(Bloomberg) — One of the last remaining hurdles in the $14 trillion global exchange-traded fund industry is weighing whether to finally merge.
Baron Capital, which focuses on traditional mutual funds, has not made a decision. But it is increasing the tax advantages and trading capabilities of ETFs. Known for it early bets above Elon Musk and from the bottom up collection stylethe firm manages approximately $45 billion.
“Plan to start now? No. Are we studying it? Yes,” said Michael Baron, co-president and portfolio manager, at Baron Capital's annual investment conference Friday at New York's Lincoln Center. “The active ETF structure is interesting. There are benefits to an active ETF, whether it's liquid, transparent, tax, operational cost.”
That Baron Capital, founded by Ron Baron in 1982 with a $10 million investment from George Soros, is discussing, given its impressive market successes and loyal customers, highlights the gravitational pull of ETFs.
Several newcomers have applied for ETF debuts in recent months, including Bridgewater Associates and Apollo Global Management Inc., as low auto rates, tax advantages and liquidity drew trillions from mutual funds over the past decade. Even MFS Investment Management – the firm behind the world's first mutual fund – deposited to launch its first ETFs this year.
Baron Capital hasn't been immune to the migration to ETFs, with its assets down more than 20% from a peak of about $59 billion at the end of 2021. However, it's not completely sold on launching a of its own — and is still keeping an open mind to other fund structures a well.
“I think everybody's crazy about ETFs, but they're not necessarily the only instruments,” said Rachel Stern, Baron's chief operating officer.