Baron FinTech Fund Details Q3 Lag, Cites LPL Drag and New Capital One Bet

Overview

• In Q3 2025, the fund fell 4.29% versus a 1.90% decline for the FactSet Global FinTech Index, though since inception it has annualized 11.10% against 4.00% for the benchmark.
• LPL Financial was the top detractor as expectations for faster Fed cuts pressured cash-sweep income, while the Commonwealth Financial Network acquisition added near-term integration strain.
• The fund maintained Morningstar after a sector pullback tied to generative AI concerns and a modest slowdown at PitchBook, expressing confidence in future growth and margins.
• Baron initiated a position in Capital One, calling its planned Discover acquisition a game-changer due to card-network ownership and anticipated market share gains.
• The letter describes a backdrop of renewed rate-cut expectations and elevated AI optimism, notes earlier trimming of insurance exposure, and flags FICO weakness tied to FHFA-related regulatory pressure.