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Baron Durable Advantage Strategy

Symbol DURABLE
L
Large-Cap Growth

Total Strategy Assets

$424.30 M

As of 09/30/2024

Inception date

01/31/2018

Performance

PerformanceAs of 09/30/2024

Portfolio or IndexQTDYTD1 Year3 Years5 YearsSince Inception 01/31/2018
Baron Durable Advantage Strategy (Net)-23.37%40.64%14.78%19.34%16.31%
Baron Durable Advantage Strategy (Gross)-23.92%41.45%15.22%19.63%16.52%
S&P 500 Index-22.08%36.35%11.91%15.98%13.22%
Russell 1000 Growth Index-24.55%42.19%12.02%19.74%16.65%

Performance InformationAs of 09/30/2024

Performance statistics3 Years5 YearsSince Inception
Standard Deviation (%)19.2718.9617.99
Sharpe Ratio0.580.890.78
Alpha (%)2.152.882.90
Beta1.061.011.00
R-Squared (%)92.5092.8592.55
Tracking Error (%)5.375.084.91
Information Ratio0.530.660.63
Upside Capture (%)110.87108.50105.80
Downside Capture (%)104.0399.8495.36
Source: FactSet SPAR. Except for Standard Deviation and Sharpe Ratio, the performance based characteristics above were calculated relative to the Strategy's benchmark.

Portfolio Holdings & Characteristics

HoldingsAs of 11/30/2024

HoldingSector% 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 Technology7.7%
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 Discretionary6.9%
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 Services6.7%
NVIDIA Corporation
NVIDIA Corporation (NVDA) sells semiconductors, systems, and software for accelerated computing, gaming, and generative AI (Gen AI).
Computing demand has been doubling every one to two years, driven by electrification, digitization, and 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 Gen AI 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 Technology5.1%
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 Technology4.3%
Apollo Global Management, Inc.
Apollo Global Management, Inc. (APO) is one of the world's leading alternative asset managers. The company manages over $600 billion in assets, mostly in credit. It also owns Athene, one of the largest providers of annuities in the U.S.
Apollo has a dominant franchise in private credit, where it has spearheaded the practice of matching of insurance liabilities with investment-grade, illiquid credit investments to generate better returns than its peers. We think Apollo will continue to grow in credit and insurance, where it has significant scale and expertise. The company should also see growth in assets, fees, and spread earnings in the years ahead, since it earns management fees on assets as well as excess spread on liabilities following its 2022 merger with Athene.
Financials4.2%
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.
Financials4.2%
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 Services4.1%
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.
Financials4.0%
Blackstone Inc.
Blackstone Inc. (BX) is the world’s largest alternative asset manager. It has $1 trillion in assets under management, with specialization across Private Equity, Real Estate, Hedge Fund Solutions, and Credit & Insurance.
Blackstone is a best-of-breed global alternative asset manager, with a strong brand, global scale, long-term investment track record, full suite of products, and a proven executive team. The company is still in the early innings of democratizing access to alternative investments for a broader array of investors. Blackstone is asset-light, maintains minimal corporate level debt, and returns most of its cash flow through dividends and share repurchases.
Financials3.8%
Total
Total
51.1%
Top Ten Holdings, Portfolio Holdings, and Sector Breakdown based on net assets. Positions smaller than 0.05% round to 0.0%. Portfolio holdings may change over time.
Portfolio holdings are subject to change. Current and future portfolio holdings are subject to risk.

Contributors / DetractorsQuarterly as of 09/30/2024

Top ContributorsAverage WeightContribution
Meta Platforms, Inc.6.87%0.96%
Blackstone Inc.3.15%0.71%
S&P Global Inc.4.37%0.66%
Brookfield Corporation2.67%0.66%
MSCI Inc.2.32%0.45%
Source: FactSet PA.

GICS Sector BreakdownAs of 11/30/2024

Sector

Financials

32.8%

Information Technology

28.9%

Communication Services

10.8%

Health Care

9.5%

Consumer Discretionary

6.9%

Industrials

6.7%

Real Estate

2.1%

Consumer Staples

1.5%

Cash & Cash Equivalents

0.7%

Sub-Industry

11/30/2024
Semiconductors15.40%
Financial Exchanges & Data10.90%
Interactive Media & Services10.80%
Systems Software7.70%
Asset Management & Custody Banks7.00%
Broadline Retail 6.90%
Life Sciences Tools & Services6.80%
Transaction & Payment Processing Services 6.60%
Aerospace & Defense4.80%
Diversified Financial Services 4.20%
Application Software4.10%
Managed Health Care2.70%
Investment Banking & Brokerage2.20%
Real Estate Services 2.10%
Property & Casualty Insurance1.80%
0369121518
Semiconductors15.40%
Financial Exchanges & Data10.90%
Interactive Media & Services10.80%
Systems Software7.70%
Asset Management & Custody Banks7.00%
Broadline Retail 6.90%
Life Sciences Tools & Services6.80%
Transaction & Payment Processing Services 6.60%
Aerospace & Defense4.80%
Diversified Financial Services 4.20%
Application Software4.10%
Managed Health Care2.70%
Investment Banking & Brokerage2.20%
Real Estate Services 2.10%
Property & Casualty Insurance1.80%
0369121518

Portfolio CharacteristicsAs of 06/30/2024

DescriptionBaron Durable Advantage StrategyS&P 500 Index
Inception DateJanuary 31, 2018
# of Issuers / % of Net Assets32 / 98.6%
Turnover (3 Year Average)16.33%
Active Share68.3%
Median Market Cap$180.42 billion$34.83 billion
Weighted Average Market Cap$974.64 billion$1.01 trillion
EPS Growth (3-5 year forecast)17.0%16.2%
Price/Earnings Ratio (trailing 12-month)33.325.8
Price/Book Ratio6.63.8
Price/Sales Ratio4.52.6
Total Strategy Assets$424.30 million
Price/Book Ratio and Price/Sales Ratio are calculated using the Weighted Harmonic Average. Source: FactSet PA. Internal valuation metrics may differ.