Baron Small Cap Fund (BSFIX)

Portfolio Management

Cliff Greenberg

Fund Manager since 1997

Objective and Strategy

The Fund invests in small-sized U.S. companies with significant growth potential. Investments include fallen angels with strong long-term franchises that have disappointed investors, and special situations, where lack of investor awareness creates opportunities. Diversified.

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Fund Description

Baron Small Cap Fund invests primarily in small growth companies.



Performance Summary as of December 31, 2016

  Annualized Returns Since Inception
YTD 1 YR 3 YR 5 YR 10 YR Annualized Cumulative
10.26% 10.26% 2.21% 11.77% 6.77% 9.34% 458.13%
Growth of $10,000 Chart

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Top Ten Holdings as of December 31, 2016

Holding Sector Percentage
Gartner, Inc. Information Technology 5.0%
TransDigm Group, Inc. Industrials 4.8%
Bright Horizons Family Solutions, Inc. Consumer Discretionary 4.0%
Waste Connections, Inc. Industrials 3.6%
IDEXX Laboratories, Inc. Health Care 3.6%
The Ultimate Software Group, Inc. Information Technology 3.5%
Acuity Brands, Inc. Industrials 3.2%
On Assignment, Inc. Industrials 2.8%
SBA Communications Corp. Telecommunication Services 2.7%
Gaming and Leisure Properties, Inc. Real Estate 2.6%
Total 35.8%
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Performance Based Characteristics as of December 31, 2016

Characteristics 3 Years 5 Years 10 Years
Standard Deviation (%) 13.77 13.05 17.99
Sharpe Ratio 0.15 0.90 0.34
Alpha (%) -1.82 0.82 0.06
Beta 0.78 0.79 0.85
R-Squared (%) 91.97 89.10 93.49
Tracking Error (%) 5.31 5.33 5.55
Information Ratio -0.54 -0.37 -0.18
Upside Capture (%) 73.96 82.12 83.95
Downside Capture (%) 81.48 79.56 83.56

Daily Price (NAV)

Prices for Jan 13 , 2017
NAV $26.72
Daily Change ($) $0.25
Daily Change (%) 0.94%
MTD 2.45%
YTD 2.45%
52-Week High $32.28
52-Week Low $23.71

Fund Facts

Inception Date September 30, 1997
Net Assets^ $3.26 billion
CUSIP 068278803
Expense Ratio* 1.04%
Risk/Return Comparison
Risk Return Graph

Specific risks associated with investing in smaller companies include that the securities may be thinly traded and more difficult to sell during market downturns. Even though the Fund is diversified, it may establish significant positions where the Adviser has the greatest conviction. This could increase volatility of the Fund's returns.


Morningstar Ratings
Ratings based on risk-adjusted returns as of 12/31/2016
Category: US Fund Small Growth
Overall 3 Stars out of 599 funds
3 Year 3 Stars out of 599 funds
5 Year 3 Stars out of 531 funds

The Overall Morningstar Rating for a fund is derived from a weighted-average of the performance figures associated with its three-, five- and (if applicable) ten-year ratings.

Lipper Rankings
Rankings based on total returns as of 12/31/2016
Category: Mid-Cap Growth Funds
1 Year 80 out of 389 funds
3 Year 296 out of 361 funds
5 Year 149 out of 317 funds


Baron Category: Small-Cap Growth
Large Value Large Core Large Growth Large
Mid Value Mid Core Mid Growth Mid
Small Value Small Core Small Growth Small
Value Core Growth  
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Performance data quoted represents past performance. Past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate; an investor's shares, when redeemed, may be worth more or less than their original cost. The Fund's transfer agency expenses may be reduced by expense offsets from an unaffiliated transfer agent, without which performance would have been lower. Current performance may be lower or higher than the performance data quoted above. For performance information current to the most recent month end, click here.

The Fund may not achieve its objectives.

Performance for the Institutional Shares prior to 5/29/2009 is based on the performance of the Retail Shares, which have a distribution fee. The Institutional Shares do not have a distribution fee. If the annual returns prior to 5/29/2009 did not reflect this fee, the returns would be higher.

^All share classes combined. As of most recent quarter end.

*As of fiscal year ended 9/30/2015 the expense ratio of the Fund’s Institutional Shares was 1.04%.

