Views
1 year ago

Baron Funds

2lc6zl9

Dec-93 Dec-94 Dec-96

Dec-93 Dec-94 Dec-96 Dec-98 Dec-00 Dec-02 Dec-04 Dec-06 Dec-08 Dec-10 Dec-12 Dec-14 Dec-16 Letter from Linda Baron Funds and the Technology Boom and Bust Baron Funds vs. Benchmarks Cumulative Returns From 10/08/1998 to 9/21/2001 Baron Fund Baron Growth Fund Baron Small Cap Fund Baron Asset Fund Baron Fund Benchmark Russell 2000 Growth Index Russell 2000 Growth Index Russell MidCap Growth Index Market Stages/ Cycles* Start Date End Date Length (months) Baron Fund Cumulative Return Benchmark Cumulative Performance Excess Return Bull Bear 10/8/1998 3/9/2000 3/9/2000 9/21/2001 17 18 108.15% –15.87% 183.51% –59.98% –75.36% 44.11% Full Cycle 10/8/1998 9/21/2001 35 75.12% 13.45% 61.67% Bull Bear 10/8/1998 3/9/2000 3/9/2000 9/21/2001 17 18 171.26% –32.41% 183.51% –59.98% –12.25% 27.57% Full Cycle 10/8/1998 9/21/2001 35 83.34% 13.45% 69.89% Bull Bear 10/8/1998 9/4/2000 9/4/2000 9/21/2001 23 13 89.11% –37.32% 172.31% –56.62% –83.20% 19.30% Full Cycle 10/8/1998 9/21/2001 35 18.53% 18.12% 0.41% Source: Baron Capital * A Bull Market is a sustained period of positive market returns where the index reaches the highest value prior to a decline of at least 20%. A Bear Market is a sustained period of negative market returns where the index reaches a decline of at least 20% from a previous market peak. Full Market Cycles include a Bear Market preceded by a Bull Market. Market cycle periods may vary for different asset classes. The indexes used to determine the start and end date for small cap and midcap stocks were the Russell 2000 Index and the Russell MidCap Index, respectively. Baron Growth Fund’s annualized returns as of December 31, 2016: 1-year, 6.31%; 5-years, 11.56%; 10-years, 6.63%; Since Inception (12/30/1994), 12.56%. Annual expense ratio for the Institutional Shares as of September 30, 2016 was 1.05%. Baron Small Cap Fund’s annualized returns as of December 31, 2016: 1-year, 10.26%; 5-years, 11.77%; 10-years, 6.77%, Since Inception (9/30/1997), 9.34%. Annual expense ratio for the Institutional Shares as of September 30, 2016 was 1.06%. Baron Asset Fund’s annualized returns as of December 31, 2016: 1-year, 6.51%; 5-years, 13.53%; 10 years, 6.75%; Since Inception (6/12/1987), 11.05%. Annual expense ratio for the Institutional Shares was 1.04%. Biases Bite Mutual Fund Investors Too Emotionally-driven investment decisions tend to yield disappointing results. The basic tenent of investing gets turned on its head, and people end up buying high and selling low. No one gets it right all the time, but making that mistake on a regular basis is not a particularly profitable investment strategy. Yet that is what we see equity investors doing. In the chart below, the blue represents equity mutual fund flows and the black line is the return of the S&P 500 a year later. The data shows that stock fund inflows were strongest just before the market declined, and outflows were strongest just before the market rallied. For example, between August 2011 and December of 2012, around $170 billion left U.S. equity mutual funds, and thus missed earning between 13% and 32% over the following 12 months. And we see a similar trend happening again. This investor behavior results in consistent underperformance. Since the majority of mutual fund investors don’t stay invested for the long term, the returns experienced by the average investor are often lower than the returns achieved by the funds. The Average Investor Performs Worse Than The Average Fund* Average Investor vs. Average Fund 10-Yr Annualized Return Difference as of 12/31/2016 Large Value Blend Growth -2.2% -1.5% -1.3% Investor Anxiety Leads to Buy High/Sell Low Behavior Equity Mutual Fund Flows vs. One-Year Forward Returns 60% Return 50% 40% 30% 20% 10% 0% -10% -20% Missed 13%-32% $180 $150 $120 $90 $60 $30 $- $(30) $(60) Net Flows ($Bn) Small Mid -2.0% -1.1% -1.9% -1.4% -2.1% -2.0% Source: Morningstar Direct -30% -40% -50% $170 Bn $(90) $(120) $(150) US OE Equity Net Flows - 1Yr Cumulative S&P 500 TR - 1Yr Forward Return Source: Baron Capital using Morningstar Data. Flows include obsolete funds. Past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate; an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. For performance information current to the most recent month end, visit www.BaronFunds.com or call 1-800-99BARON. * Please see back of letter for Average Investor and Fund definitions. 10

