XPNGF - Baron Emerging Markets Fund Q1 2025 Shareholder Letter

2025-04-28 08:09:00 ET

Summary

• Baron Emerging Markets Fund increased in the first quarter of 2025, outperforming its benchmark, the MSCI EM Index.
• Emerging markets equities outperformed as the uncertainty generated by Trump’s tariff war spurred a broad-based rotation out of U.S. equities.
• Top contributors were Alibaba Group Holding Limited, Tencent Holdings Limited, and Kingdee International Software Group Company Limited.
• Top detractors were Taiwan Semiconductor Manufacturing Company Limited, Swiggy Limited, and Kaynes Technology India Limited.
• As part of our sustainability/ESG theme, we invested in Chinese electric vehicle manufacturers BYD Company Limited and XPeng Inc. We also invested in Zhejiang Shuanghuan Driveline Co., Ltd., a leading Chinese manufacturer of high-precision gears with a dominant position in EV transmission components.

Dear Baron Emerging Markets Fund Shareholder:

Baron Emerging Markets Fund® (the Fund) gained 3.00% (Institutional Shares) during the first quarter of 2025, while its primary benchmark, the MSCI Emerging Markets Index (the Benchmark), appreciated 2.93%. The MSCI Emerging Markets IMI Growth Index (the Proxy Benchmark) gained 0.37% for the quarter. The Fund modestly outperformed the Benchmark while handily exceeding the Proxy Benchmark during a somewhat volatile quarter for global equities marked by uncertainty around President Trump’s policy agenda priorities early in his second term. We were pleased with our first quarter results, particularly given the weakness in growth versus value-oriented emerging markets ((EM)) equities during the quarter....

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