While Baron First Principles ETF (RONB) holds positions in founder Elon Musk’s Tesla and SpaceX, a deeper look reveals a portfolio full of high-conviction holdings. Guided by the firm’s First Principles philosophy, RONB includes companies such as MSCI, Shopify, Hyatt, Charles Schwab, and FactSet Research Systems.
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The aforementioned names may not command the headlines that Tesla and SpaceX do, but they showcase the fund’s focus on identifying businesses with long-term growth opportunities protected by economic moats. Furthermore, these holdings highlight the rigorous research process involved in identifying select opportunities.
Moats Beyond Musk
Baron Capital’s First Principles investment approach breaks complex problems down to their core truths to develop a deep understanding of each company’s essential elements. The firm invests with a single long-term objective — identify secular growth businesses with durable competitive advantages, run by great management teams.
These five companies meet those criteria:
- MSCI Inc: A cornerstone in the financial services sector, MSCI provides essential data tools and indexes that global institutions rely on to measure market performance.
- Shopify: This e-commerce giant provides a comprehensive platform that enables businesses to manage every aspect of online and retail commerce with high scalability.
- Hyatt Hotels: This hotel chain’s business model, targeting high-end travelers, demonstrates the company’s ability to scale a globally recognized brand with high capital efficiency and low overhead.
- Charles Schwab: This financial services firm leverages its scale to lower costs and aggregate assets, which creates a growth engine for retail as well as institutional investors that is hard to replicate.
- FactSet Research Systems: Like MSCI, FactSet is a data powerhouse. The company provides a unified platform for financial data and analytics for industry-wise usage from asset managers to investment banks.
Questioning Everything
Baron Capital’s First Principles approach isn’t about finding the next big trend. The research process questions everything and challenges assumptions, which helps to uncover companies that others overlook. When the management team identifies companies with visionary leaders and differentiated businesses capable of enduring success, they take bold positions.
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Whether it’s MSCI, Shopify, Hyatt, Charles Schwab, FactSet Research Systems, or other holdings, RONB identifies companies that offer long-term growth potential. While the fund does offer an opportunity to invest in companies like SpaceX, the true strength of RONB is its ability to identify some of the most stable and indispensable companies in the global economy.
When it comes to funds that focus on long-term investing, RONB should make every investor’s short list.
To learn more about the full lineup of active ETFs offered by Baron Capital, click here.
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