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Past performance is not a guarantee of future performance. Investment results and principal value will fluctuate so shares, when redeemed, may be worth more or less than their original cost. Investors should be aware of the additional risks associated with investments in non-diversification, undervalued or overlooked companies and investments in specific industries. Additional risks may include those associated with investing in foreign securities, emerging markets, and companies with relatively small market capitalizations.
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as of 09/30/20
The third quarter started on a strong note, with the first two months continuing the rally of the prior quarter. The markets were buoyed by a combination of factors, including employment results that were better than Street forecasts, strength from big tech, corporate earnings and guidance that on average surprised to the upside, improved consumer confidence, and perhaps most significantly, continued monetary support from the Federal Reserve.
The markets took a sharp turn in the last month of the quarter. Technology stocks, which had led the five-month rally, came off their highs while investors rotated into value plays. Elevated unemployment numbers as small businesses continued to struggle, coupled with the stalemate in Congress over additional fiscal support, raised investor concerns that the economic recovery would take longer than hoped. A sense that stock valuations were overextended also pressured share prices. Nevertheless, while volatility spiked in September, the markets posted mostly positive results in the quarter.
Against this backdrop, Baron Discovery Fund increased in the quarter. Investments in Health Care, Consumer Discretionary, and Industrials contributed the most. No sector detracted. Second largest contributor Silk Road Medical, Inc. led gains within Health Care and top contributor Penn National Gaming, Inc. led gains within Consumer Discretionary. Environmental services company Montrose Environmental Group, Inc. and wind blade manufacturer TPI Composites, Inc. were both noteworthy contributors to positive performance within Industrials.
We are still grappling with major questions regarding the course of the pandemic, progress on a vaccine, corporate earnings, fiscal stimulus, the upcoming presidential election, and the path to economic recovery, any of which could result in significant volatility in the short term. Over the longer term, we remain encouraged by the fundamental prospects of our portfolio investments. We try not to be sidetracked by the macro “noise” and instead focus our energies on managing our existing investments and finding new ones. The good news is that we continue to find high quality, fast growing small companies with significant stock appreciation potential.
as of 09/30/20
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.