South Korea Volatility Builds Case for BCEM
Recent market turbulence across South Korea’s benchmark technology leaders underscores the importance of active management in emerging markets (EM) investing. As companies like SK Hynix and Samsung Electronics navigate shifting global semiconductor demand and macroeconomic headwinds, investors relying on broad, market-cap-weighted indexes face concentrated exposure to sudden drawdowns. In this environment, Baron Emerging Markets Select ETF (BCEM) offers an active framework for managing downside risk while seeking long-term capital appreciation.
Key Takeaways:
- BCEM uses active management to help investors navigate emerging market volatility and avoid single-stock concentration risk often associated with passive indexes
- Portfolio manager Michael Kass employs a long-term, forward-looking approach to investing in high-conviction growth companies
- By focusing on enduring structural growth catalysts in areas well positioned to drive significant long-term value creation, like rising global security spend or an emphasis on AI, BCEM offers compelling upside
See More: BCSM’s Active Approach to SMID-Caps Is More Relevant Than Ever
Moving Beyond Benchmark Concentration
While passive EM strategies can capture broad market performance, they often leave investors vulnerable to geographic and geopolitical risks. South Korean investors witnessed this firsthand as major index heavyweights like SK Hynix and Samsung dictated performance regardless of underlying balance sheet strength. South Korea’s recent price swings highlight how quickly market sentiment can change, and regulators are implementing measures to curb future volatility.
BCEM addresses this vulnerability by employing a fundamental, active approach. Rather than tracking a passive index, the fund identifies high-conviction ideas across emerging economies and invests in growth companies of varying market-cap sizes based on underlying fundamentals. This active flexibility allows the portfolio manager to allocate capital based on a proprietary assessment of future value creation.
Capitalizing on Long-Term Secular Trends
Despite South Korea’s short-term volatility, the country still provides a compelling long-term opportunity set. Rather than chasing cyclical momentum, BCEM targets businesses positioned to benefit from enduring structural catalysts. This includes mainstream names like SK Hynix and Samsung, when fundamental research identifies secular shifts in the global economy as durable tailwinds.
By combining a rigorous bottom-up research approach with active flexibility, the ETF invests in quality growth companies while managing broader macroeconomic impacts. As South Korean technology stocks illustrate the double-edged nature of high market concentration, BCEM provides an active path for investors who want to capture EM upside without unintended concentration risk.
To learn more about the active ETFs offered by Baron Capital, click here.
For more news, information, and analysis, visit the Market Insights Content Hub.
Investors should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. The prospectus and summary prospectus contain this and other information about the Fund and can be obtained from the Fund’s distributor, Baron Capital, Inc., by calling 1-800-99-BARON or visiting BaronCapitalGroup.com. Please read them carefully before investing.
Risks: In addition to the general stock market risk that securities may fluctuate in value, investments in developing countries may have increased risks due to a greater possibility of settlement delays; currency and capital controls; interest rate sensitivity; corruption and crime; exchange rate volatility; and inflation or deflation. 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. The Fund is non-diversified, which means it may have a greater percentage of its assets in a single issuer than a diversified fund.
This information does not constitute an offer to sell or a solicitation of any offer to buy securities by anyone in any jurisdiction where it would be unlawful under the laws of that jurisdiction to make such offer or solicitation. This information is only for the intended recipient and may not be distributed to any third party.
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 are a reflection of our best judgment at the time and are subject to change at any time based on market and other conditions and Baron has no obligation to update them.
The Top 10 Holdings for Baron Emerging Markets Select ETF as of 6/30/2026: Franklin FTSE India ETF (15.4%), Taiwan Semiconductor Manufacturing Company Limited (13.9%), Samsung Electronics Co., Ltd. (7.8%), SK hynix Inc. (6.5%), Tencent Holdings Limited (2.8%), Southern Copper Corp (2.1%), Montage Technology Co., Ltd. (2.1%), MediaTek Inc. (1.9%), Delta Electronics, Inc. (1.8%), FirstRand Limited (1.8%).
Portfolio holdings are subject to change. Current and future portfolio holdings are subject to risk.
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 member of the Financial Industry Regulatory Authority, Inc. (FINRA).
© 2026 Baron Capital. All rights reserved.