Dec-82 Dec-81 Dec-84 Dec-86 Dec-88 Dec-90 Dec-92 Dec-94 Dec-96 Dec-98 Dec-00 Dec-02 Dec-04 Dec-06 Dec-08 Dec-10 Dec-12 Dec-14 Dec-16 December 31, 2016 Letter from Linda Exceptional Takes Time The biggest difference between successful and unsuccessful investors is rational behavior. As noted investor Benjamin Graham said, “People don’t need extraordinary insight or intelligence. What they need most is the character to adopt simple rules and stick to them.” We agree: discipline and patience are key to achieving exceptional results in anything you do. Think of a young athlete who aspires to be an NFL quarterback. He will practice throwing the football through a tire thousands of times to improve his accuracy. He will get his sisters and all his friends to catch the ball while he practices perfecting his spiral and throwing the ball far down the field. If he is disciplined and patient, and develops outstanding skills, perhaps he will advance to be the starting quarterback on his high school and college teams, and then ultimately be drafted to the NFL. It takes time to become exceptionally good. Few investors realize how important this is. Instead, they focus on the short term, listen to market noise, and seek out schemes for quick profits. As a result, they make irrational decisions. We currently see a great deal of irrational behavior in the markets. The market and investor emotions fluctuate in tandem. As the stock market rises, investor optimism builds to euphoria, only to come crashing down through anxiety, fear, panic, and, eventually, despondency. It then builds again, through hope and renewed optimism, getting back to where we started. The Stock Market and the Cycle of Emotional Investing POINT OF MAXIMUM FINANCIAL RISK Excitement Optimism Thrill Euphoria Anxiety Desperation Denial Fear POINT OF MAXIMUM FINANCIAL OPPORTUNITY Optimism Active Management Is at the Point of Maximum Financial Opportunity Euphoria Thrill Anxiety LOW Point of Maximum Opportunity Here is why. The performance of the markets is cyclical, and so is the performance of active and passive products. The average active manager tends to perform better during gradual uptrends and down markets – and tends to lag when the market is spiking high. The Performance of Active and Passive Managers Has Been Cyclical Relative Performance 6% 4% 2% 0% -2% -4% -6% Active Outperforms Passive Passive Outperforms Active S&P 500 Index 2,250 2,000 1,750 1,500 1,250 1,000 750 500 250 S&P 500 Index Panic Relief -8% Capitulation Despondency Hope Depression We believe that the stock market and investor emotions are currently around their high point. On the other hand, we think active management is at the point of maximum financial opportunity. Source: Morningstar Direct, Baron Capital The analysis is based on monthly rolling 3-year returns for the period 12/31/1981 to 12/30/2016. US OE Large includes all share classes in Morningstar’s US OE Large Growth, US OE Large Value and US OE Large Blend categories. The performance of passive funds is calculated as the average 3- year performance of all index fund share classes. The performance of active funds is calculated as the average 3-year performance of all non-index fund share classes. 11

Pioneer Funds – Strategic Income - Pioneer Investments
Pioneer Funds – Strategic Income - Pioneer Investments
Portfolio Pioneer Funds – US Dollar Aggregate Bond
Pioneer Funds – Euro Strategic Bond - Pioneer Investments
Investor Presentation March 2016
新鴻基地產發展有限公司 - Sun Hung Kai Properties Ltd.
永泰地產有限公司 - Wing Tai Properties Limited
" " ¤VXG - TVK
J-Curve Exposure: Managing a Portfolio of Venture Capital and Private Equity Funds (Wiley Finance)
Oznámení podílníkům Pioneer Funds - Pioneer Investments
主要交易- 出售一家合營公司之40%權益 - Wing Tai Properties Limited
Fund update
Working Paper Series
AODP-GCI-2016_INSURANCE-SECTOR-ANALYSIS_FINAL_VIEW
Invest more when valuations are low Here’s how
Výroční zpráva k 31.12.2001 - Pioneer Investments
ANNUAL REPORT 2015
קבוצת אלרוב