Review and Outlook
Baron Opportunity Fund performed well during the third quarter, continuing a steady improvement from a challenging start to the year. In January and February, investors appeared to put significant weight on macro downside risks: a sharp economic slowdown in China, the end of the U.S. economic recovery, persistent low and even negative sovereign interest rates, collapsing oil prices, etc. As we have progressed through the year, concerns over those fears have turned more optimistic and the market environment has been more favorable for the Fund. But macro uncertainties always exist. Today they involve such issues as whether the Federal Reserve will raise interest rates before the end of the year, the outcome of one of our nation’s most troubling presidential elections in recent history, the persistent challenges in the Middle East (Syria, Iraq, ISIS, etc.) and the seemingly ever-present threats of terrorist attacks, and, of course, what the next move in the stock market will be. While we try to stay abreast of all these issues, we remain focused on what we can control: our industry and company research and portfolio construction decisions.
The consistent strategy of the Fund has been to invest in high growth, innovative businesses capitalizing on powerful secular trends. This is how we strive to distinguish ourselves from a passive index or ETF, as well as generalized growth funds, and to provide our investors with what we believe is a unique investment vehicle in today’s increasingly passive, index-driven investment mindset. In a world and market concerned about where growth will come from, we aim to differentiate not by trying to figure out the next bend in the cyclical growth curve, but by identifying powerful secular trends–generational, paradigm or tectonic shifts across industries and society–that will drive robust long-term growth regardless of the short-term fluctuations of the underlying economy. These trends are visible, impactful, and persistent. They are where the world’s going, not where it’s been (paraphrasing the great hockey player Wayne Gretzky). We believe many of the businesses that emerge as winners will possess significant growth opportunities, considerable moats to sustain their leadership and capture large profit pools from the legacy way of doing things.
Some of the powerful secular themes in which we invest include 1) cloud computing and software-as-a-service, 2) mobile, 3) big data and analytics, 4) digital (internet-delivered) media, 5) e-commerce, 6) genetics, 7) electronic medical records, 8) immuno-oncology, 9) targeted digital advertising, 10) cybersecurity, 11) electric drive vehicles and autonomous driving, and 12) electronic payments.
We believe wholeheartedly in the strategy for the Fund: growth based on powerful, long-term, innovation-driven secular growth trends. In the highly uncertain world we live in, we believe non-cyclical, sustainable, and resilient growth should be part of investors’ portfolios.
Top Contributors/Detractors to Performance
Quarterly Attribution Analysis
The Quarterly Attribution Analysis for period ending September 30, 2016 is not yet available
Back to Top
Invest In Baron Funds Today