Baron Small Cap Fund Investment Strategy Info For Potential Investors


Investing in mutual funds is a complicated process that requires a lot of research. You need to decide on a mutual fund based on your goals and expectations as an investor. Are you looking for long-term benefits? Are you looking to supplement your income with immediate returns? Questions like this are crucial. Mutual funds vary on their style of investment. Baron Small Cap Fund, in particular, is an intriguing fund that has had steady growth in recent years. If you are an investor interested in learning more about this fund, refer to this quick guide to the Baron Small Cap Fund.

Small Cap Investor

Baron Small Cap Fund has a focus on small-cap investments. This means that they invest primarily in stocks that have small market capitalization. The definition varies between brokerages. However, companies with small market capitalization usually range from $300 million to $2 billion in yearly revenue. This is not to say that Baron Small Cap’s portfolio consists of only small companies. Their average holdings equal to about $3.1 billion. This is far higher than the small-cap fund average of $1.8 million. Their largest company is a wireless tower company called SBA Communications. SBA has been with Baron for over a decade and has since grown into a market cap of $11 billion. This is due to manager Cliff Greenberg’s tendency to hold onto companies with potential. In general, Baron values long-term growth over all else. This brings us to the next section of our guide to Baron Small Cap Fund.

Investment Policy

The Baron Small Cap Fund investment policy will, of course, affect their money control and your bottom line if you choose to invest with them. That is why you should understand that this Small Cap fund looks for appreciation through investments in small company securities primarily. At least eighty percent of its total assets are invested in securities of smaller companies. This is based on the market size of the investment at the time of purchase. Understanding the investment policy of Baron Small Cap Fund is necessary to making an informed, sound investment decision.

Long-Term Investor

Baron Small Cap is all about long-term investments. They look for smaller companies that have the potential for growth. They stay with these companies as long as they increase in value. This explains how Baron Small Cap’s average market cap is so high. Companies like SBA Communications stay in their portfolio for years. Their market cap has increased by the billions in recent years. Greenberg is keen on holding onto high-value companies like this because it is good for the fund overall. Other companies like Financial Engines and Lumber Liquidators Holdings have done even better. They had triple digit value increases in 2012. Baron Small Cap may be a small-cap fund, but they are primarily invested in the long-term. Keep this in mind as a key aspect of their investment strategy.

Cost And Fees

Fee information is important to know for potential mutual fund investors. Baron Small Cap has a management fee of 1% and a net expense ratio of 1.3. This is relatively low to average among other small-cap mutual funds or an online trading account platform. In addition, they have cost projections for investors in terms of years. For 3 years, it is $412. For 5 years, it is $713. You can use these numbers to plan your investments and expectations accordingly. An important number to note is the minimum initial investment. Baron Small Cap requires a minimum of $2000. Be sure to remember this information if you plan on investing in Baron Small Cap Fund.

Recent Performance

Baron Small Cap has had an annualized return of 10.4% since their launch in 1997. This exceeds the Russell 2000 index by an average of 3.3% per year. Currently, their fund assets total nearly $37 billion with investments in 75 different holdings. Their performance has been consistent over the last few years. However, their recent performance can only be described as average. Their return in 2013 was behind the Russell 2000 by about 4%. Greenberg explains that this mainly due to their investing in long-term projects. In 2008, they lost about 40%. In the following year, they gained 35%. Thus, they have managed to stay in the middle of the pack. They have also managed to avoid any major collapses. Overall, Baron Small Cap is a solid performer with relatively low-risk compared to other mutual funds.

Mutual funds differ on a number of factors including investment style and costs. You need to understand how each fund works in order to find one that fits with your needs. Baron Small Cap Fund is a small-cap mutual fund that likes to focus on long-term investments. They have had steady performances in recent years and are likely to continue this trend. If you are interested in learning all there is to Baron Small Cap Fund, refer to the information in this post.

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