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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
Buyside Digest is not affiliated with, and does not endorse, Baron Emerging Markets Fund. This analysis is provided for institutional research purposes only and is not investment advice.
"Baron Emerging Markets Fund returned 19.61% in Q2 2026, trailing the benchmark's 24.05% in a semiconductor-dominated quarter. Agentic AI adoption and Iran cease-fire drove returns concentrated in mega-cap memory leaders SK hynix, TSMC, and Samsung."
Baron Emerging Markets Fund returned 19.61% in Q2 2026, underperforming the MSCI Emerging Markets Index's 24.05% return in a quarter dominated by semiconductor and AI-related shares. The delta is attributed to emphasis on innovative technology companies and lack of legacy commodity semiconductor exposure. Key catalysts included the Iran cease-fire reopening the Strait of Hormuz and rapid adoption of agentic AI from Anthropic and OpenAI, enabling the leap from chatbots to fully autonomous AI agents. Top contributors were SK hynix, TSMC, and Samsung, all benefiting from supply-constrained HBM markets and record memory profitability. Detractors included Alibaba, which ramped AI infrastructure investment, and BYD, facing domestic EV price competition. The manager initiated positions in Indian pharmaceutical companies Divi's and Acutaas as supply chain diversification beneficiaries, Saudi digital insurance platform Rasan, and Hungarian bank OTP. Despite near-term AI concentration risks and poor market breadth, the manager remains optimistic about their theme-driven approach, viewing current valuations in digitization beneficiaries as attractive opportunities. The Fund maintains market weight semiconductor exposure while opportunistically adding to mispriced quality growth names.
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