Baron Capital, the New York-based investment manager with over $44 billion in assets, is making a move into ETF territory. On Monday, the firm introduced five actively managed ETFs that bring its growth-oriented investment approach to investors who want the flexibility that comes with ETF wrappers. It's a recognition that advisors increasingly want active management without the structural limitations of traditional mutual funds.
The new arrivals are Baron First Principles ETF (RONB), Baron Global Durable Advantage ETF (BCGD), Baron SMID Cap ETF (BCSM), Baron Financials ETF (BCFN), and Baron Technology ETF (BCTK). Together, they cover a pretty wide swath of the market: U.S. and global equities, sector-focused strategies, and a small-to-mid-cap mandate.
What's not changing is Baron's investment philosophy. The firm is sticking with what it knows: identifying growth companies with competitive advantages and strong management teams. The ETF structure is new, but the process remains the same. What investors get with the ETF format is intraday trading flexibility and potentially better tax efficiency than mutual funds.
Let's break down what each fund does.
BCTK is the technology play, investing at least 80% of its assets in U.S. and international tech companies across all market caps. Think software, IT services, semiconductors, and internet retail. The management fee is 0.75%.
BCFN targets financials, focusing on companies involved in banking, lending, insurance, capital markets, payments, and asset management. This one charges 0.80%.
For investors wanting international exposure, BCGD invests primarily in developed markets with some emerging market exposure, targeting companies with strong market positions and substantial cash flow generation. The management fee sits at 0.75%.
BCSM goes after smaller companies, specifically those with market caps starting above $1 billion and extending up to the largest stock in the Russell Mid-cap Growth Index. The fund hunts for firms offering significant growth potential and carries a 0.75% expense ratio.
Finally, RONB takes the most flexible approach of the bunch. It invests in U.S. growth stocks across all market capitalizations and can use leverage up to one-third of assets. That added flexibility comes with a 1.00% management fee, plus interest costs on any borrowed funds.
Baron's entry into the ETF space reflects a broader industry shift. Active managers are increasingly embracing the ETF structure as investor preferences evolve, and Baron is betting that its decades-long track record in growth investing will translate well into this format.
