Baron Technology ETF

BCTK

Market cap $175M

The Baron Technology ETF is an actively managed vehicle focused on "technology-related growth companies." BCTK has a much larger exposure to the growth factor than QQQM (i.e., a 30% weighted average forward revenue growth rate), which should contribute to its performance this year. However, I gravitate towards the neutral stance as the BCTK portfolio does not have a GARP tilt, and its 1.69 weighted average beta amplifies risks.

With regard to investing, artificial intelligence (AI) is often viewed as a monolith marked by a single, overwhelming wave of change. However, according to Michael Lippert, Head of Technology Research at Baron Capital, AI is better understood as “an onion” with many layers.

For the majority of investors, tech investing has become synonymous with passive index funds heavy with Magnificent Seven companies. While exposure to these funds has provided strong returns in recent years, Baron Technology ETF (BCTK) is a departure from the typical market-cap weighted status quo.

Active exchange-traded funds (ETFs) came to the forefront in 2025 with the launch of a record number of funds catering to active strategies. 2026 could bring another year for heavy active ETF demand from investors.

As the markets move through the first quarter of 2026, the tech sector continues to be the engine that's powering global growth. After the recent AI boom, investors are now looking for tech plays in sophisticated, actively managed vehicles with strategies that discern between hype and long-term opportunities.

Software and IT services are undervalued relative to 11-year averages, while semiconductors and hardware remain notably overvalued. Baron Technology ETF is a new, actively managed, high-conviction tech fund with a 0.75% expense ratio and 40 holdings. BCTK is overweight in semiconductors (36%), uses a broader sector scope than XLK, and has strong growth characteristics.