This fund has returned 32.28% to its investors so far this year, according to Morningstar.
Baron Emerging Markets Fund (BEXFX)
From Ian Wyatt’s Million Dollar Portfolio
Baron Emerging Markets Fund (BEXFX) is a mutual fund that invests in non-U.S. companies. Like many of the other funds from Baron Funds, this is a growth-oriented mutual fund.
Baron Funds is a well-respected fund manager led by Ron Baron.
This particular fund is led by Michael Kass, who has been with Baron Funds for the last decade. Kass likes to invest in growth companies that have the potential to double in price within three to five years.
His investing approach could describe his approach as “growth at a reasonable price.”
The fund only invests in growth companies, but Kass only buys stocks when the valuation is justified.
It’s worth noting that the fund manager has between $500,000 and $1 million of his personal savings invested in the fund. With many mutual funds, the managers themselves often have little or no investment in their own funds. The fact that the manager has skin in the game is a big positive for me.
As of Sept. 30, 86% of the fund’s assets are invested in the developing world. Top countries include:
- China: 32%
- India: 17%
- Taiwan: 7%
- Korea: 6%
- Brazil: 5%
With nearly one-third of the fund’s assets invested in China, I wasn’t surprised to see that the top three individual holdings were Chinese companies. Alibaba (BABA), Tencent (TCEHY) and Baidu (BIDU) top the list.
Since its launch in December 2010, the fund has performed well.
Over the last five years, the fund has delivered average annualized gains of 8.8%. That’s 1.5% above the benchmark international index from MSCI. And even more impressive, it’s more than four points higher than the average emerging markets fund.
This year, the fund has been on a bit of a hot streak, posting 32.3% gains. That compares with 21% gains in the benchmark index.
The performance has attracted more capital to the fund. Kass believes that the fund can grow from its current $4.3 billion in assets to $10 billion. When we see funds growing their assets quickly, it can be a reason for concerns. As the asset base grows, the fund may be unable to effectively invest in small-cap companies with brighter growth prospects.
With a $2,000 minimum investment and 1.38% expense, the Baron Emerging Markets Fund is approachable and relatively affordable for an actively managed mutual fund.
Mutual fund research firm Morningstar gives the fund a five-star rating and a Bronze rating.
The bottom line is that I’m bullish on international equities, and particularly emerging markets. The Baron Emerging Markets Fund has been a top performer, has a strong team, and a diversified basket of growth oriented assets.
Buy the Baron Emerging Markets Fund.
Ian Wyatt, Ian Wyatt’s Million Dollar Portfolio, www.wyattresearch.com, October 13, 2017