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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 12/31/20
In the fourth quarter of 2020, equity markets marched higher, continuing their rally of the prior two quarters. Markets looked past an alarming spike in the number of COVID-19 cases and instead focused on positive news around vaccines, the U.S. election results, and continued monetary and renewed fiscal stimulus. While growth equities underperformed value stocks, growth was still ahead by a wide margin for the year.
Baron Focused Growth Fund increased in the quarter. Consumer Discretionary, Communication Services, and Industrials investments were the top contributors. Holdings within Health Care detracted. All six holdings within Consumer Discretionary had double-digit gains, including top contributor Tesla, Inc., which soared by nearly 65%, as well as Vail Resorts, Inc. and Hyatt Hotels Corporation, the second and third largest contributors, respectively. Communications Services advanced on strong performance by satellite communications company Iridium Communications Inc. and leading music streaming service Spotify Technology SA. Shares of Iridium rose after results revealed resiliency despite exposure to pandemic-impacted verticals. Shares of Spotify rose on robust user growth and engagement and an improving ad revenue outlook. CoStar Group, Inc. drove performance of the Industrials sector, after shares of this real estate information and marketing services company increased on an acceleration in demand for its digital marketplace businesses as traditionally offline activities increasingly shift online. With all three top detractors within the sector, Health Care had a relatively weak quarter.
We believe that while certain segments of the market will likely take longer to recover, in many cases, that likelihood is already baked into lower valuations for those companies. At the same time, we think other companies and segments of the market will continue to benefit from the acceleration in digitization and other secular trends as a result of the pandemic’s impact on the way we work, learn, socialize, and entertain ourselves.
We look at 2020 as a testament to our active, long-term approach to investing. Considering the unprecedented and unexpected effects of the pandemic on the economy and our lives, the fact that the markets have recovered all of their losses and then some since the start of the year is an outstanding outcome. The patient investor has been rewarded for staying calm during the storm.
as of 12/31/20
as of 12/31/20
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.