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Baron Small Cap Fund highlights BXDC in its Q2 investor letter
The fund’s Q2 2026 letter came as it said U.S. small caps rebounded, with the Russell 2000 Growth Index gaining 25.7% versus the fund’s 12.6%.
Baron Small Cap Fund published its Q2 2026 investor letter, and the firm used the update to spotlight Blackstone Digital Infrastructure Trust Inc., a newly organized Blackstone-sponsored vehicle targeting mission-critical data center assets.
According to the letter, the fund gained 12.6% in the quarter on institutional shares, trailing the Russell 2000 Growth Index’s 25.7% return. The broader move was described as a rebound in U.S. equities after March’s selloff tied to the U.S.-Iran conflict, with AI infrastructure, semiconductors, and other technology stocks contributing to the market gains.
The investor letter also said performance in small caps remained concentrated in high-beta and momentum stocks, and that the fund historically has had less exposure to those areas. It noted AI could disrupt software and services businesses, leaving that segment pressured even as other technology-linked themes supported the market.
For BXDC, the material states that Blackstone Digital Infrastructure Trust Inc. closed at $20.33 per share on August 17, 2026, with a one-month return of 1.6% and a 3-month loss of 9.0%. The trust is described as acquiring and owning stabilized, fully leased data centers supported by long-term, non-cancellable leases, and the investor letter referenced the fund’s participation in BXDC’s IPO.
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