Baron Capital launched five actively managed exchange-traded funds on Monday and expects its long-term track record – including a large, early investment in SpaceX – to lead to growing demand for active strategies in the ETF format.
The new funds – the Baron First Principles ETF (RONB), the Baron Global Durable Advantage ETF (BCGD), the Baron SMID Cap ETF (BCSM), the Baron Financials ETF (BCFN) and the Baron Technology ETF (BCTK) – began trading on Monday. Each ETF is designed to reflect investment approaches that Baron Capital has used for decades in its mutual funds and personal accounts.
Baron Capital founder, CEO and chairman Ron Baron said SpaceX, which is aiming for one of the largest IPOs ever, has overtaken Tesla to become the company's largest investment at about $10 billion.
SpaceX's rapidly growing Starlink satellite network is a key driver of its long-term investment thesis, Baron said. He added that he was also optimistic about the development of space-based data centers, arguing that on-orbit infrastructure could significantly reduce operating costs for power and cooling.
“Cooling is a huge cost. Put it in space, there are no additional cooling costs,” Baron said.
Baron Capital has also invested in xAI, another company founded by Elon Musk, which Baron said could benefit from expanding satellite networks and space-based computing to provide artificial intelligence services like ChatGPT “but better.”
Baron said the company's long-term performance supports its entry into ETFs. He said 98% of Baron Capital's assets outperformed their benchmarks, with about 60% ranking in the top 5% of funds. He noted that the Baron Partners Fund has been the best-performing U.S. fund since 2003.
Baron added that the company has so far generated about $57 billion in profits after starting with $100 million in assets in 1992, and aims to generate five times that amount in the next decade.
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