Baron Capital’s High-Conviction ETF Strategies

In a technologically advanced era of investing that’s dominated by algorithmic trading and passive indexing, Baron Capital isn’t changing its identity. This also includes its ETF strategies. The firm prides itself on its human-centric, “old school active” research approach. Their strategies maintain high active share, with portfolios that look meaningfully different from their benchmarks in a market where many “active” strategies closely resemble them.

Baron Capital’s foray into active ETFs just began late last year, but the firm has been in the asset management business since 1982. Matt Camuso, Head of ETF Solutions at Baron Capital, sat down with Nate Geraci during an episode of ETF Prime to discuss why their time-tested methodology is uniquely suited for today.

“We were coined during a segment a few weeks ago as ‘old school active,’” Camuso said. “We love that. That is who we are. That investment philosophy, for 40-plus years, has stayed the same. That’s where we differ.” That consistency has translated into strong long-term performance and reinforces the effectiveness of the firm’s disciplined approach.

A Research Emphasis

Across their full ETF suite, Baron Capital employs fundamental, bottom-up research that ignores short-term market noise in favor of long-term business compounding. This includes actively identifying and investing in companies with open-ended growth opportunities, durable competitive advantages, and strong management. Crucially, the firm targets these companies only when they trade at attractive valuations relative to their estimates of intrinsic value.

In a market where many active managers are pivoting toward “quantamental” or factor-based models, Baron’s focus remains on this deep-dive primary research.

“What that means to us is bottom-up, fundamental research,” Camuso explained. “We’re looking for high-growth businesses that have sustainable competitive advantages, run by what we think are exceptional management teams.”

The Baron Capital Differentiator

Baron Capital’s extensive research constructs high-conviction portfolios for a long-term investment horizon. These actively managed ETFs stand in stark contrast to passive indexes that may hold hundreds of frequently traded names.

Baron pairs this highly concentrated portfolio-construction process with legendary patience. Indeed, the firm maintains holding periods measured in years, and often decades, rather than quarters.

“We don’t own stocks, we own businesses,” Camuso added, noting that in a world of systematic methodologies, Baron Capital emphasizes “human intuition” and “human interaction” by “engaging with companies before we make an investment and during the life cycle of that investment to ensure our thesis is the same.”

It’s a refreshing take in an ETF market that’s constantly evolving. Baron Capital is a firm that understands who they are and their strategy, and executes them to perfection.

“Stick to what you know and what has always worked for you, and don’t chase new trends,” Camuso concluded.

To learn more about the active ETFs offered by Baron Capital, click here.

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