Baron Financials ETF

Mastercard Incorporated (MA) is a leading global payment network. The company authorizes and facilitates electronic payments for consumers, merchants, and banks.
Mastercard 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. Margins should continue expanding due to operating leverage. The company generates significant free cash flow, which it uses for acquisitions and share repurchases. Mastercard's well-established brand, ubiquitous acceptance network, and extensive banking relationships are significant competitive advantages.

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 significant competitive advantages from its well-established brand, ubiquitous merchant acceptance network, and extensive banking relationships.

S&P Global Inc. (SPGI) provides credit ratings, indexes, 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 from strong brand awareness, high switching costs, and network effects. Excess cash flow is being used for accretive acquisitions and is being returned to shareholders through share repurchases and dividends.

The Charles Schwab Corporation (SCHW) is a discount brokerage firm offering securities brokerage and other financial services to individual investors directly and through independent financial advisors. The company has over $12 trillion in assets under custody.
Schwab’s emphasis on customer trust has made it a sterling brand in financial services. We believe its investor services division is well positioned to take share from traditional brokerages, while its institutional business continues to gain RIA relationships. The company has made acquisitions that have broadened its product offering and brought new customers onto the platform. As a result, we expect Schwab to retain clients while further lowering its industry-leading cost per client asset.

LPL Financial Holdings Inc. (LPLA) is the largest independent broker-dealer in the U.S., with over $2.4 trillion in Assets Under Management. It offers independent financial advisors the technology, brokerage services, and practice management support they need to run their own practices.
As advisors continue to break away from wirehouses, we believe LPL is an attractive home for them and will continue to win share in this market. The company is benefiting from the higher interest rate environment, as it earns interest on its assets. LPL leverages its economies of scale to generate healthy margins and free cash flow that it can reinvest into its business. With a profitable business, good growth prospects, and favorable industry tailwinds, we believe LPL is well positioned to continue growing earnings per share at a rapid rate.

MercadoLibre, Inc. (MELI) is the largest e-commerce company in Latin America. The company operates the MercadoLibre e-commerce marketplace, the Mercado Pago fintech platform, and the Mercado Envios suite of shipping solutions for sellers on its platform.
MercadoLibre benefits from the emergence of two secular trends: e-commerce and digital payments. The company has a significant first-mover advantage and is investing aggressively in logistics to widen its competitive moat. Latin America is a predominantly cash-based economy with e-commerce penetration under 20%, and MercadoLibre has an attractive, asset-light marketplace business model. We believe the company's logistics network is a key competitive advantage, and we see a significant opportunity in the growth of its fintech offerings.

Interactive Brokers Group, Inc. (IBKR) is an automated global electronic broker. The company provides low-cost execution, clearing, and settlement of trades for retail and institutional customers across multiple asset classes and currencies.
Interactive Brokers is gaining share due to its advanced technology, quality of execution, and low trading costs. We expect the company to continue growing rapidly through international expansion and as domestic RIAs depart traditional institutions to launch their own firms. Interactive Brokers' competitive advantage comes from automation through best-in-class software engineering, which enables it to offer industry-low costs to customers. Founder and Chairman Thomas Peterffy is well regarded and is the company's largest shareholder.

KKR & Co. Inc. (KKR) is one of the world's leading alternative asset managers. The company manages $744 billion in assets, with large franchises in private equity, real assets, and credit. KKR also owns a large retirement insurance company, Global Atlantic.
KKR has strong franchises in alternative asset management, having successfully diversified from its buyout roots into private equity, credit, and real assets. These strategies are in early stages of maturation, positioning KKR to raise over $300 billion from 2024 to 2026 and eventually grow assets under management to more than $1 trillion. KKR also owns an insurer, Global Atlantic, which should continue compounding as it leverages KKR's asset sourcing capabilities, driving growth in both fee and spread earnings.

Tradeweb Markets Inc. (TW) operates electronic marketplaces for trading rates, credit, equities, and money markets.
Tradeweb is benefiting from the electronification of the fixed income market and gaining share from less innovative competitors. Tradeweb enjoys network effects from pooling liquidity from its more than 3,000 clients and benefits from high switching costs due to its deep integration into client technology and workflows. We expect ongoing margin expansion driven by operating leverage and efficiency initiatives.

CME Group, Inc. (CME) is the world's largest and most diversified derivatives marketplace. Its exchanges support trading of futures and options across a variety of asset classes, including interest rates, equity indexes, energy, agricultural commodities, currencies, and metals.
We believe CME should benefit as higher volatility and fluctuating interest rates lead to higher trading volumes. Bank capital requirements favor trading of CME's centrally cleared securities over non-cleared OTC products. We expect margin expansion as a result of operating leverage and efficiency initiatives. Its deep liquidity pools, vertical integration into post-trade clearing, and cross-margining benefits for customers represent high barriers to entry, in our view. CME produces significant free cash flow that's being returned to shareholders through variable dividends.