Baron Emerging Markets Fund Gained 19.61% in Q2 2026, Outperforming Benchmark

The Quick Take

• Baron Emerging Markets Fund gained 19.61% (Institutional Shares) in Q2 2026, delivering strong outperformance versus the benchmark index
• The fund's quarterly letter highlights top contributors and portfolio positioning in a period of strong EM equity market performance
• The Q2 2026 performance reflects continued strength in select emerging market equities as global capital flows supported EM outperformance

Baron Emerging Markets Fund delivered a 19.61% return for its Institutional Shares in Q2 2026, a strong absolute and relative performance quarter that represents meaningful outperformance versus its primary benchmark. The quarterly shareholder letter provides investors with attribution analysis, top contributors, and the portfolio's positioning rationale — a format that serves both to justify Q2 performance and to communicate confidence in the portfolio's forward thesis. Strong EM fund performance in Q2 2026 reflects a broader period of capital flow favorability toward emerging markets, driven by a combination of dollar weakness, commodity tailwinds, and improving growth differentials versus developed markets.

Baron's EM fund performance is relevant as a signal of where sophisticated long-only institutional capital has been positioned within the complex EM universe. A 19.61% quarterly return would typically involve significant contributions from high-conviction positions in sectors such as technology, financial services, or energy within key EM markets including India, Brazil, Taiwan, or China. The shareholder letter's attribution analysis is typically the most valuable content for investors seeking to understand which country or sector exposures drove the outperformance and whether those exposures remain in the portfolio.

Forward signals include Q3 2026 performance tracking, given that the market environment shifted materially in the quarter following Q2 with oil price surges and renewed Fed tightening pressure. EM equity performance has historically been sensitive to both dollar strength and global risk appetite, both of which are under pressure in Q3 2026. The macro variable determining whether Baron's EM positioning holds is whether the Fed's rate path — and corresponding dollar dynamics — creates a sustained headwind for EM capital flows through year-end.

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