Baron Durable Advantage Fund
Nav
$27.95
As of 10/08/2024
Net Assets
$424.30 M
Morningstar Rating™
Morningstar Medalist Rating™
GOLD
Inception date
12/29/2017
Prices & Performance
PricesAs of 10/08/2024
NAV | Daily Change ($) | Daily Change (%) | MTD | QTD | YTD |
---|---|---|---|---|---|
$27.95 | $0.33 | 1.19% | 0.50% | 0.50% | 23.89% |
NAV | $27.95 |
---|---|
Daily Change ($) | $0.33 |
Daily Change (%) | 1.19% |
MTD | 0.50% |
QTD | 0.50% |
YTD | 23.89% |
PerformanceAs of 09/30/2024
Portfolio or Index | QTD1 | YTD1 | 1 Year | 3 Years | 5 Years | Since Inception 12/29/2017 |
---|---|---|---|---|---|---|
BDAUX - Baron Durable Advantage Fund - R6 | 5.66% | 23.27% | 40.46% | 14.44% | 18.80% | 16.52% |
S&P 500 Index | 5.89% | 22.08% | 36.35% | 11.91% | 15.98% | 13.98% |
Performance InformationAs of 06/30/2024
Performance statistics | 3 Years | 5 Years | Since Inception |
---|---|---|---|
Standard Deviation (%) | 19.80 | 18.97 | 18.31 |
Sharpe Ratio | 0.50 | 0.84 | 0.77 |
Alpha (%) | 2.45 | 2.82 | 2.51 |
Beta | 1.07 | 1.01 | 1.00 |
R-Squared (%) | 92.57 | 92.44 | 92.63 |
Tracking Error (%) | 5.53 | 5.22 | 4.97 |
Information Ratio | 0.56 | 0.61 | 0.54 |
Upside Capture (%) | 113.13 | 107.20 | 105.01 |
Downside Capture (%) | 105.59 | 98.16 | 96.30 |
Risk & Return06/30/2019 - 06/30/2024
1 Source: FactSet SPAR.
Portfolio Holdings & Characteristics
HoldingsAs of 09/30/2024
Holding | Sector | % of Net Assets | |
---|---|---|---|
Microsoft Corporation Microsoft Corporation (MSFT) is a software company traditionally known for its Windows and Office products. Over the last five years, it has built a $120 billion-plus annual cloud business, including Office 365, CRM product Dynamics 365, and infrastructure-as-a-service product Azure. Over the past decade, Microsoft has transformed itself, refocusing the business on cloud computing and AI. Microsoft's commercial cloud business now represents over 56% of revenue and is growing around 25% year-on-year. Its moat is built on the wide reach of its sales channel, its diverse platform of software offerings, its hybrid cloud capabilities, and the high costs of switching away from its solutions, which tend to be mission critical for customers. We believe Microsoft will benefit from the growing adoption of cloud for years to come. | Information Technology | 8.0% | |
Meta Platforms, Inc. Meta Platforms, Inc. (META) owns Facebook, the world's largest social network, with over 3.0 billion monthly and over 2.1 billion daily active users. Instagram, Messenger, WhatsApp, and Oculus are also part of the Meta Platforms network, with over 3.9 billion total monthly unique users across Meta products. Meta owns unique social platforms with users that continue to demonstrate stickiness and high engagement. Advertisers want to be where users are, and Meta's ability to analyze, target, and show clear, demonstrable, and rising returns on investment makes the platform particularly attractive to them. We believe the company is still in the middle innings of monetizing its vast customer base, especially internationally. In addition, we see significant positive optionality from monetization opportunities in video, WhatsApp, business messaging, and generative AI features. | Communication Services | 6.9% | |
Amazon.com, Inc. Amazon.com, Inc. (AMZN) is an e-commerce pioneer, innovator, and market share leader with a relentless focus on providing value and convenience to its customers. Amazon also operates the industry-leading cloud infrastructure business Amazon Web Services (AWS). Amazon's market share of U.S. online retail sales is around 40%, while its share of global online retail sales is less than 5%. Amazon has many avenues for revenue growth, including consumer staples, apparel, international expansion, digital media offerings, private label, pharmacy services, advertising, and a better shopping experience powered by generative AI. Amazon also represents an opportunity to invest in the secular growth of cloud computing through AWS, a large, growing part of the business. | Consumer Discretionary | 6.4% | |
NVIDIA Corporation NVIDIA Corporation (NVDA) sells semiconductors, systems, and software for accelerated computing, gaming, and generative AI (GenAI). Computing demand has been doubling every one to two years, driven by electrification, digitization and the recent advancements in AI, yet supply growth has decelerated dramatically due to the slowdown in Moore's law. NVIDIA’s accelerated computing architecture enables continued growth in supply of computing through parallelization. We are at the tipping point of a new era in computing with NVIDIA at its epicenter as GenAI adoption grows. Given its leading market share in gaming, data centers, and autonomous machines, we believe NVIDIA can grow rapidly for years to come. | Information Technology | 4.6% | |
