Baron Health Care Fund Details Q3 Letter: Adds AbbVie, Rebuys UnitedHealth as Stock Picking Edges Benchmark

Overview

• The fund returned 5.39% in Q3 2025 versus a 5.05% gain for the Russell 3000 Health Care Index and 8.18% for the broader Russell 3000.
• Management said positive stock selection was diluted by negative effects from active sub‑industry allocations and cash holdings during a rising market.
• Baron initiated AbbVie, citing growth from Skyrizi and Rinvoq and a litigation settlement that delays expected Rinvoq generic entry to 2037, with expectations for sustained high single‑digit revenue growth and low double‑digit earnings growth.
• Baron repurchased UnitedHealth after leadership changes and a reset of 2025 earnings guidance, acknowledging pressures from medical cost trends, rate dynamics, potential PBM reform, and government investigations while emphasizing the company’s scale, data assets, vertical integration, and Medicare Advantage leadership.
• As of October 31, 2025, AbbVie closed at $218.04 with a $385.18 billion market cap and UnitedHealth closed at $341.56 with a $309.40 billion market cap, while Q2 data showed hedge fund holdings rising to 89 portfolios for AbbVie and 159 for UnitedHealth.