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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. Many of the themes in which we invest – e-commerce; electronic payments; digital entertainment, media, and advertising; digital workflows; cloud computing; cybersecurity; and genomics – proved critical to allowing businesses and people to carry on with life and work during the pandemic.
It proved to be a favorable investing environment for Baron Opportunity Fund, which increased in the quarter to end the full year up nearly 89%. Information Technology (IT), Health Care, and Communication Services holdings contributed the most. IT’s positive performance was led by cloud communications company RingCentral, Inc., whose stock climbed on continued acceleration in its business and a major distribution deal with Vodafone. With 15 out of 19 holdings appreciating by double- or triple-digits, Health Care had a strong quarter. Second largest contributor Pacific Biosciences of California, Inc. led gains within the sector after its stocks rose by nearly 168%. With 8 out of 11 holdings increasing by double-digits, including third largest contributor Snap Inc., Communication Services also saw broad sector-wide strength in the quarter. The Real Estate sector was a modest detractor due to share price declines in two out of five investments.
What do we expect for 2021? Consensus expectations appear to be that mass vaccination will be successful and we will emerge into a post-COVID-19 world hopefully by summer. In addition, the consensus view is that the post-pandemic economic recovery will be significant, supported by accommodative monetary and fiscal policy and continued low interest rates. Many predict that our politics and governance will become more stable and potentially more bipartisan with a new administration and a 50/50 Senate. If these things come to pass, we believe it will be a favorable environment for the market and our strategy.
On the other hand, these things may not come to pass. We think the immediate future is almost impossible to predict with any accuracy. However, we don’t have to answer the unanswerable. As we have always done, we continue to focus our research, analysis, and investment decisions on identifying the secular growth trends that will drive economic growth going forward, regardless of short-term economic cycles or stock market gyrations, and the individual companies that are leading or riding those trends and possess sustainable competitive advantages, profitable business models, and long-term-oriented managers.
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.