrinos AS, a green technology company.
As we embark on a new year, we maintain conviction in our principal investment themes and diversified portfolio of investments. These themes include: supply chain logistics and distribution; Japanese political & economic reform; mobile broadband, eCommerce, and Internet; digitization of India's cable and media; emerging markets; consumer; Chinese economic and financial reform; and Brazilian post-secondary education.
We look forward to exploring new opportunities in the year ahead.
Top Contributors/Detractors to Performance
Quarterly Attribution Analysis
The Quarterly Attribution Analysis for period ending December 31, 2013 is not yet available
Yearly Attribution Analysis
The Yearly Attribution Analysis for period ending December 31, 2013 is not yet available
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The prospective performance of the companies discussed herein is based on our internal analysis and reflect our opinions only. We cannot promise future returns and our opinions are a reflection of our best judgement at the time of publication. Our views are not intended as recommendations or investment advice to any person and are subject to change at any time based on market and other conditions and Baron has no obligation to update them. Investing in the stock market is always risky. Current and future portfolio holdings in the Fund are subject to risk.
Source: FactSet PA