S&P Global Inc. S&P Global Inc. (SPGI) provides credit ratings, indices, data, and analytics to the financial, transportation, and commodities markets. S&P Global benefits from the secular growth of rated bond issuance, the ongoing shift from active to passive investing, and growing demand for data and analytics. The company operates in oligopoly markets, where it enjoys formidable competitive advantages. We expect to see a recovery in rated bond issuance as interest rates stabilize, alongside ongoing benefits from S&P Global’s 2022 merger with IHS Markit. Excess cash flow is being used for accretive acquisitions and is being returned to shareholders through share repurchases and dividends. | Financials | 4.2% | |
Taiwan Semiconductor Manufacturing Company Limited Taiwan Semiconductor Manufacturing Company Limited (TSM) is the world's largest independent semiconductor foundry, manufacturing chips on behalf of other companies. TSMC is the dominant force in leading edge semiconductor foundry manufacturing, as it benefits from economies of scale and a superior cost structure. Its successful track record of deploying new technology faster than competitors enables it to maintain its market share and pricing power. We believe TSMC’s investments in advanced nodes will solidify its superior market positioning and profitability in the long run. | Information Technology | 4.1% | |
Broadcom Inc. Broadcom Inc. (AVGO) designs, develops, and supplies a wide range of semiconductor and infrastructure software solutions. Its semiconductor devices serve broadband, networking, wireless, storage, and industrial markets while its software offerings focus on operational efficiency tools for large enterprises. Broadcom’s semiconductor portfolio is reaching an inflection point, driven by its AI solutions in networking and custom compute. We expect mid-single-digits growth for the rest of the semiconductor portfolio and low-single-digits growth for the legacy software offerings, driven by cost efficiencies, cross-selling, and servicing key enterprise accounts. Broadcom's product simplification and SaaS conversion strategy should drive expansion of its VMWare business as well. The company has best-in-class margins and cash flow, which it returns to shareholders. | Information Technology | 3.9% | |
Alphabet Inc. Alphabet Inc. (GOOGL) is the parent of Google, the world's most dominant online search provider. Other services and products include display advertising, Android, Chrome, Google Cloud, Google Maps, Google Play, and YouTube. Its Other Bets segment consists of businesses such as CapitalG, Waymo, and Verily. Alphabet has been the largest beneficiary of a secular shift in advertising from all other media to online and mobile. The company has processed and indexed more data than any other company, and its leadership position in AI allows it to leverage its large datasets to quickly improve its products. Subsidiaries Google Cloud and YouTube give Alphabet exposure to the secular shifts to cloud computing and connected TV. Alphabet has tremendous scale, distribution, and talent. We are monitoring the potential disruption of generative AI to the company's core search business. | Communication Services | 3.9% | |
Moody's Corporation Moody's Corporation (MCO) provides credit ratings, financial intelligence, and analytical tools to assist businesses in making decisions. Moody's benefits from the secular growth of bond issuance as debt levels rise with the global economy and bond markets gain share from unrated bank debt. We think the data and analytics business will generate steady growth from new sales, product upgrades, and price increases. Further, we believe margins should continue expanding due to operating leverage and efficiency initiatives. Excess cash flow is being used for accretive acquisitions and returned to shareholders through share repurchases and dividends. | Financials | 3.4% | |
Visa Inc. Visa Inc. (V) is a leading global payment network. The company authorizes and facilitates electronic payments for consumers, merchants, and banks. Visa benefits from consumer spending growth and the secular shift from cash to electronic payments. Most of its revenue comes from international markets, where consumer spending and the adoption rate of electronic payments are rising quickly. The company generates significant free cash flow, which is being returned to shareholders through dividends and share repurchases. We believe Visa enjoys high barriers to entry given its well-established brand, ubiquitous merchant acceptance network, and extensive banking relationships. | Financials | 3.3% | |
Total Total | 48.8% |
Portfolio holdings are subject to change. Current and future portfolio holdings are subject to risk.
