Review and Outlook

as of 03/31/22

The Review and Outlook for period ending March 31, 2022, is not yet available.

Top Contributors/Detractors to Performance

as of 03/31/22


  • Reliance Industries Limited is India's leading conglomerate, with business interests in telecommunications, retail, oil refining, and petrochemicals. Reliance is fast transforming into a digital services company, leveraging its telco network to offer online and e-commerce services. Shares increased due to improving earnings visibility as India's economy continues to recover post-COVID. In addition, the company is gaining telco market share and benefiting from rising oil prices. We believe earnings will sustain 18% to 20% growth over the next three to five years.
  • Bharti Airtel Limited contributed during the quarter. As India's dominant mobile operator, the company is benefiting from ongoing industry consolidation, as Vodafone Idea, a key player, is on the verge of bankruptcy amid severe pricing pressure and an unsustainable balance sheet. Performance was driven by market share gains and the company's targeted plan to expand into other digital services such as Enterprise and Cloud. We retain conviction in Bharti as it transforms into a digital services company and potentially benefits from rising mobile tariffs as well.
  • Hyundai Heavy Industries Co., Ltd. is the world’s largest shipbuilder and global leader of eco-friendly LNG powered ships. Shares rallied on increased demand for LNG carriers given the rise in natural gas prices. We remain investors as we believe Hyundai Heavy Industries will be the leading beneficiary of the trend in decarbonization of shipping given its technological leadership and dominant market position. We expect tightening carbon emission regulations to drive much higher demand for LNG fuel-propelled ships and carbon-free ammonia-fueled ships.


  • Tencent Holdings Limited operates the leading social network and messaging platforms (QQ, WeChat), the largest online entertainment and media business, and the largest online gaming business in China. Shares of Tencent were down given crackdowns by Chinese regulators on aspects of digital technology and consumerism in an attempt to re-focus investment in China on the community. Despite the near-term regulatory uncertainty, we retain conviction that Tencent can sustain durable growth given its track record of execution, scale, and unique and diversified online assets.
  • Zhejiang Dingli Machinery Co., Ltd. is China’s largest manufacturer of Aerial Work Platforms (AWPs). Shares fell due to stiff U.S. tariffs and an economic slowdown in China. We remain investors. Dingli is the largest player in the AWP industry, with premium products and 40% market share. The AWP market is significantly underpenetrated in China, and, in our view, there is a long-term structural growth opportunity for rising adoption due to the increasing relative affordability of AWP rentals and a growing focus on worker safety and productivity.

Quarterly Attribution Analysis (Institutional Shares)

as of 03/31/22

When reviewing performance attribution on our portfolio, please be aware that we construct the portfolio from the bottom up, one stock at a time. Each stock is included in the portfolio if it meets our rigorous investment criteria. To help manage risk, we are aware of our sector and security weights, but we do not include a holding to achieve a target sector allocation or to approximate an index. Our exposure to any given sector is purely a result of our stock selection process.

as of 03/31/22

Baron New Asia Fund (Institutional Shares) declined 15.24% in the first quarter, trailing the MSCI AC Asia ex Japan Index by 725 basis points as adverse stock selection was somewhat offset by cash exposure in difficult market conditions.

From a country perspective, favorable stock selection in Korea along with lower exposure to this lagging country added value. The Fund’s significantly higher exposure to better performing Indian equities contributed another 70-plus basis points to relative results. These positive effects were undone by weak stock selection in China, India, and Taiwan, which together accounted for most of the relative shortfall. The Fund’s unique exposure to Japan, where Keyence Corporation, Hoya Corporation, and Tokyo Electron Limited were down double digits, together with underexposure to better performing Singaporean and Hong Kong equities also weighed heavily on relative performance.

Apart from cash, lower exposure to the lagging Consumer Discretionary sector and outperformance of Energy Absolute PCL in Utilities contributed to relative performance.

Investments in Information Technology (IT), Industrials, Financials, and Communication Services detracted the most from relative results. Within IT, lower exposure to index heavyweight Taiwan Semiconductor Manufacturing Company Ltd. was responsible for a portion of the weakness in the sector. Stock selection also proved costly in IT, driven by notable declines from the Fund’s China value-added positions, particularly those in the semiconductor related (Will Semiconductor Co., Ltd., Silergy Corp., and Hua Hong Semiconductor Limited), SaaS/software (Yonyou Network Technology Co., Ltd. and Venustech Group Inc.), and advanced manufacturing/robotics (Keyence Corporation) sub-themes. Weakness in Industrials also came from the Fund’s China-value added investments, specifically those in the advanced manufacturing/robotics sub-theme (Zhejiang Dingli Machinery Co., Ltd., Han’s Laser Technology Industry Group Co., Ltd., and Estun Automation Co., Ltd.), as well as Full Truck Alliance Co. Ltd., which is part of the digitization theme. Within Financials, lower exposure to diversified banks, which benefited from rising rates, and declines from life insurance providers Max Financial Services Limited and AIA Group Limited hampered relative results. The Fund’s Communication Services holdings underperformed after falling nearly 22% as a group, with global digital gaming and e-commerce company Sea Limited leading the decline. Sea’s shares were down sharply due to a slowdown in user growth at its key Free Fire digital game and mounting investments in its e-commerce operation, particularly in new markets like Brazil. We exited our position as we lost confidence in the long-term unit economics in some of Sea’s new markets and were concerned by the simultaneous slowdown in revenue growth and increase in underlying cash burn.