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

  • Space Exploration Technologies Corp. (SpaceX) designs, manufactures, and launches rockets, satellites, and spacecrafts. Its mission, ultimately, is to enable people to live on other planets. SpaceX is commercializing its broadband offering by rapidly deploying user terminals and its satellite constellation. It continues to reliably provide reusable launch capabilities, including crewed flights, and advancing the development of its newest and larger rocket, Starship. We value SpaceX using prices of recent transactions and a proprietary valuation model driving the price appreciation.
  • Shares of brokerage firm The Charles Schwab Corp. rose in the quarter. The company has been successfully integrating its acquisition of TD Ameritrade. The merger enables Schwab to leverage efficiencies of scale to drive down its industry-leading operating costs per client assets even further. Additionally, net new assets grew in the mid-single digits as customers tapped the services of the combined businesses. Finally, the business now has over $400 billion of interest-earning assets, which should lead to improved earnings in a more normalized interest rate environment.
  • Shares of timeshare company Marriott Vacations Worldwide Corp. increased in the quarter on accelerated sales driven largely by increased demand in Orlando and Hawaii, which together comprise 40% of its annual sales. Its announced Welk acquisition also helped boost the share price. We think excess inventory from its Welk acquisition will help to quickly improve the company's balance sheet and cash flow profile.

Detractors

  • Shares of CoStar Group, Inc., a real estate information and marketing services company, detracted as a result of a broader rotation away from higher-multiple growth stocks. CoStar has seen an acceleration in demand for its digital marketplace businesses as traditionally offline activities shifted online. Modest headwinds in its data licensing businesses that hampered growth in 2020 are now abating. CoStar has moved to enter the residential real estate market, which meaningfully expands its market and should amplify growth as it launches new technological innovations.
  • Tesla, Inc. designs, manufactures and sells fully electric vehicles, solar products, energy storage solutions, and battery cells. The stock fell during the quarter as a result of general market dynamics and a potential production slowdown due to a parts shortage. A refreshed S/X and China Model Y ramp could also have a potentially negative impact on margins in early 2021. We anticipate strong growth and improved margins driven by production efficiencies, localization of manufacturing and supply chain, and maturation of full self driving technology.
  • Zillow Group, Inc. operates leading U.S. real estate sites, a mortgage marketplace, and the Zillow Offers home-buying business. Shares fell slightly during the quarter in concert with the broader rotation out of technology-based stocks despite continued inflection in mortgages revenue, strong profitability in the core business, and a positive real estate outlook as Zillow builds out its iBuying ecosystem. In our view, Zillow is a leader in the large online real estate advertising market with substantial upside from mortgages and Offers, and we remain investors.

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.