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Baron Funds Comments on Oaktree Capital Group

August 23, 2012 | About:
Holly LaFon

Holly LaFon

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From Baron Funds' second quarter commentary:

Oaktree Capital Group, LLC (OAK), a credit focused alternative asset manager with $78 billion in assets under management, has had stellar investment performance since its formation in 1986. The company's bedrock principle of putting its clients' interests ahead of its own has yielded a loyal customer base that eases the company's ability to raise funds when opportunities arise.These relationships with clients have contributed to over $9.5 billion in contributions each year since 2007. The asset management industry has seen a shift away from traditional active management towards alternative managers, yet the segment only comprises 10% of the $87 trillion global industry. But, unlike most other high profile alternative asset managers, Oaktree has specialized in debt investments, a segment of investing that is gaining increased attention given volatile equity markets. Investors are increasingly attracted to the downside protection offered by these instruments. Oaktree has growng its distribution into international markets with these clients now comprising over 30% of assets under management.Additionally, the company is expanding its product capabilities into real estate, foreign securities and investments in unique traditional asset managers.We believe these areas should be fruitful ventures. Finally, in a similar vein to Oaktree's funds that seek investments with downside protection, we believe the strong balance sheet, accrued net incentive income and a consistent management fee at Oaktree Capital provide sufficient protection in what has historically been a volatile investment category. (Michael Baron)

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