Baron Real Estate Fund Q1 2025 Shareholder Letter
2025-04-27 22:07:00 ET
Summary
- Baron Real Estate Fund declined in the first quarter of 2025, underperforming its benchmark, the MSCI US REIT Index.
- Real Estate did relatively better than the overall market as investors rotated into defensive sectors in the risk-off environment.
- Top contributors were Welltower Inc., American Tower Corporation, and Ventas, Inc.
- Top detractors were Equinix, Inc., Digital Realty Trust, Inc., and Vornado Realty Trust.
- During the quarter, the Fund re-acquired shares of two industrial REITs: Prologis, Inc. and EastGroup Properties, Inc.
Dear Baron Real Estate Fund Shareholder:
In the first quarter of 2025, numerous stocks were sold, in some cases indiscriminately without regard to value, largely because of concerns about a slowdown in economic growth, still somewhat elevated inflation, and policymaking that is keeping businesses and consumers off balance. Baron Real Estate Fund® (the Fund) was not immune.
The Fund’s non-REIT cyclically oriented real estate-related holdings – travel-related companies, homebuilders, building products/services companies, and real asset alternative asset managers - in addition to select REIT categories (data centers, office, and malls) weighed on performance during this period. For the three months ended March 31, 2025, the Fund declined 6.69% (Institutional Shares), underperforming the MSCI USA IMI Extended Real Estate Index (the MSCI Real Estate Index), which fell 3.11%, and the MSCI US REIT Index (the REIT Index), which increased 0.76%.
Table I.
Performance
Annualized for periods ended March 31, 2025
| Baron Real Estate Fund Retail Shares 1,2 | Baron Real Estate Fund Institutional Shares 1,2 | MSCI USA IMI Extended Real Estate Index 1 | MSCI US REIT Index 1 | S&P 500 Index 1 | |
|---|---|---|---|---|---|
| Three Months 3 | (6.76)% | (6.69)% | (3.11)% | 0.76% | (4.27)% |
| One Year | (3.36)% | (3.09)% | 2.45% | 8.98% | 8.25% |
| Three Years | 1.44% | 1.71% | 4.79% | (1.77)% | 9.06% |
| Five Years | 15.72% | 16.02% | 15.39% | 10.04% | 18.59% |
| Ten Years | 8.11% | 8.40% | 7.73% | 4.01% | 12.50% |
| Fifteen Years | 12.35% | 12.64% | 10.31% | 7.41% | 13.15% |
| Since Inception (12/31/2009) (Annualized) | 12.64% | 12.92% | 10.76% | 7.94% | 13.31% |
| Since Inception (12/31/2009) (Cumulative) 3 | 514.02% | 538.31% | 374.88% | 220.83% | 572.66% |
Performance listed in the above table is net of annual operating expenses. Annual expense ratio for the Retail Shares and Institutional Shares as of April 26, 2024 was 1.31% and 1.06%, respectively. The performance data quoted represents past performance. 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. The Adviser may waive or reimburse certain Fund expenses pursuant to a contract expiring on August 29, 2035, unless renewed for another 11-year term and the Fund’s transfer agency expenses may be reduced by expense offsets from an unaffiliated transfer agent, without which performance would have been lower. Current performance may be lower or higher than the performance data quoted. For performance information current to the most recent month end, visit BaronCapitalGroup.com or call 1-800-99-BARON. or call 1-800-99-BARON. (1)The MSCI USA IMI Extended Real Estate Index Net ((USD)) is a custom index calculated by MSCI for, and as requested by, BAMCO, Inc. The index includes real estate and real estate-related GICS classification securities. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed or produced by MSCI. The MSCI US REIT Index Net ((USD)) is designed to measure the performance of all equity REITs in the U.S. equity market, except for specialty equity REITs that do not generate a majority of their revenue and income from real estate rental and leasing operations. The S&P 500 Index measures the performance of 500 widely held large-cap U.S. companies. MSCI is the source and owner of the trademarks, service marks and copyrights related to the MSCI Indexes. The MSCI Indexes and the Fund include reinvestment of dividends, net of foreign withholding taxes, while the S&P 500 Index includes reinvestment of dividends before taxes. Reinvestment of dividends positively impacts performance results. The indexes are unmanaged. Index performance is not Fund performance. Investors cannot invest directly in an index.(2)The performance data in the table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.(3)Not annualized. |
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Baron Real Estate Fund Q1 2025 Shareholder Letter
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