| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 4.8% | -1.3% | 29.8% |
| 2025 |
|---|
| 30.1% |
Baron Emerging Markets Fund delivered strong full-year returns of 30.14% in 2025 despite a challenging fourth quarter decline of 1.26%. The manager believes 2025 marked the beginning of sustainable emerging market equity outperformance, driven by improving global economic conditions and central bank easing cycles. Key performance drivers included semiconductor investments in Taiwan and Korea benefiting from AI demand, though Chinese technology holdings faced volatility around trade policy uncertainty. The fund maintains a large overweight in India despite flat 2025 performance, positioning for an expected earnings upgrade cycle supported by infrastructure spending recovery and tax reforms. New investments in South African banks and Latin American digital banking reflect conviction in favorable credit cycles and financial services disruption. Looking ahead, the manager expects continued EM outperformance supported by dollar weakness, improving China-US trade relations, and India's economic recovery. The portfolio remains positioned for secular growth themes including AI, semiconductors, and digital transformation across emerging markets.
Emerging markets are entering a multi-year upcycle with 2025 marking the beginning of sustainable outperformance versus developed markets, driven by improving fundamentals, central bank easing, and geopolitical realignment favoring bilateral trade relationships.
The manager is optimistic entering 2026, believing 2025 represented the beginning of sustainable EM equity outperformance. He expects continued global economic growth supported by central bank easing, with emerging markets benefiting from dollar weakness if Fed independence is challenged. The manager sees constructive backdrop for EM equities despite geopolitical volatility, with particular optimism around China technology recovery and India earnings inflection.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 27 2026 | 2025 Q4 | 000660.KS, 005930.KS, 0700.HK, 1024.HK, 300750.SZ, BABA, BAJFINANCE.NS, BAP, BEL.NS, BHARTIARTL.NS, HDFCBANK.NS, NU, RELIANCE.NS, SQM, TSM, ZLAB | AI, Banking, China, emerging markets, geopolitics, India, semiconductors, technology |
TSM 000660 KS 005930 KS BABA ABG SJ FSR SJ NU |
The fund maintains significant exposure to AI-related investments, particularly through semiconductor companies like TSMC and SK hynix that benefit from AI chip demand. The manager… |
| Oct 28 2025 | 2025 Q3 | 0TDG LN, 1024 HK, 700 HK, BABA, BHE IN, GDS, INDUSTOW IN, INPST NA, TRENT IN, TSM | Artificial Intelligence, China, Data centers, emerging markets, India | - | The fund outperformed its benchmark as AI infrastructure buildouts and global easing cycles fueled emerging market gains. Managers highlighted Chinas growing AI ecosystem and leadership… |
| Aug 11 2025 | 2025 Q2 | 002050 SZ, 009540 KS, 034020 KS, 329180 KS, 3690 HK, GGPS3 BZ, TSM | capital flows, demographics, Digitization, emerging markets, infrastructure | - | The commentary highlights emerging markets as beneficiaries of shifting capital flows, weaker U.S. dollar dynamics, and domestic growth drivers. Country and theme selection focus on… |
| Mar 31 2025 | 2025 Q1 | 002472 CH, 002594 CH, 2423 HK, 9868 HK, KAYNES IN, KGDEY, KMB LN, SWIGGY IN, TCEHY, TSM | - | - | - |
| Dec 31 2024 | 2024 Q4 | 002352 CH, 005930 KS, 272210 KS, 329180 KS, KAYNES IN, MELI, SWIGGY IN, TSM | - | - | - |
| Sep 30 2024 | 2024 Q3 | 000660 KS, 005930 KS, 095340, 207940 KS, 300750 CH, 8069 TT, MPNGY, PDD, TRENT IN | - | - | - |
| Jul 27 2024 | 2024 Q2 | 009540 KS, BBRI IJ, KKC IN, PWGR IN, SRF IN, SUZ, TCEHY, TSM, WEGZY, XP | - | - | - |
| Apr 15 2024 | 2024 Q1 | 105560 KS, FYGGY, HDB, INDIGO IN, NU, TME, TSM, ZLAB | - | - | - |
| Jan 27 2024 | 2023 Q4 | 005930 KS, KAYNES IN, PDD, TRENT IN, TSM, YUMC | - | - | - |
| Sep 30 2023 | 2023 Q3 | 600519 CH, 6861 JP, BC94 LN, MM IN, NU, SUZ, TCEHY, TCOM IN, TSM | - | - | - |
| Jul 30 2023 | 2023 Q2 | 009540 KS, BC94 LN, HY9H GR, MAXHEALT IN, TRENT IN, TSM | - | - | - |
| Mar 31 2023 | 2023 Q1 | 000858 CH, 051910 KS, 268 HK, 3888 HK, 9618 HK, BAF IN, HUVR IN, RI AV, SMSN LN, SUZ, TCEHY, TS, TSM | - | - | - |
| Dec 31 2022 | 2022 Q4 | 268 HK, 587 HK, BAF IN, HAPVY, NHU SS, SMSN LN, TCEHY, TS, TSM | - | - | - |
