Baron WealthBuilder Fund Q2 2025 Shareholder Letter

Core Viewpoint - The Baron WealthBuilder Fund has shown strong performance, recovering losses from the previous quarter and appreciating 10.45% in the June quarter, closely aligning with the S&P 500 Index and slightly lagging the MSCI ACWI Index [3][4]. Performance Summary - The Fund's annualized return since inception (December 29, 2017) is 12.91%, which is comparable to the S&P 500 Index's 13.76% and significantly ahead of the MSCI ACWI Index's 9.96% [5][6]. - For the June quarter, the Fund's performance was 10.45% for Institutional Shares, 10.31% for Retail Shares, and 10.39% for TA Shares, while the S&P 500 Index and MSCI ACWI Index returned 10.94% and 11.53%, respectively [6][9]. - The Fund's performance over the past year was 18.29% for Institutional Shares, outperforming the S&P 500 Index's 15.16% and the MSCI ACWI Index's 16.17% [6][9]. Sector and Holdings Analysis - The Fund's performance was driven by underlying Baron Funds with significant exposure to large-cap technology-oriented businesses, including Meta Platforms, NVIDIA, and Microsoft, which performed well due to strong financial results [9][10]. - Shopify reported a 27% year-over-year revenue growth, contributing positively to the Fund's performance, driven by its expansion into offline retail and international markets [9]. - Tesla's shares rebounded following the rollout of its robotaxi business, indicating a transformative shift in the automotive industry, while Spotify's share price was supported by solid results and growth in user subscriptions [10][11]. Economic and Market Context - The Fund has navigated a challenging economic environment characterized by political uncertainty and macroeconomic volatility, with investor concerns about tariffs and government spending cuts subsiding in the recent quarter [8][12]. - The Fund's strategy focuses on investing in growth quality businesses that are expected to thrive in less competitive environments, which has been beneficial during transitional economic periods [7][12]. Investment Strategy - The Fund employs a strategy that invests in companies across various market capitalizations, primarily focusing on U.S. securities but allowing up to 35% in non-U.S. securities [17][18]. - The Fund's investment philosophy emphasizes long-term business fundamentals rather than short-term market fluctuations, aiming for durable growth through technology advancements [18][19].