In the fast-changing 2026 market landscape, investors are increasingly seeking active managers who perform original, in-depth research, take a long-term view, and identify true drivers of growth. It has rarely been more challenging to identify the growth leaders of tomorrow, but fundamentally driven ETFs like Baron First Principles ETF (RONB) can help separate durable compounders from the rest.
The fund is managed by Ron Baron, David Baron, and Michael Baron. At the core of the fund’s investment philosophy is the “First Principles” approach. That’s an examination that breaks down each potential investment to its basic components. The result is a high-conviction portfolio that can deliver long-term growth outperformance.
A "First Principles" Framework
The “First Principles” approach can be especially effective in 2026 as AI-driven innovation and disruption reshapes the global economy. Given the high uncertainty around AI, it’s important for investors to gain exposure to companies with true growth prospects, supported by long-term fundamentals and secular trends, rather than hype. To accomplish this, the fund focuses on:
- Intrinsic value: companies with valuations that reflect their long-term investment horizon
- People: companies with exceptional founders and management teams focused on innovation
- Strong moats: companies with sustainable competitive advantages that can thrive through various economic cycles
“At its core, first-principles thinking means deconstructing a business… its culture, people, and strategy… down to its most essential elements,” noted Ron Baron, who founded Baron Capital in 1982. “We take each potential investment apart piece by piece to understand how a company really works, then rebuild it with a clear picture of where we think it can go over the long term.”
The portfolio (as of February 17) includes names like Tesla, Space Exploration Technologies, MSCI, Spotify, and Hyatt Hotels. RONB is diversified across sectors and market capitalizations.
Active Advantage
The portfolio management team has a long-term mindset, following companies for many years before investing. Across Baron Capital strategies, the average holding period is six years, and for RONB it is projected to be even longer. Once the portfolio managers identify compelling opportunities at attractive valuations, they hold them for extended periods, allowing compounding to work. This offers investors long-term growth outperformance.
While short-term market movements may continue to shift at a rapid pace, long-term wealth creation remains rooted in owning differentiated businesses led by visionary leaders, grounded in deep active research, and capable of enduring success.
To learn more about RONB, click here.
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