Top Ten Fund Holdings based on net assets. Portfolio holdings may change over time.
Industry sector or sub-industry group levels are provided from the Global Industry Classification Standard ("GICS"), developed and exclusively owned by MSCI, Inc. ("MSCI") and Standard & Poor's Financial Services LLC ("S&P"), unless otherwise stated that they have been reclassified or classified by the Adviser. All GICS data is provided "as is" with no warranties.

For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund's monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.) © 2015 Morningstar, Inc.  All Rights Reserved.  The Morningstar information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely.  Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.

Lipper Analytical Services, Inc. rankings and fund performance do not reflect sales charges and are based on total return, including reinvestment of dividends and capital gains for the stated periods.

Performance Based Characteristics based on trailing five-year and since-inception periods. Performance statistics for additional periods will be provided on request. Source: FactSet SPAR.

Definitions (provided by BAMCO, Inc.): The indexes are unmanaged.  The Russell 2000® Growth Index measures the performance of small-sized U.S. companies that are classified as growth and the S&P 500 Index of 500 widely held large-cap U.S. companies. The indexes and the Fund are with dividends, which positively impact the performance results. Russell Investment Group is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell is a trademark of Russell Investment Group. The Morningstar US OE Small Growth Category Average is not weighted and represents the straight average of annualized returns of each of the funds in the Small Growth category. The Fund’s Retail Shares have been included in the category since inception and the Fund’s Institutional Shares since 5/29/09. ©2015 Morningstar, Inc.  All Rights Reserved.  The Morningstar information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely.  Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Standard Deviation: measures the degree to which a fund’s performance has varied from its average performance over a particular time period. The greater the standard deviation, the greater a fund’s volatility (risk). Sharpe Ratio: is a risk-adjusted performance statistic that measures reward per unit of risk. The higher the Sharpe ratio, the better a fund’s risk adjusted performance. Alpha: measures the difference between a fund’s actual returns and its expected performance, given its level of risk as measured by beta. Beta: measures a fund’s sensitivity to market movements. The beta of the market (Russell 2000 Growth Index) is 1.00 by definition. R-Squared: measures how closely a fund’s performance correlates to the performance of the benchmark index (Russell 2000 Growth Index), and thus is a measurement of what portion of its performance can be explained by the performance of the index. Values for R-Squared range from 0 to 100, where 0 indicates no correlation and 100 indicates perfect correlation. Tracking Error: measures how closely a fund’s return follows the benchmark index returns (Russell 2000 Growth Index). It is calculated as the annualized standard deviation of the difference between the fund and the index returns. Information Ratio: measures the excess return of a fund divided by the amount of risk the fund takes relative to the benchmark index (Russell 2000 Growth Index). The higher the information ratio, the higher the excess return expected of the fund, given the amount of risk involved.  Upside Capture %: explains how well a fund performs in time periods where the benchmark’s returns (Russell 2000 Growth Index) are greater than zero. Downside Capture %: explains how well a fund performs in time periods where the benchmark’s returns (Russell 2000 Growth Index) are less than zero. EPS Growth Rate (3-5 year forecast): indicates the long-term forecasted EPS growth of the companies in the portfolio, calculated using the weighted average of the available 3-to-5 year forecasted growth rates for each of the stocks in the portfolio provided by Factset Estimates. The EPS Growth rate does not forecast the Fund’s performance. Price/Earnings Ratio (trailing 12-months): is a valuation ratio of a company’s current share price compared to its actual earnings per share over the last twelve months. Price/Book Ratio: is a ratio used to compare a company’s stock price to its tangible assets, and it is calculated by dividing the current closing price of the stock by the latest quarter’s book value per share. Price/Sales Ratio: is a valuation ratio of a stock’s price relative to its past performance. It represents the amount an investor is willing to pay for a dollar generated from a particular company’s operations. Price/Sales is calculated by dividing a stock’s current price by its revenue per share for the last 12 months. Weighted Harmonic Average: is a calculation that reduces the impact of extreme observations on the aggregate calculation by weighting them based on their size in the fund. This information does not constitute an offer to sell or a solicitation of any offer to buy securities by anyone in any jurisdiction where it would be unlawful under the laws of that jurisdiction to make such offer or solicitation.