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Baron Real Estate Income Fund®: The Case for Active Management

March 2025 | Download PDF

 

Our active approach has consistently outperformed the MSCI US IMI Real Estate 25/50 Index

Baron Investor: Baron Small Cap Fund chart

Note: SEC standardized performance is available on page 2.

1 Annualized returns as of March 31, 2025.
2 Institutional shares. For Retail and R6 shares, visit BaronCapitalGroup.com.
3 Inception date: December 29, 2017.

 

As active managers, we have the flexibility to invest in the best and avoid the rest

Active Management
  • Employs bottom-up, research-intensive security selection
  • Emphasizes the winners and avoid the losers
  • Is discerning with sector selection, geographic exposure, balance sheet analysis, and lease duration
  • Strives to exploit market mispricings
  • Takes benchmark-agnostic approach
Passive Management
  • No fundamental analysis in building and managing a real estate portfolio
  • Simply replicates a real estate benchmark or index
  • Owns both the winners and the losers, often with inappropriate sizing vs. the prospective investment returns

 

Baron Real Estate Income Fund is highly differentiated from our passive and actively managed peers

  • Has larger investment universe than actively managed REIT funds
    • REITs represent at least 75% to 80% of net assets. Non-REIT dividend-paying real estate companies that may present superior growth, income, and/or share price appreciation potential than REITs may comprise 20% to 25% of net assets
  • Is less reliant on debt capital markets than traditional REIT funds (REITs must pay out at least 90% of taxable income in dividends annually)
  • Portfolio allocations are driven by conviction, thematic investing, and risk-adjusted returns, not benchmark considerations
  • May own REITs and non-REITs not included in index
  • Is more discerning than passive real estate funds that must own entire index, regardless of quality

Featured Fund

Learn more about Baron Real Estate Income Fund.