Baron Capital launches ETFs

Baron Capital Launches Five Active ETFs, Highlights SpaceX as Key Growth Holding for Investors

Imagine you’re picking a team for a big game—you want players with a track record of winning. That’s kind of like what’s happening with Baron Capital, a well-known investment company, as they launch five new ETFs. Let’s break down why this matters for investors and what you should watch for.

What’s New with Baron Capital?

Baron Capital just started five new exchange-traded funds (ETFs). These are like baskets of different stocks you can buy or sell easily, just like regular shares. The new funds aim to use Baron’s proven strategies, which have worked well for them over many years.

  • Baron First Principles ETF (RONB)
  • Baron Global Durable Advantage ETF (BCGD)
  • Baron SMID Cap ETF (BCSM)
  • Baron Financials ETF (BCFN)
  • Baron Technology ETF (BCTK)

These ETFs are built to follow the same playbook that Baron Capital has used in its other funds and private accounts. They hope this will attract investors who want more “hands-on” management, not just funds that follow an index.

Why Investors Should Care

For investors, this is a big deal because Baron Capital has a history of picking winners early. For example, they invested in SpaceX before it became famous, and now that investment is worth about $10 billion—more than they ever put into Tesla.

Baron’s founder, Ron Baron, is excited about SpaceX’s Starlink satellites, which beam internet down from space. He even thinks future space-based data centers could save tons of money on cooling—since space is already cold! These ideas could shape entire industries and give Baron’s funds a possible edge.

The Bull Case: Why Be Excited?

  • Proven Track Record: Baron says 98% of their assets have beaten the market average, and some funds rank in the top 5% of their category.
  • Big Bets on Innovation: Investing early in companies like SpaceX and xAI (an artificial intelligence company) could mean big payoffs if these trends keep growing.
  • Strong Growth: Baron Capital turned $100 million in 1992 into about $57 billion in profits today. That’s a huge jump and shows their strategies have worked well over time.
  • Active Management Demand: More investors are looking for “active” managers who can pick winners, not just follow the crowd. According to Morningstar, active ETFs are gaining popularity, with assets growing by over 50% in 2023.
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The Bear Case: What Could Go Wrong?

  • Active Funds Can Underperform: Even the best managers have bad years. Some studies show that most active funds don’t beat the market over long periods (S&P Global SPIVA report).
  • Tech and Space Bets Are Risky: Companies like SpaceX and xAI are exciting, but they face big challenges and competition. If these bets don’t pay off, investors could lose money.
  • High Expectations: Baron is aiming to make five times more profits over the next decade. That’s a tall order—especially if markets change or technology shifts.
  • ETFs Are Still New: Baron has managed mutual funds for years, but ETFs are a different game. There’s no guarantee their success will carry over.

Investor Takeaway

  • Consider adding some active ETFs if you want managers who try to beat the market, but don’t put all your eggs in one basket.
  • Watch how Baron’s new ETFs perform in their first year—track both returns and how much risk they take.
  • If you’re interested in the space or tech sectors, these funds could offer unique exposure, but remember the risks.
  • Keep a core of simple, low-cost index funds in your portfolio for steady growth.
  • Stay curious about new trends, but always do your homework before investing in something new.

For the full original report, see CNBC

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