Differentiated Growth: The Baron Risk Optimized Large Cap ETF

Investors seeking a more consistent performance profile from their large-cap growth allocation may benefit from an approach that goes beyond the market-cap-weighted approach offered by many passive funds. Baron Capital’s Baron Risk Optimized Large Cap ETF (BROL) combines the firm’s fundamental stock-picking heritage with a quantitative risk-optimization framework designed to pursue long-term capital appreciation while managing tracking error. The strategy is managed by Michael Lippert, Head of Technology Research and Portfolio Manager at Baron Capital. Lippert also co-manages Baron Technology ETF and manages Baron Opportunity Fund, which was recently recognized by Morningstar as the best-performing mutual fund of the past 25 years.

BROL combines bottom-up fundamental stock selection with a quantitative risk-optimization framework to provide active large-cap growth exposure with intentional risk characteristics* By monitoring beta, tracking error, and other factor exposures, the ETF seeks to manage unintended factor risk so that stock selection remains the primary driver of performance The portfolio balances growth-oriented exposure across sectors, with meaningful positions in market leaders such as Nvidia, Apple, and SpaceX *Risk targets are subject to change as market conditions or portfolio management considerations evolve. There can be no guarantee that these objectives will be met.

BROL invests primarily in U.S. large-cap growth companies, most of which are constituents of its benchmark, the S&P 500 Index. When constructing and monitoring the portfolio, the management team combines proprietary fundamental research with an ongoing quantitative risk-management process. The strategy seeks to outperform its benchmark, the S&P 500 Index, on an annualized basis over the long term while maintaining low tracking error. The investable universe consists exclusively of U.S. equities actively researched by Baron Capital. The portfolio invests in high-quality businesses characterized by significant long-term growth opportunities, sustainable competitive advantages, strong management teams, and attractive valuations—consistent with Baron Capital’s investment approach across all strategies. Risk management is embedded throughout the investment process to support, rather than replace, active decision-making. The portfolio manager retains final discretion over security selection and uses proprietary risk tools to inform investment decisions. The process evaluates security-specific risks and each holding’s contribution to overall portfolio characteristics. Key parameters include: Beta: The portfolio’s sensitivity to movements in the broader equity market Tracking error: The variability of the fund’s returns relative to its benchmark Monitoring these and other portfolio-level metrics daily enables more informed, data-driven decisions as the manager builds or adjusts the portfolio.

From this universe, the portfolio manager selects the companies considered most attractive for BROL and evaluates how each position affects sector, industry, and sub-industry exposures, position sizing, and broader factor characteristics. The resulting top holdings illustrate the portfolio’s balanced, growth-oriented construction. As of August 27, 2026, holdings include technology leaders such as Nvidia, Apple, Taiwan Semiconductor, and Broadcom, several of which provide exposure to the buildout and adoption of artificial intelligence (AI). Alphabet and Amazon provide additional exposure through digital platforms and cloud infrastructure. SpaceX, Costco, Welltower, and Eli Lilly round out the fund’s top 10 holdings. The holdings are monitored daily through a f...