Baron Capital, an investment management company, launched its second-quarter 2026 investor letter for its “Baron Fifth Avenue Growth Fund”. The letter can be downloaded here. The fund achieved a sturdy quarter, gaining 24.6% (Institutional Shares), outperforming the Russell 1000 Growth Index (16.7%) and the S&P 500 (15.2%). Year to date, it’s up 11.7%, surpassing its benchmarks. The first half of 2026 mirrored the earlier yr, with a 10.4% drawdown in Q1 due to geopolitical tensions, related to last yr’s tariff-related decline. However, the fund rebounded with a 24.6% gain in Q2 after a cease-fire and declining oil costs. Stock choice drove the outperformance, contributing 940bps, while sector allocation detracted 152bps. In a risky market, the firm stays centered on figuring out high-quality, competitively advantaged corporations and is optimistic about long-term prospects, investing when costs align with intrinsic values. Also, examine the fund’s prime 5 holdings to see its best picks in 2026.
In its second-quarter 2026 investor letter, Baron Fifth Avenue Growth Fund highlighted Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) as a notable contributor to efficiency. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the world’s main contract chip producer, producing superior semiconductors for main international technology corporations. On August 31, 2026, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) closed at $415.32 per share. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) fell 0.44% over the previous month, while its shares gained 81.85% over the previous 52 weeks. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) has a market capitalization of $1.97 Trillion.
Baron Fifth Avenue Growth Fund acknowledged the following regarding Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its Q2 2026 investor letter:
“Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the world’s largest contract chipmaker and the leading manufacturer of advanced logic semiconductors used in modern AI accelerators. Shares rose 41.6% during the quarter as the company continues to report stellar financial results underpinned by AI demand with revenue growth of 35% year-on-year and EPS growth of 58%, with 66% gross margins and 58% operating margins. High-performance computing now represents the majority of TSMC’s business. AI demand is consuming so much leading-edge capacity that smartphone and PC production is increasingly shifting to older technology nodes, reversing a dynamic that defined the foundry industry for much of the past decade. Management also raised its full-year outlook and increased capital spending to support demand that remains well above available supply. We retain long term conviction in TSMC and view its leading-edge manufacturing monopoly, pricing power, and technology roadmap as durable advantages that support a long duration of growth.”