Baron Capital has made a significant entrance into the exchange-traded fund (ETF) market by launching five actively managed ETFs. The firm is banking on its impressive historical performance, including a notable early investment in SpaceX, to attract interest in active investment strategies packaged in an ETF format.
The newly launched funds include the 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). These funds began trading on Monday and are designed to reflect investment methodologies that Baron Capital has successfully utilized in its mutual funds and private accounts for many years.
Ron Baron, the founder, CEO, and chairman of Baron Capital, highlighted SpaceX as a pivotal part of the firm’s investment strategy. With an estimated valuation that positions it for one of the largest IPOs in history, SpaceX has surpassed Tesla to become Baron Capital’s largest investment at approximately $10 billion. Baron’s investment thesis is strongly tied to the rapid growth of SpaceX’s Starlink satellite network, which he believes will play a significant role in future technologies.
Baron elaborated on the potential of space-based infrastructure, particularly the development of satellite data centers, claiming that such advancements could drastically lower costs associated with energy and cooling. He pointed out, “Cooling is a huge cost; put them in space, no more cooling costs,” emphasizing the innovative cost-saving opportunities these developments could provide.
Additionally, Baron Capital’s position in xAI, another venture founded by Elon Musk, was mentioned as a key component of their forward-looking strategy. The firm sees potential in leveraging the expansion of satellite networks and space-based computing to enhance artificial intelligence services, aiming to deliver capabilities that surpass existing solutions like ChatGPT.
Baron Capital’s decision to launch ETFs is underpinned by its strong performance track record—98% of its assets have outperformed their benchmarks, with approximately 60% ranking in the top 5% within their categories. He noted that the Baron Partners Fund has been the best-performing U.S. fund since 2003. The firm has reported generating around $57 billion in profits since its inception in 1992 with an initial asset base of $100 million, and Baron expressed ambitions to quintuple that figure over the next ten years.
As Baron Capital steps into the ETF landscape, it hopes to capitalize on growing investor interest in active strategies while leveraging its historical successes to attract a broader clientele. The launch of these ETFs aims to provide investors with actively managed options reflective of Baron Capital’s investment philosophies and long-term commitment to performance.
