CWAN - Baron Growth Fund Q4 2023 Shareholder Letter

2024-02-18 11:27:00 ET

Summary

• Baron is an asset management firm focused on delivering growth equity investment solutions known for a long-term, fundamental, active approach to growth investing.
• Baron Growth Fund (the Fund) gained 7.70% (Institutional Shares) for the quarter and 14.97% for the year ended December 31, 2023.
• While we only purchase small-cap companies, we tend to hold stocks as long as our investment thesis remains intact, and we see a path to earning attractive compounded returns.

Dear Baron Growth Fund Shareholder:

Performance

Baron Growth Fund® (the Fund) gained 7.70% (Institutional Shares) for the quarter and 14.97% for the year ended December 31, 2023. This modestly trailed those of the Fund’s primary benchmark, the Russell 2000 Growth Index (the Benchmark), which gained 12.75% for the quarter and 18.66% for the year. The S&P 500 Index, which measures the performance of publicly traded large-cap U.S. companies, gained 11.69% for the quarter and 26.29% for the year.

The Federal Reserve’s sudden interest rate pivot sent speculative, lower-quality, and interest-rate sensitive stocks soaring in December. While the Fund performed well on an absolute basis, our exclusive focus on high-quality durable growth assets put us at a relative disadvantage during the month. This is consistent with historical patterns, where the Fund generally keeps up with the market during the early phase of rallies and protects capital during more challenging periods, all while taking less risk than the Benchmark. We are optimistic that this strategy will continue to generate positive results over cycles. ...

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