Nate Geraci explored active ETFs and sector investing on this week’s ETF Prime, featuring Baron Capital’s Matt Camuso and VanEck’s Michael Cohick.
Camuso, head of ETF solutions at Baron Capital, discussed the firm’s recent entry into the ETF space. Baron entered the market in December with five actively managed ETFs and has already gathered approximately $550 million in assets. The firm, founded in 1982, manages nearly $50 billion in total assets and is known for high-conviction growth investing.
SpaceX Holding Draws Attention to Flagship Fund
The flagship Baron First Principles ETF (RONB) has garnered attention for holding a position in privately held SpaceX. Camuso explained that Baron has owned SpaceX shares since 2017 and deemed the position “less liquid” rather than “illiquid” based on the firm’s unique relationship with the company.
“We got comfortable that we could sell that reasonable size within a seven day settlement period,” Camuso said.
He emphasized that SpaceX inclusion wasn’t a publicity stunt, but part of Baron’s fundamental research process. The position operates as “cash in lieu securities at the last known price” from an operational standpoint.
Camuso described Baron’s approach as “old school active,” emphasizing human intuition and management interaction as differentiators. The firm typically holds positions for four to five years, with lower turnover than other growth managers.
On ETF due diligence, Camuso encouraged investors not to dismiss new ETFs based solely on launch dates. “Just because an ETF is brand new to the market, don’t assume it’s brand new into the firm,” he said, noting that Baron’s technology and financials ETFs are conversions from mutual funds.
Camuso also confirmed that Baron has filed for additional ETFs, including a risk-optimized large-cap growth strategy.
Geraci also spoke with Cohick, director of product management at VanEck, who explained the firm’s TruSector ETFs. These products solve regulatory diversification caps that force traditional sector ETFs to underweight megacap stocks. The VanEck Technology TruSector ETF (TRUT ) holds nearly 45% in the State Street Technology Select Sector SPDR ETF (XLK ) to provide full market capitalization exposure.
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