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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.

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“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.”


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