| Sep 30 2022 | 2022 Q3 | 002271 CH, 002747 CH, BAF IN, BHARTI IN, BIDU, CPNG, TCEHY, TSM | - | - | - |
| Jun 30 2022 | 2022 Q2 | 002747 CH, 1880 HK, 600519 CH, 601100 CH, CPNG, TSM, YMM | - | - | - |
| Mar 31 2022 | 2022 Q1 | 047810 KS, 1299 HK, BAP, BIDU, GLEN LN, TCEHY | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
AIAI has been integrated into RGA's research process through tools like NotebookLM, Gems in Gemini, and Claude Code. The firm views AI as a force multiplier for human judgment rather than a replacement, emphasizing the Kasparov Law principle. They believe the market narrative around AI displacement is swinging to unhelpful extremes, creating investment opportunities. |
Machine Learning Automation Software Productivity Innovation |
BankingEuropean banking sector produced strong outperformance led by Bank of Ireland, Lloyds Banking Group, and CaixaBank. Sector returns supported by interest rate stabilization and yield curve steepening. The market is transitioning toward improving organic loan growth after fifteen years of stagnant credit activity. |
Regional Banks Money Center Banks European Banks | |
ChinaChina's economic rebalancing appears to be moving forward. Market liquidity, anti-involution and a measured consumer policy are likely to drive a sustained market performance in 4Q. Fiscal support and ongoing reforms in China is supportive of a stronger currency. |
Growth Policy Currency | |
Energy TransitionThe portfolio maintains significant exposure to electrification themes through companies like Bloom Energy, which provides clean, reliable power solutions for AI data centers. The energy transition represents a structural opportunity as companies race to build power infrastructure to support growing electricity demands from AI workloads. |
Electrification Clean Energy Power Generation Fuel Cells Grid Infrastructure | |
IndiaIndia combines sustained economic growth, rising formalization, deepening capital markets, and a growing pool of well-run, founder-led businesses with long reinvestment runways. The economy has grown from about $1 trillion to around $4 trillion over roughly 17 years, with credible estimates suggesting it could roughly quadruple over the next 15-20 years. India has moved from the periphery to the center of global equity markets as the fourth-largest listed market in the world. |
Formalization Capital Markets Growth Emerging Markets | |
SemiconductorsRGA initiated a position in Lattice Semiconductor, viewing it as an under-appreciated AI winner with immediate gains and longer-term optionality. Lattice's focus on efficiency and advantages in low-power, small footprint FPGAs position it favorably for AI servers, particularly as the only Post-Quantum Cryptography secure chips on the market. |
FPGAs Security Efficiency AI Infrastructure Programmable | |
| 2025 Q3 |
AIAI has been integrated into RGA's research process through tools like NotebookLM, Gems in Gemini, and Claude Code. The firm views AI as a force multiplier for human judgment rather than a replacement, emphasizing the Kasparov Law principle. They believe the market narrative around AI displacement is swinging to unhelpful extremes, creating investment opportunities. |
Machine Learning Automation Software Productivity Innovation |
ChinaChina's economic rebalancing appears to be moving forward. Market liquidity, anti-involution and a measured consumer policy are likely to drive a sustained market performance in 4Q. Fiscal support and ongoing reforms in China is supportive of a stronger currency. |
Growth Policy Currency | |
IndiaIndia combines sustained economic growth, rising formalization, deepening capital markets, and a growing pool of well-run, founder-led businesses with long reinvestment runways. The economy has grown from about $1 trillion to around $4 trillion over roughly 17 years, with credible estimates suggesting it could roughly quadruple over the next 15-20 years. India has moved from the periphery to the center of global equity markets as the fourth-largest listed market in the world. |
Formalization Capital Markets Growth Emerging Markets | |
| 2025 Q2 |
EmergingMarkets |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jan 27, 2026 | Fund Letters | Michael Kass | TSM | Taiwan Semiconductor Manufacturing Company Limited | Information Technology | Semiconductors | Bull | New York Stock Exchange | AI, Foundry, Pricing power, scale, semiconductors | Login |
