The information contained on this site is intended for institutional investors only, and is published strictly for informational purposes only without regard to the investment objective, financial situation or specific needs of any particular investor. The information is not intended for use by institutional investors in a jurisdiction where distribution or purchase is not authorized.
An institutional investor is one that falls within one or more of the following categories:
If you do not fall within at least one of the above categories you should not access the information contained in the site.
Baron Capital Management, Inc. makes reasonable efforts to ensure the material on the site is as accurate and timely as possible and that disruptions of service are minimal, Baron Capital Management, Inc. makes no warranty or guarantee concerning the availability of this site or the services or the accuracy of the information on it. In addition, the information contained on the site is in no way intended to constitute investment advice, an offer to sell, or a recommendation of any security or investment product. In fact, the products described herein may not be available to, or suitable for, all investors. You should consider, if appropriate, obtaining independent professional advice before making an investment decision. Please consider the charges, risks, expenses and investment objectives carefully before investing. Nothing on this site is intended to constitute legal or tax advice.
Please keep in mind that the opinions and views expressed through the content and commentaries published on the site are just that - opinions and views - and that they are published on the site for informational purposes only. In addition, views and opinions are based on the information available at the time and may not necessarily be shared by Baron Capital Management, Inc., or its employees, in general. As the investing environment changes, so could this information, and Baron Capital Management, Inc. has no responsibility to update it.
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.
By selecting “I Agree” below, you confirm that you are an institutional investor or consultant to an institutional investor.
The link you have selected is not available within the Institution user experience. You will be switched to view this website as a Financial Advisor.
When you wish to view strategies again, click an 'Institution' link within the 'View As' menu or 'Strategies' in the footer.
Thank you for your email. We will respond as soon as possible.
as of 06/30/20
After falling sharply on COVID-19-related fears during the first quarter, U.S. equity markets staged their largest quarterly gain in more than 20 years. The market rally was likely driven by a confluence of factors, including accommodative Federal Reserve policies, stepped up efforts to reopen the economy, optimism about a COVID-19 treatment, renewed speculation about large government infrastructure stimulus, and various economic data (such as unemployment figures) that were more positive than expected.
For Baron Real Estate Fund, we are currently prioritizing three investment themes. First is the ongoing recovery in the U.S. housing market, which we believe may be boosted by the pandemic as we anticipate a possible shift in households from urban to suburban centers as COVID-19 outbreaks have largely been centered around major cities and work from home arrangements have become more prevalent. In addition, more time at home may lead to more investment in home improvement and repair.
Second, we are focused on real estate-related companies that embrace and adopt the latest technological advances and innovations. The growth in cloud computing, the internet, mobile data and cellphones, and wireless infrastructure are powerful secular drivers that should continue unabated for years. Key beneficiaries include data center companies, wireless tower companies, industrial REITs, and real estate data analytics companies. If anything, the pandemic will accelerate these trends as more people conduct business, leisure, residential, and commerce activities online.
Third, we believe what we are calling “epicenter” companies are likely to experience a major rebound when a medical breakthrough for COVID-19 emerges and economic activity is restored. “Epicenter” companies include hospitality-related real estate companies such as hotels, casino and gaming companies, timeshare, amusement parks, ski resorts, and cruise lines, which were hard hit by the pandemic as they were forced to shut down operations almost without exception. We exited or reduced many of our positions in these companies early in 2020 at favorable prices. Since then we have been selectively reinvesting at compelling valuations. We believe these businesses are cyclically depressed – not secularly challenged – and are likely to lead the market higher in the post-COVID-19 period. Our holdings have strong balance sheets and ample liquidity to survive without revenue for at least a year, if not two.
We are mindful of the economic and real estate uncertainty generated by the pandemic. While the current increase in the number of COVID-19 cases is concerning, we know more about how the virus spreads and doctors are much better at treating patients than a few months ago, so we do not anticipate a return to a total shutdown. For the real estate market in particular, historically low interest rates should also help boost growth. We believe our philosophy of structuring a more inclusive and unique real estate fund – one that includes REITs but is more expansive, balanced, and diversified than a typical “REIT only” fund – is a compelling long-term strategy.
as of 06/30/20
as of 06/30/20
When reviewing performance attribution on our portfolio, please be aware that we construct the portfolio from the bottom up, one stock at a time. Each stock is included in the portfolio if it meets our rigorous investment criteria. To help manage risk, we are aware of our sector and security weights, but we do not include a holding to achieve a target sector allocation or to approximate an index. Our exposure to any given sector is purely a result of our stock selection process.
as of 06/30/20
Baron Real Estate Fund (Institutional Shares) gained 29.93% in the second quarter and meaningfully outperformed the MSCI USA IMI Extended Real Estate Index by 817 basis points due to a combination of stock selection and differences in real estate category exposures.
Investments in casinos & gaming operators, homebuilders & land developers, data centers, and hotels & leisure companies and lower exposure to underperforming office and residential REITs added the most value. Favorable stock selection in the casinos & gaming category accounted for a third of the Fund’s outperformance in the period, led by sharp gains from Penn National Gaming, Inc. and Boyd Gaming Corporation. These companies benefited from a quick rebound in revenues at recently opened properties as most of their business is local. Higher exposure to the casinos & gaming category, which was up more than 36% in the index, also added value. Within homebuilders & land developers, higher exposure to this top performing category and outperformance of installation contractor Installed Building Products, Inc. (“IBP”) bolstered relative results. IBP’s stock price rose sharply on strong quarterly results and an encouraging business outlook. Homebuilders Lennar Corporation, D.R. Horton, Inc., and Taylor Morrison Home Corporation also performed well in the category after reporting an acceleration in new home orders. Strength in the data centers and hotels & leisure categories was driven by the outperformance of GDS Holdings Limited and Marriott Vacations Worldwide Corp., respectively. Chinese data center operator GDS was the third largest contributor due to robust quarterly results, solid bookings visibility, continued strong cloud growth from its core customers, and several M&A opportunities to augment growth. Shares of timeshare resort company Marriott increased after occupancy levels and sales at recently opened resorts exceeded Street forecasts. The company’s delinquency rates have not increased materially, new construction projects remain on schedule, and management successfully preserved cash by operating at a cash flow neutral level while its resorts and sales centers were closed.
Cash exposure in a rising market, significantly lower exposure to strong performing home improvement retail stocks within the building products/services category, and higher exposure to lagging real estate operating companies hampered relative results.
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.