Emerging markets stocks are on a tear, returning 39% over the 12 months through August. So why isn't Baron Emerging Markets (BEXFX), a member of the Kiplinger 25, our favorite no-load mutual funds, in the same stratosphere?
The fund's 24% gain over the same period is impressive on a stand-alone basis, but it lags the MSCI Emerging Markets Index. That's a reversal of fortune from a few months ago, when the fund was keeping better pace with the benchmark.
Tech hits a rough patch
Part of the reason is tech stocks. Some of the fund's top holdings in that sector were big gainers in 2025 and early 2026, and they have been key contributors to the fund's returns. But in recent months, those stocks have pulled back.
Shares in Taiwan Semiconductor Manufacturing (TSM), 16% of assets in the portfolio at last report, have slipped 13% over the past two months. Stocks in Korean tech giants Samsung Electronics (8% of the portfolio) and SK hynix (7%) have lost 28% and 12%, respectively, over the same period.
On top of that, shares in Chinese tech firms Alibaba Group Holding (BABA) and Tencent Holdings have also been a drag since the start of 2026.
In a report for the quarter that ended in June, manager Michael Kass said he remained "quite encouraged by the strong absolute performance of the fund." The fund's cumulative gain since the start of 2025 is 50% — impressive, but it falls behind the 66% return in the MSCI EM Index.
Over longer hauls, however, the fund compares better. Baron Emerging Markets' 15-year annualized return of 6.3% ranks among the top 31% of all diversified emerging-markets stock funds and leads the MSCI EM, which is up 6.0%, by a smidge.
Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.