Contributors / DetractorsQuarterly as of 06/30/2024
Top Contributors | Average Weight | Contribution |
---|---|---|
NVIDIA Corporation | 4.51% | 1.48% |
Alphabet Inc. | 4.86% | 0.95% |
Broadcom Inc. | 2.86% | 0.74% |
Taiwan Semiconductor Manufacturing Company Limited | 2.93% | 0.74% |
Microsoft Corporation | 9.07% | 0.55% |
GICS Sector BreakdownAs of 09/30/2024
Sector
Information Technology
29.7%
Financials
29.4%
Communication Services
10.8%
Health Care
10.8%
Consumer Discretionary
6.4%
Industrials
5.8%
Cash & Cash Equivalents
3.3%
Real Estate
2.5%
Consumer Staples
1.4%
Sub-Industry
09/30/2024Portfolio CharacteristicsAs of 06/30/2024
Description | Baron Durable Advantage Fund | S&P 500 Index |
---|---|---|
Inception Date | December 29, 2017 | |
Net Assets | $424.30 million | |
# of Issuers / % of Net Assets | 32 / 98.6% | |
Turnover (3 Year Average) | 16.33% | |
Active Share | 68.3% | |
Median Market Cap | $180.42 billion | $34.83 billion |
Weighted Average Market Cap | $974.64 billion | $1.01 trillion |
R6 Shares | ||
CUSIP | 068278753 | |
Gross Expense Ratio | 1.01% | |
Net Expense Ratio | 0.70% | |
Current Expense Ratio Date | 9/30/2023 | |
EPS Growth (3-5 year forecast) | 17.0% | 16.2% |
Price/Earnings Ratio (trailing 12-month) | 33.3 | 25.8 |
Price/Book Ratio | 6.6 | 3.8 |
Price/Sales Ratio | 4.5 | 2.6 |
Price/Book Ratio and Price/Sales Ratio are calculated using the Weighted Harmonic Average. Source: FactSet PA. Internal valuation metrics may differ.
Distributions
Record Date | Ex Date | Payable Date | Income | Return of Capital | Short-Term Capital Gain | Long-Term Capital Gain | Total | Re-Invest NAV | Calendar-Year Return |
---|---|---|---|---|---|---|---|---|---|
12/06/2023 | 12/07/2023 | 12/08/2023 | $0.0226 | $0.0000 | $0.0000 | $0.0000 | $0.0226 | $21.62 | 45.51% |
11/22/2021 | 11/23/2021 | 11/24/2021 | $0.0000 | $0.0000 | $0.0000 | $0.0605 | $0.0605 | $20.24 | 32.16% |
07/28/2021 | 07/29/2021 | 07/30/2021 | $0.0079 | $0.0000 | $0.0000 | $0.0000 | $0.0079 | $19.12 | 32.16% |
07/29/2020 | 07/30/2020 | 07/31/2020 | $0.0182 | $0.0000 | $0.0000 | $0.0000 | $0.0182 | $14.11 | 20.32% |
11/28/2018 | 11/29/2018 | 11/30/2018 | $0.0346 | $0.0000 | $0.0000 | $0.0000 | $0.0346 | $9.91 | -7.28% |
Baron Durable Advantage Fund: A Unique Approach to Large-Cap Core Investing
According to the conventional wisdom, large-cap stocks are the place to go for value-oriented passive investing. These companies have already reached their growth potential, the thinking goes, and the efficiency and transparency of this asset category makes it tough for active managers to beat the benchmark.
We have never followed the conventional wisdom. On the contrary, we believe there are significant opportunities for the selective investor who eschews the conventional wisdom to analyze large caps with a fresh and unbiased eye.