Q2 Earnings Season Puts Financials & BCFN in Focus

The Q2 earnings season is approaching a critical moment for the financial sector. With Wall Street anticipating massive profit expansions across indexes, investors are fixated on whether corporate growth is correlated with increasing valuations. While tech has dominated market narratives as of late, a strong macroeconomic backdrop is paving the way for financial companies to secure strong earnings in Q2. For investors seeking to capitalize on this tailwind, Baron Financials ETF (BCFN) makes for a compelling option.

See More: How BCGD Capitalizes on Long-Term Compounding

BCFN: Fundamentally Built For Long Term

BCFN’s underlying investment strategy is fundamentally built for this environment. It seeks long-term capital appreciation by investing growth companies of any size, within or adjacent to the financial services sector, that are powered by secular and structural tailwinds. The fund uses active management to identify companies with strong growth prospects regardless of the macroeconomic backdrop.

By focusing on businesses that provide or enable critical financial services, BCFN achieves steady through various market cycles. The financial sector also offers a more stable portfolio diversifier beyond the typical tech exposure. Ultimately, this can be beneficial during heavy volatility, as seen in last quarter’s AI blowout.

Top Holdings Reflect Positioning

A closer look at BCFN’s high-conviction holdings reveals why it is perfectly positioned to capture long-term trends and upcoming Q3 momentum:

Payment rails and transaction giants. The fund includes exposure to Visa Inc.(V) and Mastercard Inc. (MA), which are two firms that are positioned benefit from resilient consumer spending and expanding digital transaction volumes.
Capital markets and advisory resurgence. Banking giants Bank of America and Morgan Stanley (MS) stand to gain enormously from a rebounding investment banking landscape, strengthening credit cycles, and elevating asset management fees.
Brokerage and wealth infrastructure. Dynamic enablers like Interactive Brokers (IBKR) and Charles Schwab (SCHW) are capitalizing on robust retail trading volume and higher-yield environments.

As incoming Q2 earnings reports showcase which firms possess the true pricing power to thrive, BCFN’s growth-focused exposure to the financials sector offers a compelling way to participate in the sector’s upside.

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Disclosure Information

On December 12, 2025, Baron FinTech Fund® was converted from a mutual fund into an exchange-traded fund, Baron Financials ETF™. The ETF has an identical investment goal and substantially similar investment strategy as its predecessor mutual fund. For additional information please refer to the prospectus.

Investors should consider the investment objectives, risks, and charges and expenses of the investment carefully before investing. The prospectus and summary prospectuses contain this and other information about the Fund. You may obtain them from the Funds’ distributor, Baron Capital, Inc., by calling 1-800-99-BARON or visiting BaronCapitalGroup.com. Please read them carefully before investing.

Risks: In addition to general market conditions, FinTech companies may be adversely impacted by government regulations, economic conditions and deterioration in credit markets. Companies in the Information Technology sector are subject to rapid changes in technology product cycles; rapid product obsolescence; government regulation; and increased competition, both domestically and internationally, including competition from foreign competitors with lower production costs. The IT services industry can be significantly affected by competitive pressures, such as technological developments, fixed-rate pricing, and the ability to attract and retain skilled employees, and the success of companies in the industry is subject to continued demand for IT services. The Fund invests in companies of all sizes, including small and medium-sized companies whose securities may be thinly traded and more difficult to sell during market downturns.

Investors generally incur the cost of the spread between the prices at which shares are bought and sold. Buying and selling shares may result in brokerage commissions which will reduce returns.

Prior to trading in the secondary market, shares of the fund are “created” at NAV by market makers, large investors and institutions only in block-size Creation Units. Each “creator” or “Authorized Participant” enters into an authorized participant agreement with Baron Capital, Inc. Only an Authorized Participant may create or redeem Creation Units directly with the fund.

Investors buy and sell shares of ETFs at market price (not NAV) in the secondary market throughout the trading day. These shares are not individually available for purchase or redemption directly from the ETF. Baron Capital, Inc. serves as the distributor of the Creation Units for the ETFs on an agency basis. Baron Capital does not maintain a secondary market in Fund’s shares.

The discussion of market trends is not intended as advice to any person regarding the advisability of investing in any particular security. The views expressed in this document reflect those of the respective writer. Some of our comments are based on management expectations and are considered “forward-looking statements.” Actual future results, however, may prove to be different from our expectations. Our views reflect our best judgment at the time and are subject to change at any time based on market and other conditions and Baron Capital has no obligation to update them.

Portfolio holdings are subject to change. Current and future portfolio holdings are subject to risk.

The Top 10 Holdings for Baron Financials ETF: Visa Inc. (6.0%), Mastercard Incorporated (5.6%), Bank of America Corporation (4.9%), Interactive Brokers Group, Inc. (4.5%), Morgan Stanley (4.3%), The Charles Schwab Corporation (4.1%), S&P Global Inc. (4.0%), JPMorgan Chase & Co. (3.8%), Moody’s Corporation (3.7%), MSCI Inc. (3.6%).

Investment Products: NOT FDIC INSURED | MAY LOSE VALUE | NOT BANK GUARANTEED

BAMCO, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Baron Capital, Inc. is a broker-dealer registered with the SEC and a member of the Financial Industry Regulatory Authority, Inc. (FINRA).