Review and Outlook

as of 03/31/21

The Review and Outlook for period ending March 31, 2021, is not yet available.

Top Contributors/Detractors to Performance

as of 03/31/21

Contributors

  • Alphabet Inc. is the parent company of Google, the world’s largest search and online advertising company. Shares rose in the quarter on strong fourth quarter results that saw continued recovery in ad spend and accelerated cloud revenue growth. We remain highly convicted in Alphabet's merits as it continues to benefit from growth in mobile and online video advertising, which accrues to its core assets of search, YouTube, and the Google ad network. Alphabet's investments in AI, autonomous driving (Waymo), and life sciences (Verily, Calico) provide additional optionalities for growth.
  • Shares of Facebook, Inc., the world’s largest social network, were up on robust fourth quarter results driven by strong ad pricing growth and tailwinds to newer shopping and payments products from rapidly increasing e-commerce adoption. In our view, Facebook continues to utilize its leadership in mobile to provide global advertisers targeted marketing capabilities at scale, with substantial monetization opportunities ahead across its various assets including WhatsApp, video tools including Watch and IG TV, and community-based marketplace, shopping, jobs, and dating features.
  • Microsoft Corporation is a software mega cap that has successfully pivoted from the client server and PC era to today’s world of digital transformation and cloud. Microsoft is a cloud leader through its Azure, Office 365, Dynamics 365, and Teams offerings, among others. Shares were up as Microsoft’s transition to cloud-based subscriptions has made its business more durable to downturns, with 90% of its commercial revenue base paid on an annual basis. Microsoft also stands to benefit from the acceleration of digital transformation trends driven by the pandemic, in our view.

Detractors

  • Adobe Inc. is a leading software company that offers creative and document cloud solutions for the digital media market and marketing, advertising, and analytics cloud solutions for the digital experience market. Shares declined during the quarter due to the broader market rotation. We believe Adobe’s robust growth profile is sustainable as it is driven by some of the strongest technological shifts of our time (which have only accelerated due to COVID-19), including digitization, increasing demand for personalized customer experiences, and the widespread adoption of video.
  • Shares of MSCI, Inc., a leading provider of investment decision support tools, detracted from performance. The stock pulled back as part of the broader market rotation that saw steady compounders (especially ones with solid 2020 performance) temporarily fall out of favor. There was no materially negative company-specific news with MSCI reporting largely solid fourth quarter earnings and hosting an upbeat investor day. We retain long-term conviction as MSCI owns strong, all weather franchises and remains well positioned to benefit from numerous tailwinds in the investment community.
  • Charter Communications, Inc., the second largest cable operator in the U.S., detracted in the quarter. Charter reported slightly slower user growth in the fourth quarter than the Street expected, as outsized pandemic-related increases in prior quarters pulled forward some growth that would otherwise have come later in the year. We remain investors, as we believe Charter has several years of user growth ahead of it, followed by substantial pricing power across the majority of its network where its broadband business has no effective competition.

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

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. The Fund’s transfer agency expenses may be reduced by expense offsets from an unaffiliated transfer agent, without which performance would have been lower. Current performance may be lower or higher than the performance data quoted.

Risks:All investments are subject to risk and may lose value.

The discussion of market trends is not intended as advice to any person regarding the advisability of investing in any particular security. The views expressed on this page reflect those of the respective writer. Some of our comments are based on management expectations and are considered “forward-looking statements.” Actual future results, however, may prove to be different from our expectations. Our views are a reflection of our best judgment at the time and are subject to change at any time based on market and other conditions and Baron has no obligation to update them

Portfolio holdings are subject to change. Current and future portfolio holdings are subject to risk.

The index performance is not fund performance; one cannot invest directly into an index.