Baron Small Cap Fund

Scorecard
3 / 5 Stars
Lipper
5 5 4 3 4
Zacks Investment Research
1 (Strong Buy)
Standard & Poor's
3 / 5 Stars
TheStreet.com
B- (Buy)

U.S. News evaluated 215 Small Growth Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.

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Note: Profile written for different share class.

Performance

The fund has returned 30.02 percent over the past year, 14.78 percent over the past three years, 26.19 percent over the past five years, and 9.98 percent over the past decade.

Trailing Returns Updated 02.28.2014
Year to date 1.2%
1 Year 30.0%
3 Years (Annualized) 14.8%
5 Years (Annualized) 26.2%
10 Years (Annualized) 10.0%

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Summary

Baron Small Cap takes a slow-and-steady approach to small-cap investing.

As of March 05, 2014, the fund has assets totaling almost $5.58 billion invested in 110 different holdings. Its portfolio consists of shares of small companies.

Recently, Baron Small Cap hasn’t had any surprises. In 2008, it lost more than 40 percent, and in 2009 it gained 35 percent as small-cap stocks rallied. In both years, Baron stayed close to the middle of the pack, where it has continued to sit in 2010. Although the fund hasn’t had any recent blockbuster years, it also hasn’t had any disasters. As of late, the fund has found opportunities in the business services sector. Within that category, SBA Communications Corp., which owns and operates wireless communications towers, has been a particularly strong performer. The fund has returned 30.02 percent over the past year and 14.78 percent over the past three years.

Historically, the fund has had some challenges. Its performance was hit-or-miss in the early 2000s, but it began to level off by the middle of the decade. Over time, the fund has quietly built a solid track record. Says Morningstar: “Growth investors often fail because they pay too much for stocks and focus too intently on closely watched short-term data, where getting an edge can be difficult. Manager Cliff Greenberg, like his Baron cohorts, attempts to avoid these traps by paying close attention to valuation and thinking about the future in terms of years, not quarters.” The fund has returned 26.19 percent over the past five years and 9.98 percent over the past decade.

Investment Strategy

According to the fund’s semi-annual report: “Baron Small Cap’s investments fall into three categories: Growth Stocks, Fallen Angels and Special Situations. The fund intends to continue to invest in ‘Growth Stocks’ that we believe have significant long-term growth prospects and can be purchased at what we believe are attractive prices because their prospects have not yet been appreciated by investors. ‘Fallen Angels’ are companies that we believe have strong long-term franchises but have disappointed investors with short-term results, creating what we believe are buying opportunities. ‘Special Situations’ include spin-offs and recapitalizations, where lack of investor awareness creates opportunities to purchase what we believe are strong businesses at attractive prices.”

Role in Portfolio

Morningstar calls the fund a “supporting player.”

Management

Cliff Greenberg has managed the fund since it opened its doors in 1997.

Fees

Baron Small Cap Fund has an expense ratio of 1.05 percent.

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Risk

Like all stock funds, this one comes with some risks. Additionally, small-cap stocks can be more volatile than the broader market. 

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See Also:

Top Baron Capital Group Funds