While much of the market in 2025 is focused on artificial intelligence and big tech companies, billionaire fund manager Ron Baron said on CNBC's “ETF Edge” this week that investors should look across more market caps and sectors for the best opportunities. This is starting to happen as many investors are exiting technology stocks and looking for value across the market, including the financial sector. Baron named two companies from the financial sector that his company Baron Capital owns: MSCI And FactSetwhich he believes receives little attention from individual investors, and where he says the CEOs are one of the reasons for confidence in the future.
Baron joined “ETF Edge” to talk about his company's new exchange-traded funds, his first ETFs after decades of running mutual funds and other investments that have brought Baron Capital investors an estimated $57 billion in profits over four decades. He predicted another $250 billion in profits over the next decade and focused largely on finding stocks that the rest of the market ignores.
“There are so many companies that are interesting right now and they are all focused on technology,” he said.
MSCI is best known for its stock indices, which are used by asset managers, pension funds and ETF providers around the world. Trillions of dollars are invested based on MSCI benchmarks, including developed markets, emerging markets and ESG indices. The company also offers analytical and risk management tools deeply embedded in institutional investments.
MSCI went public in 2007 at $18 per share after being spun off from Morgan Stanley. The stock initially rose, then fell sharply during the financial crisis, but Baron said he continued buying during that time.
But MSCI has been left out of the recent bull market as its shares have lost nearly 8% over the past year, trading at $563 on Thursday.
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MSCI YTD
Baron, founder and CEO of Baron Capital, said he has owned MSCI since its initial public offering and invested alongside founder and chairman Henry Fernandez, whose personal story is particularly close to his heart. Fernandez fled Nicaragua during a coup, came to the US with no money and set up MSCI within Morgan Stanley.
In all the years since the IPO, “we've continued to buy,” Baron said. “He also personally bought stocks,” Baron said of Fernandez. “I’m trying to keep up with him.”
FactSet was an even bigger loser, down nearly 40% this year after disappointing earnings and a weak earnings outlook. However, Baron believes the decline is due to short-term issues rather than a business collapse, citing the company's new CEO as a reason for his bullish assessment. “What I find really interesting … there has been a change in management,” he said.
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FactSet YTD
FactSet, which provides financial data, analysis and research tools for investment professionals, named Sanoke Viswanathan as CEO in September. Baron said he originally invested while looking for a similar option to Bloomberg that was private and in which he could not invest. Now, Baron says the new CEO is another reason to invest, comparing Viswanathan to JPMorgan CEO Jamie Dimon.
As with Fernandez, Baron also pointed to Viswanathan's personal story. He grew up poor on a farm in India, attended top engineering schools, worked at McKinsey, advised U.S. officials during the financial crisis at age 33, and later became one of the senior executives on Jamie Dimon's team at JPMorgan. According to Baron, Viswanathan was among the top candidates being considered as Dimon's successor, and when he found out that he would not be the successor for the CEO job at JPMorgan, he decided to accept the top job at FactSet.
Baron sees this decision as a big win for FactSet. “When you have a really cool company with great opportunities like Bloomberg, but young and up-and-coming, and a killer guy like that… think about putting Jamie Dimon at the helm of that company at 51 or 52. That's what just happened,” Baron said.
“You find companies like this, you find people like this running these companies, and you say, 'I need to invest in this person,'” Baron added.