MASTERS OF GROWTH INVESTING

The Baron Funds have an extraordinarily long and successful track record. Here's how they do it.

- ANDREW TANZER

On a recent sunny morning in New York City, Ron Baron, founder, chairman, and chief executive officer of Baron Capital, is standing and studying Sixteen Jackies, a famous painting of Jackie Kennedy by Andy Warhol that Baron purchased through a dealer. The office walls are adorned with dozens of paintings by Warhol, Roy Lichtenstein, Jasper Johns, and other modern art masters. In Baron's corner office, Babe Ruth's 1920 contract and a 1940 letter written by Albert Einstein about the plight of Jews in Europe hang on the walls; President John F. Kennedy's rocking chair sits by a table. The view from the 48th floor of the General Motors Building on Fifth Avenue is spectacular: You can see all of Central Park, the Upper East and West sides of Manhattan, and both the Hudson and East rivers.

Baron, a multibillionaire, is one of the greatest growth-stock investors of all time, investing in companies with the potential to increase profits at a faster-than-average rate. During a time when relatively few actively managed funds can beat their respective index benchmarks (and more investors are gravitating to passive indexing), Baron's long-term approach to growth investing continues to shine.

As of the end of the first quarter, 15 of 17 funds, representing 98.5% of Baron Funds' $49 billion of assets under management, had beaten their index benchmarks since inception, several of them by an annualized five percentage points or more. Baron Growth is the top midsize-company growth fund since its inception in 1994; Baron Partners and Baron Focused Growth are the top performers among all mutual funds since their inceptions in the 1990s.