Baron Funds released its Q3 2025 “Baron Durable Advantage Fund” investor letter. A copy of the letter can be downloaded here. The fund appreciated 5.6% (institutional shares) in the quarter compared to an increase of 8.1% for the S&P 500 index (the index). Year to date, the fund is up 13.6% compared to a 14.8% gain for the index. Three-quarters of the way through 2025, investors in U.S. large-cap stocks are enjoying gains. The early 2023 rally still looks strong this quarter. Additionally, you can check out the fund’s top five holdings to determine your best picks for 2025.
In its Q3 2025 investor letter, Baron Durable Advantage Fund highlighted stocks like Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM). Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) manufactures, packages, tests and sells integrated circuits and other semiconductor devices. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)’s monthly performance was -4.24% and its shares gained 48.68% of its value in the last 52 weeks. On November 17, 2025, shares of Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) closed at $282.01 per share, with a market capitalization of $1.463 billion.
Baron Durable Advantage Fund stated the following regarding Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its Q3 2025 investor letter:
“Semiconductor giant Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) contributed to performance during the quarter, as shares rose 23.6%, driven by strong demand for AI chips. We remain convinced that TSMC’s technology leadership, pricing power and exposure to secular growth markets, including AI and high-performance computing, automotive, 5G and the Internet of Things, will enable the company to maintain strong double-digit earnings growth over the next few years. We believe that while near-term uncertainty increases due to evolving geopolitical relations between China and the US, TSMC’s competitive positioning in cutting-edge semiconductor manufacturing remains unmatched, with a 90% market share (and 65% overall). TSMC’s unique positioning in the market is underlined by the company’s ability to increase prices as demand for its next-generation nodes continues to be strong; This should also allow TSMC to offset any margin pressure stemming from cost inflation or headwinds from opening factories in the US at an accelerated pace. We also believe TSMC will benefit from prolonged growth as AI adoption continues to accelerate. Note that TSMC will benefit regardless of the final market share split between NVIDIA, AMD, OpenAI or Anthropic and whether application-specific ICs would gain significant market share. “It’s the best provider of picks and shovels for AI.”
