investing

Baron Global Advantage Bets Big on Tech

The managers for this large-company global stock fund scout for companies that invest aggressively for growth.

Venturing abroad to find stocks has gotten more challenging lately. But Baron Global Advantage (BGAFX) has found success with a mix of foreign and domestic stocks. Manager Alex Umansky and his team look across borders and at companies of all sizes, hoping to snatch another Amazon.com (AMZN), Alibaba (BABA) or Facebook (FB), some of the standouts in a tailored collection of, at last count, 45 stocks.

To narrow the investable universe a bit, the managers ask themselves a set of simple questions: Can this company increase its market value (share price times shares outstanding) five- or tenfold? Do they believe in the management team? Can it create a meaningful and attractive brand?

The fund is drawn to companies that tap into a growing market, dominate it and then tackle adjacent businesses. Amazon, the fund’s second-largest holding, accounting for nearly 5% of assets, is a prime example. The e-commerce giant built its brand by selling and shipping books but is now an “everything store,” most recently disrupting drug retailers with its purchase of online pharmacy PillPack, says Umansky.

For Global Advantage, betting on the future beats collecting dividends in the present. “We’re looking for companies that are aggressively investing for growth, not returning cash to shareholders,” Umansky says. The fund’s biggest bet is on technology stocks, which make up 53% of the portfolio. Top holding Naspers is a South African internet and media firm with a huge stake in Tencent, China’s internet services giant. Some 13% of the portfolio is invested in Chinese firms, including CTrip.com, known as the Priceline of China.

K9I-FUNDTRENDS_RANKINGS.a.indd

Getty Images

The fund, launched in April 2012, can be volatile. In 2016, it lost 1.2%, compared with a 3.3% gain for its benchmark, the MSCI All Country World Growth index. The unexpected results of the U.S. presidential election created volatility in several of the fund’s U.S. growth companies as in­vestors shifted temporarily to more-defensive names. Campaign rhetoric about global trade led to double-digit losses in China-based shares. The fund bounced back in 2017 with a 49.6% return, besting 99% of similar funds. Global Advantage is the top performer in its category for the past 12 months.

Most Popular

The 15 Best Stocks for the Rest of 2022
stocks to buy

The 15 Best Stocks for the Rest of 2022

The lesson of the past two years: Be ready for anything. Our 15 best stocks to buy for the rest of 2022 reflect several possible outcomes for the seco…
June 21, 2022
Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
Retirement Comfort: How to Avoid Running Out of Money
retirement planning

Retirement Comfort: How to Avoid Running Out of Money

When it comes to retirement planning, one thing all of us worry about is whether we will have enough money to last. Financial professionals can help y…
June 25, 2022

Recommended

Move Over ETFs: Direct Indexing Is an Investment Strategy Worth Paying Attention to
investing

Move Over ETFs: Direct Indexing Is an Investment Strategy Worth Paying Attention to

More flexibility, more control, the potential for higher returns and tax-reducing strategies: With pros like that, could direct indexing be right for …
June 25, 2022
Janus Henderson Global Equity Income Fund Hangs Tough
Kip 25

Janus Henderson Global Equity Income Fund Hangs Tough

A focus on dividend payers and defensive stocks has kept the Janus Henderson Global Equity Income Fund afloat in a rough market.
June 23, 2022
Ron Baron: A Fund Legend Shares Stock-Picking Secrets
mutual funds

Ron Baron: A Fund Legend Shares Stock-Picking Secrets

The ability to buy and hold great growth companies for the long term is important to becoming a successful investor.
June 22, 2022
Baron Funds: The Masters of Growth Investing
mutual funds

Baron Funds: The Masters of Growth Investing

The Baron Funds have an extraordinarily long and successful track record. Here's how they do it.
June 22, 2022