Active exchange-traded funds (ETFs) came to the forefront in 2025 with the launch of a record number of funds catering to active strategies. 2026 could bring another year for heavy active ETF demand from investors. This paves the way for products like those from Baron Capital.
In mid-December, Baron Capital launched five new funds: Baron SMID Cap ETF (BCSM), Baron First Principles ETF (RONB), Baron Global Durable Advantage ETF (BCGD), Baron Financials ETF (BCFN), and Baron Technology ETF (BCTK). Founded in 1982, it’s not the firm’s first foray into active management. In addition to these new ETFs, the firm’s diverse product lineup includes mutual funds, UCITS, and separate accounts.
“The reason we’re launching ETFs is pure and simple: our clients are demanding it,” said Michael Baron, Co-President and Portfolio Manager at Baron Capital. “They don’t want just any ETF. They want an ETF from Baron Capital.”
“Baron Capital has a strong heritage of active management being brought to the ETF market,” said VettaFi Head of Research Todd Rosenbluth regarding the ETF launch late last year. “It is great to see them support the growing number of advisors turning to active ETFs.”
About Baron Capital
While founded in 1982, Baron Capital’s experience with managing assets began in 1983. The firm built a reputation for long-term, fundamental, active approach to growth investing. Its founder, Ron Baron, began his career as a research analyst in 1970, and has managed client assets since 1975.
Because Baron Capital began as an equity research firm, research remains a core component of their asset management business. More than one in five of their employees are dedicated to equity research and analysis.
Currently, Baron Capital has $48.9 billion in assets under management. Headquartered in New York City, the firm has 220 employees, 42 of whom are investment professionals, including 18 portfolio managers.
Baron Capital employs the same investment approach across all of their funds. This includes using fundamental research as a means to identify and invest in companies with open-ended growth opportunities, durable competitive advantages, and strong management, at attractive valuations relative to their estimates of intrinsic value.
ETFs Built For the Long Term
The aforementioned investing principles apply to this new suite of ETFs. With active management, these ETFs allow their portfolio managers to select holdings for the long-term investment horizon based on extensive fundamental research. In contrast to passive funds that are tethered to an index, active ETFs allow for greater flexibility to construct a portfolio.
Additionally, ETFs carry inherent benefits such as tax efficiency, lower fees, lower trading costs, and insulation from the buying/selling activities of other investors in the fund. For Baron Capital, active ETFs provide another way to deliver on their long-standing investment philosophy. As such, the approach is the same— focusing on identifying differentiated growth businesses with durable competitive advantages and exceptional management teams.
“We spent a lot of time understanding and researching if we can deliver Baron Capital-type strategies in this wrapper,” added Baron. “We determined that we can.”
Early Interest Mounting
Early interest is already mounting for the newly minted ETFs. RONB is already garnering over $185 million inflows since its inception in mid-December. The fund’s ticker symbol is a nod to founder Ron Baron, and builds upon a “First Principles” approach—invest in significant growth opportunities, with durable competitive advantages, and exceptional management, available at a compelling valuation. This involves comprehensive analysis centered on “questioning everything” to reveal the true value of investments in U.S. equities. As such, the active managers of RONB pick holdings that are relatively undervalued by the rest of the market and hold long-term intrinsic value.
Given that 2025 was dominated by large cap growth names, 2026 could be the year that small caps outperform. If that’s the case, then exposure to BCSM is ideal. At almost $18 million inflows since its inception, early interest is flowing into this small-mid cap fund. Small caps offer higher growth potential. Meanwhile, mid-caps balance the stability characteristics of large caps with the small cap growth opportunities. Given that small cap volatility tends to be higher than their large cap counterparts, having an active management strategy in this space is ideal.
To learn more about the active ETFs offered by Baron Capital, click here.
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