The curated database of hedge funds that publish investor letters. Research by geography, strategy, and schools of thought.
| # | Fund | Strategy | Style | Geography | AUM | Latest Letter |
|---|---|---|---|---|---|---|
As of Nov 9, 2026
Baron First Principles ETF posted a net decline of 3.99% for the third quarter of 2026, lagging the Russell 3000 Growth Index benchmark return of 0.45%, and bringing year-to-date performance to -6.01% net of fees. The portfolio experienced broad-based pressure within capital-intensive disruptive technology and rate-sensitive consumer categories. Declines were primarily led by market concerns surrounding massive artificial intelligence infrastructure capital expenditures at Tesla and private holding Space Exploration Technologies Corp. (SpaceX), alongside macroeconomic headwinds from elevated interest rates and persistent inflation that pressured premium footwear, lodging, and gaming allocations. Cash and equivalents were maintained at 1.1% of net assets, preserving near-full investment across 21 concentrated holdings. The investment team maintains that macroeconomic inflation will track near its historical 3% to 4% annualized range, with benchmark interest rates matching inflation. This backdrop is anticipated to favor businesses compounding top-line growth at rates exceeding nominal gross domestic product. Strategic exposure is organized across four distinct categories: high-growth disruptive investments (56.2% of net assets), data-driven recurring financial platforms (18.8%), mature double-digit core growth compounders (13.5%), and irreplaceable physical assets trading at steep discounts to replacement cost (10.4%). The fund remains structurally overweight Consumer Discretionary at 27.0%, Communication Services, and Financials, while holding zero exposure to cyclical, commodity-sensitive energy, materials, utilities, or consumer staples. Negative quarterly performance was partially counterbalanced by resilient cloud software and financial data platforms benefiting from AI integration rather than suffering disintermediation. Key positive contributors included healthcare apparel leader FIGS, e-commerce platform Shopify, investment intelligence provider Morningstar, and workflow data engine FactSet Research Systems. Management emphasizes that several top holdings trade at cyclical trough valuation multiples despite generating expanding free cash flow, prompting extensive corporate share buyback activity and establishing potential strategic acquisition appeal.
Baron First Principles ETF invests in a focused, high-conviction portfolio of competitively advantaged, founder-led growth companies across disruptive innovation, recurring financial information, core compounders, and irreplaceable real assets with the potential to double earnings and cash flow over four to five years.
Management anticipates inflation will remain at or below its historical 3% to 4% range with interest rates roughly tracking inflation, creating a favorable backdrop for businesses compounding revenues significantly faster than broader economic growth. The fund expects multiple expansion and accelerated earnings growth across its concentrated holdings as market fears over artificial intelligence capital spending and software displacement subside.
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