Baron Fund May Shift Solely to Growth Stocks

Times Staff, Bloomberg News

From the signs-of-the-times department: Baron Growth & Income Fund on Tuesday proposed changing the focus of the $366-million portfolio solely to growth stocks while dropping income as an investment goal.

The New York-based fund managed by Ronald H. Baron is asking shareholders to approve the change at a May 19 special meeting. If a majority of its outstanding shares vote in favor, the fund said it will divest its holdings in dividend-paying real estate stocks and look to invest the money in small-cap growth stocks that have fallen to bargain prices.

The fund, seeking to change its name to Baron Growth Fund under the proposal, would invest in small- and mid-cap stocks that have the potential to gain 50% over two years while doubling in four to five years, according to the proxy filing.


Baron Growth & Income said its dual objective is out of favor with investors. Indeed, the fund was virtually flat in 1998, seriously lagging the broad market.

“The fund’s income didn’t save it from 1998’s downturn, so Baron sees little reason to pursue it when there are attractive growth opportunities available,” Morningstar analyst Christopher Traulsen wrote in a recent report. “Reducing the fund’s income component is probably for the best.”