| Jan 27, 2026 | Fund Letters | Michael Kass | 000660 KS | SK hynix Inc | Information Technology | Semiconductors | Bull | New York Stock Exchange | AI, HBM, Memory, Pricing, semiconductors | Login |
| Jan 27, 2026 | Fund Letters | Michael Kass | 005930 KS | Samsung Electronics Co Ltd | Information Technology | Semiconductors | Bull | New York Stock Exchange | AI, Foundry, HBM, Memory, semiconductors | Login |
| Jan 27, 2026 | Fund Letters | Michael Kass | BABA | Alibaba Group Holding Limited | Consumer Discretionary | Internet Retail | Bull | New York Stock Exchange | AI, China, cloud, ecommerce, Platforms | Login |
| Jan 27, 2026 | Fund Letters | Michael Kass | ABG SJ | Absa Group Limited | Financials | Diversified Banks | Bull | New York Stock Exchange | banking, Credit cycle, Margins, South Africa, valuation | Login |
| Jan 27, 2026 | Fund Letters | Michael Kass | FSR SJ | FirstRand Limited | Financials | Diversified Banks | Bull | New York Stock Exchange | banking, diversification, Margins, Returns, South Africa | Login |
| Jan 27, 2026 | Fund Letters | Michael Kass | NU | Nu Holdings Ltd | Financials | Consumer Finance | Bull | New York Stock Exchange | Credit, digital banking, Fintech, growth, Latin America | Login |
| TICKER | COMMENTARY |
|---|---|
| 000660.KS | SK Hynix has solidified its leadership in high-bandwidth memory (HBM), emerging as the exclusive HBM supplier for Microsoft's in-house AI accelerator and securing roughly two-thirds of NVIDIA's anticipated HBM4 demand for its next-generation platforms at meaningfully higher price points and margins than prior generations. |
| 005930.KS | Top gainers included Samsung (+38% in U.S. dollar terms) |
| 0700.HK | Shinya also visited Shenzhen, where Star Magnolia Capital organized an educational visit for our families to Tencent's headquarters, alongside meetings with several promising early-stage companies. |
| 1024.HK | our Chinese e-commerce and internet stalwarts – Kuaishou saw their share prices soften as the market focused on more direct AI beneficiaries |
| 300750.SZ | CATL alone commands 38% market share in global lithium-ion battery production |
| BABA | Alibaba was a detractor during the quarter after the company reported mixed fiscal Q2 results. While cloud revenue growth accelerated and margins remained stable, the core commerce business struggled with slowing growth and significant profit pressure, particularly in the quick commerce segment where heavy investment and intense competition led to a sharp decline in profitability. |
| NU | Since our mid-year update, Nubank's shares increased 37%, bringing full-year performance to +63%. This performance has been driven primarily by fundamentals, with earnings growing approximately 42% over the same period. Brazil remains a powerful profit engine, with high customer engagement, improving risk-adjusted returns, and expanding penetration across consumer and SME banking. Mexico continues to emerge as the next major growth vector: customer penetration has reached ~14% of the population. |
| RELIANCE.NS | India-based conglomerate: chemicals, refining, #1 mobile telco and #1 retailer in India |
| SQM | SQM is a Chilean chemical and mining company with extraction rights in the Salar de Atacama, which is the world's largest and lowest-cost lithium deposit. Its share price has been strong amid rising market expectations for electromobility and energy storage systems demand, which supports price recovery and volume growth. SQM achieved record lithium sales volumes in the third quarter, up 43% year-over-year, and achieved approval from China's antitrust regulator for a joint venture that will enable long-term lithium production planning in Chile through 2060. |
| TSM | TSMC was a top contributor during the quarter, driven by robust demand for advanced semiconductor manufacturing and improved gross margins as AI continues to grow strong and the non-AI segment showed signs of recovery. Management raised its revenue growth guidance to the mid-30% range, and given continued strength in demand, AI-related growth targets are expected to move above the current mid-40% level. |
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