Baron Fund, a distinguished investment management firm, recently published its fourth-quarter 2025 letter for the Baron Partners Fund. This report reveals a significant increase in the fund's performance, with a 19.07% return for Institutional Shares during the quarter. This impressive growth surpassed both the Russell Midcap Growth Index, which saw a -3.70% return, and the broader Russell 3000 Index, with a 2.40% return. For the entire calendar year, the fund achieved a 24.86% return, markedly outperforming the Russell Midcap Growth Index's 8.66% and the Russell 3000 Index's 17.15%. The fund's strategy is centered on long-term investments in a concentrated portfolio of well-managed, growth-oriented businesses, acquired at attractive valuations across various market capitalizations. This approach has consistently yielded robust absolute and relative performance over time, demonstrating resilience during market downturns and substantial gains during prosperous periods.
Among its top holdings, The Charles Schwab Corporation stands out as a key contributor to the fund's success. The Charles Schwab Corporation, a prominent brokerage and financial services firm, closed at $99.25 per share on February 10, 2026, boasting a market capitalization of $180.161 billion. Over the past month, the stock experienced a -2.62% return, yet it surged by 20.62% over the last twelve months. The Baron Partners Fund's letter specifically noted Schwab's multi-year initiative to optimize funding costs. The firm has observed a strengthening trend in net new assets, a result of the ongoing migration of TD Ameritrade accounts to the Schwab platform. These positive developments led to an upward revision in the company's full-year guidance for revenue, net interest margin, and earnings per share. After enduring several years of declining earnings estimates, investors are now recognizing Schwab's improved fundamentals and rising projections, signaling a return to its historical double-digit earnings growth. The fund expresses confidence in Schwab's leading position in the retail brokerage sector and its capacity to boost earnings through both organic expansion in assets under management and enhanced funding efficiency, with the stock appreciating by 36.6% in 2025.
The Charles Schwab Corporation exemplifies how strategic initiatives and a robust business model can inspire investor confidence and drive sustained financial growth. Its commitment to operational efficiency and client asset growth positions it favorably in a competitive financial landscape. The company's journey highlights the importance of adaptability and forward-thinking management in navigating market dynamics and achieving long-term success. Through continuous innovation and a focus on core strengths, Schwab demonstrates that sound financial principles, coupled with a clear vision, can lead to remarkable achievements and create substantial value for shareholders.
