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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 03/31/19
The year is off to a good start with the market climbing significantly during the quarter, erasing essentially all of its losses from the fourth quarter of last year. The gains were broad-based as the market rebounded following the Fed’s pivot on interest rates, talking back its auto pilot approach to one that is data sensitive and accommodative for longer if necessary, accompanied by hopes for a trade-war resolution.
Baron Durable Advantage Fund increased in the quarter. All sectors contributed, led by Information Technology (IT), Health Care, Financials, and Communication Services. IT's strong showing included top contributor Mastercard Incorporated. Microsoft Corporation was another noteworthy contributor within the sector. Shares of this software mega-cap company increased on reports of growing margins and strong results in Microsoft's cloud business, which grew by 48% year-over-year. Third largest contributor Danaher Corporation was the primary driver of positive performance within the Health Care sector. Financials benefited from double-digit returns in the share prices of second largest contributor Moody's Corporation and S&P Global, Inc. Shares of S&P Global, which is the world's largest credit agency, climbed as interest rates fell and credit spreads narrowed, leading to a more positive outlook on new debt issuance. Communication Services' solid performance was led by Electronic Arts Inc., a global leader in digital entertainment.
We do not attempt to predict when the next recession will occur or if the market will be up or down over the next 3, 6, or 12 months. We do know however, that over the last 40 years or so, the stock market has outperformed bonds approximately 73% of the time based on monthly rolling five-year returns, and while history doesn’t repeat itself, it often rhymes. Our goal is to invest in large-cap companies with strong and durable competitive advantages, proven track records of successful capital allocation, high returns on invested capital, and high free cash flow generation, a significant portion of which is regularly returned to shareholders in the form of dividends or share repurchases. We hope to maximize long-term returns without taking significant risks of permanent loss of capital. We are optimistic about the prospects of the companies in which we are invested and will always continue to search for new ideas and opportunities.
as of 03/31/19
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.