TTAN - Baron Asset Fund Q4 2024 Shareholder Letter

2025-01-29 05:45:00 ET

Summary

• Baron Asset Fund declined in the fourth quarter of 2024, underperforming its benchmark, the Russell Midcap Growth Index.
• Top contributors were Space Exploration Technologies Corp., X.AI Corp., and Dayforce, Inc..
• Top detractors were IDEXX Laboratories, Inc., Mettler-Toledo International Inc., and Arch Capital Group Ltd.
• We initiated a position in ServiceTitan, Inc., the leading business management software platform for “the trades” that support maintenance, repair, and installation of building systems.

Dear Baron Asset Fund Shareholder

U.S. equities rose during the fourth quarter, with most of the market’s strength coming after Donald Trump was elected President alongside a Republican majority in both chambers of Congress. Investors were enthusiastic about the prospect of the Trump administration lowering taxes, reducing regulation, increasing domestic oil production, and enabling more merger and acquisition activity. Investor euphoria was partially offset by concerns that Trump policies would lead to reaccelerating inflation and rising interest rates – the benchmark 10-year U.S. Treasury yield increased from 3.8% to 4.6% during the quarter.

Following solid outperformance in the prior quarter, Baron Asset Fund® ( BARIX, the Fund) had a difficult fourth quarter, trailing the Russell Midcap Growth Index (the Benchmark) by 818 basis points (Institutional Shares). The relative shortfall was driven by several factors that we believe will prove transitory....

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