Tech Stocks Hold This Baron Emerging Markets Fund Back

The Baron Emerging Markets Fund has generated an impressive return so far this year, but a rough patch for tech shares has capped its performance.

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Emerging markets stocks are on a tear, returning 39% over the 12 months through August. So why isn't Baron Emerging Markets (BEXFX), a member of the Kiplinger 25, our favorite no-load mutual funds, in the same stratosphere?

The fund's 24% gain over the same period is impressive on a stand-alone basis, but it lags the MSCI Emerging Markets Index. That's a reversal of fortune from a few months ago, when the fund was keeping better pace with the benchmark.

Tech hits a rough patch

Part of the reason is tech stocks. Some of the fund's top holdings in that sector were big gainers in 2025 and early 2026, and they have been key contributors to the fund's returns. But in recent months, those stocks have pulled back.

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Shares in Taiwan Semiconductor Manufacturing (TSM), 16% of assets in the portfolio at last report, have slipped 13% over the past two months. Stocks in Korean tech giants Samsung Electronics (8% of the portfolio) and SK hynix (7%) have lost 28% and 12%, respectively, over the same period.

On top of that, shares in Chinese tech firms Alibaba Group Holding (BABA) and Tencent Holdings have also been a drag since the start of 2026.

In a report for the quarter that ended in June, manager Michael Kass said he remained "quite encouraged by the strong absolute performance of the fund." The fund's cumulative gain since the start of 2025 is 50% — impressive, but it falls behind the 66% return in the MSCI EM Index.

Over longer hauls, however, the fund compares better. Baron Emerging Markets' 15-year annualized return of 6.3% ranks among the top 31% of all diversified emerging-markets stock funds and leads the MSCI EM, which is up 6.0%, by a smidge.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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Nellie S. Huang
Nellie S. Huang
Senior Editor, Kiplinger Personal Finance Magazine

Nellie joined Kiplinger in August 2011 after a seven-year stint in Hong Kong. There, she worked for the Wall Street Journal Asia, where as lifestyle editor, she launched and edited Scene Asia, an online guide to food, wine, entertainment and the arts in Asia. Prior to that, she was an editor at Weekend Journal, the Friday lifestyle section of the Wall Street Journal Asia. Kiplinger isn't Nellie's first foray into personal finance: She has also worked at SmartMoney (rising from fact-checker to senior writer), and she was a senior editor at Money.