With much of the market focused on artificial intelligence and big tech companies in 2025, billionaire fund manager Ron Baron told CNBC’s “ETF Edge” this week that investors should look to more market caps and sectors for the best opportunities. That’s starting to happen as many investors shift away from tech stocks and seek value across markets, including the financial sector. Baron cited MSCI and FactSet, two financial sector companies owned by his firm Baron Capital, which he said have received little attention from retail investors, and said the presence of CEOs is part of the reason he is confident about the future.
Mr. Baron joined “ETF Edge” to discuss the company’s new exchange-traded fund and first ETF after decades of managing mutual funds and other investments that have generated an estimated $57 billion in profits over 40 years for Baron Capital investors. He predicted an additional $250 billion in profits over the next 10 years, and focused much of the conversation on finding stocks that the rest of the market was ignoring.
“There are a lot of interesting companies out there right now and everyone is focused on technology,” he said.
MSCI is best known for its stock index and is used by asset managers, pension funds, and ETF providers around the world. Trillions of dollars are invested based on MSCI benchmarks such as developed markets, emerging markets, and ESG indices. The company also provides deeply embedded analytical and risk management tools for institutional investors.
MSCI went public in 2007 at $18 per share after being spun out of Morgan Stanley. Barron said he continued to buy through the initial rise in stock prices, which then plummeted during the financial crisis.
But MSCI has been left out of the recent bull market, with its shares down nearly 8% over the past year and trading at $563 on Thursday.
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MSCI year to date
Baron, founder and CEO of Baron Capital, said he has owned MSCI since it went public and has invested with founder and chairman Henry Fernandez, and his personal story is particularly memorable. Mr. Fernandez fled Nicaragua during the coup, went penniless to the United States, and founded MSCI within Morgan Stanley.
In the years since the IPO, “we kept buying,” Barron said. “He’s also personally buying stocks,” Barron said of Fernandez. “I’m trying to catch up with him.”
FactSet has suffered even bigger losses this year, falling nearly 40% after disappointing results and a weak profit outlook. But Baron believes the decline reflects short-term issues rather than business failure, and cited the company’s new CEO as a reason for his bullish view. “What I think is really interesting…is that there has been a change in management,” he said.
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FactSet since the beginning of the year
FactSet, which provides financial data, analytics and research tools used by investment professionals, named Sanoke Viswanathan CEO in September. Mr. Barron said he originally invested when he was looking for options similar to Bloomberg, but was unable to invest because Bloomberg is private. The new CEO is now also a reason for the investment, Baron said, comparing Viswanathan to JPMorgan CEO Jamie Dimon.
Like Fernandes, Baron also pointed to Viswanathan’s personal story. He grew up poor on a farm in India, attended a prestigious engineering school, worked at McKinsey, advised U.S. officials during the financial crisis at the age of 33, and later became one of the senior executives on Jamie Dimon’s team at JPMorgan. Mr. Barron said Mr. Viswanathan was one of the top candidates being considered to succeed Mr. Dimon, but when he learned he would not be replacing him as J.P. Morgan’s CEO, he decided to take the top job at FactSet.
Baron believes this decision is a major benefit for FactSet. “If you have a company like Bloomberg, a great young, up-and-coming company with a great opportunity, and you have a guy like this, a killer guy like this…think about putting a 51-year-old, 52-year-old Jamie Dimon in charge of this company. That’s exactly what happened,” Barron said.
“When you find companies like this, you find these people who run these businesses, you say, ‘We have to invest in this person,'” Baron added.
