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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
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"Baron Health Care Fund outperformed in Q2 2026 driven by Eli Lilly's GLP-1 leadership and Revolution Medicines' breakthrough pancreatic cancer data. The manager re-entered managed care stocks UnitedHealth and Elevance to capture margin recovery as the insurance cycle turns favorable."
Baron Health Care Fund returned 11.99% in Q2 2026, outperforming the Russell 3000 Health Care Index by 151 basis points through solid stock selection in pharmaceuticals, biotechnology, health care equipment, and life sciences tools. Key contributors included Eli Lilly, whose GLP-1 obesity portfolio continues demonstrating commercial leadership with all major PBMs now providing coverage and next-generation pipeline data reinforcing the company's position in a category that could exceed $150 billion. Revolution Medicines contributed following groundbreaking Phase 3 pancreatic cancer data showing 60% reduction in death risk, representing the first major advance in over 30 years. The manager re-established positions in UnitedHealth and Elevance to capitalize on the improving managed care cycle as companies rebuild profitability after exiting unprofitable Medicare Advantage markets. Biotechnology funding is up 130% year-over-year with 2026 on track for the strongest year since 2021, while M&A activity remains robust as large pharma companies replace patent-expiring products. Medical device stocks face near-term headwinds from ACA subsidy expiration and Medicaid work requirements but trade at discounts creating potential opportunities. The portfolio holds 43 stocks with 51% in top 10 holdings, overweight life sciences tools and biotechnology.
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