Baron Real Estate Income Fund Q1 2025 Shareholder Letter
2025-04-29 09:35:00 ET
Summary
- Baron Real Estate Income Fund declined in the first quarter of 2025, underperforming its benchmark, the MSCI USA IMI Extended Real Estate Index.
- Top contributors were Welltower Inc., American Tower Corporation, and GDS Holdings Limited.
- Top detractors were Equinix Inc., Hyatt Hotels Corporation, and Las Vegas Sands Corporation.
- During the quarter, the Fund re-initiated positions in industrial REIT Prologis, Inc. and casino company Wynn Resorts, Limited.
Dear Baron Real Estate Income Fund Shareholder:
In the first quarter of 2025, numerous stocks were sold, in some cases indiscriminately without regard to value, largely because of concerns about a slowdown in economic growth, still somewhat elevated inflation, and policymaking that is keeping businesses and consumers off balance. Baron Real Estate Income Fund® (the Fund) was not immune.
Table I. - Performance† - Annualized for periods ended March 31, 2025
| Baron Real Estate Income Fund Retail Shares 1,2 | Baron Real Estate Income Fund Institutional Shares 1,2 | MSCI US REIT Index 1 | S&P 500 Index 1 | |
|---|---|---|---|---|
| Three Months 3 | (1.11)% | (0.98)% | 0.76% | (4.27)% |
| One Year | 13.67% | 13.98% | 8.98% | 8.25% |
| Three Years | (0.16)% | 0.09% | (1.77)% | 9.06% |
| Five Years | 12.59% | 12.86% | 10.04% | 18.59% |
| Since Inception (12/29/2017) (Annualized) | 8.81% | 9.05% | 4.49% | 12.65% |
| Since Inception (12/29/2017) (Cumulative) 3 | 84.42% | 87.46% | 37.46% | 137.11% |
Performance listed in the above table is net of annual operating expenses. The gross annual expense ratio for the Retail Shares and Institutional Shares as of April 26, 2024 was 1.32% and 0.96%, respectively, but the net annual expense ratio was 1.05% and 0.80% (net of the Adviser’s fee waivers), respectively. The 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 Adviser waives and/ or reimburses certain Fund expenses pursuant to a contract expiring on August 29, 2035, unless renewed for another 11-year term and 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. For performance information current to the most recent month end, visit BaronCapitalGroup.com or call 1-800-99-BARON. †The Fund’s historical performance was impacted by gains from IPOs and there is no guarantee that these results can be repeated or that the Fund’s level of participation in IPOs will be the same in the future. (1)The MSCI US REIT Index Net ((USD)) is designed to measure the performance of all equity REITs in the U.S. equity market, except for specialty equity REITs that do not generate a majority of their revenue and income from real estate rental and leasing operations. The S&P 500 Index measures the performance of 500 widely held large-cap U.S. companies. MSCI is the source and owner of the trademarks, service marks and copyrights related to the MSCI Indexes. The MSCI US REIT Index and the Fund include reinvestment of dividends, net of foreign withholding taxes, while the S&P 500 Index includes reinvestment of dividends before taxes. Reinvestment of dividends positively impacts performance results. The indexes are unmanaged. Index performance is not Fund performance. Investors cannot invest directly in an index. (2)The performance data in the table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares. (3)Not annualized. |
The Fund’s select REIT categories (data centers, office, and malls) and non-REIT cyclically oriented real estate-related holdings (travel-related and real asset alternative asset managers) weighed on first quarter performance. For our more complete thoughts on this topic please see the “Portfolio Construction” section later in this letter. In the first quarter, the Fund declined 0.98% (Institutional Shares), underperforming the MSCI US REIT Index (the REIT Index), which increased 0.76%....
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Baron Real Estate Income Fund Q1 2025 Shareholder Letter
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