Baron Capital, an investment management company, released its Q4 2025 letter for its “Baron Real Estate Fund”. A copy of the letter is available to download here. Baron Real Estate Fund was recognized as the Best Real Estate Fund Over Three Years at the 2026 LSEG Lipper Funds Awards, reflecting the three-year performance ending December 31, 2025. The Fund declined 5.39% (Institutional Shares) in Q1, underperforming the MSCI USA IMI Extended Real Estate Index (−0.96%) and the MSCI US REIT Index (+4.52%). Despite the Q1 decline, the long-term performance remains strong. The letter covers current thoughts, portfolio composition, key themes, top contributors and detractors, recent activity, and outlook for real estate and the Fund. The Fund has a positive outlook on the broader equity market and public real estate, and maintains a constructive outlook with compelling reasons to stay the course. Please review the Fund’s top five holdings to gain insights into their key selections for 2026.
In its first-quarter 2026 investor letter, Baron Real Estate Fund highlighted Digital Realty Trust, Inc. (NYSE:DLR). Digital Realty Trust, Inc. (NYSE:DLR) is a real estate investment trust that owns, acquires, develops, and operates data centers. On June 11, 2026, Digital Realty Trust, Inc. (NYSE:DLR) closed at $182.84 per share. One-month return of Digital Realty Trust, Inc. (NYSE:DLR) was -2.42%, and its shares gained 5.44% over the past 52 weeks. Digital Realty Trust, Inc. (NYSE:DLR) has a market capitalization of $64.25 billion.
Baron Real Estate Fund stated the following regarding Digital Realty Trust, Inc. (NYSE:DLR) in its Q1 2026 investor letter:
“Separately, after trimming our position in Digital Realty Trust, Inc. (NYSE:DLR) at the beginning of 2025 due to a more balanced risk/reward profile, a valuation premium, and more attractive relative opportunities, we indicated we would revisit the name at more compelling levels. During the quarter, we added to our position as the valuation multiple improved, supported by a highly favorable multi-year supply/demand backdrop – arguably the strongest in years – and a durable outlook for high-single-digit earnings growth.”
Digital Realty Trust, Inc. (NYSE:DLR) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 46 hedge fund portfolios held Digital Realty Trust, Inc. (NYSE:DLR) at the end of the first quarter, up from 43 in the previous quarter. While we acknowledge the risk and potential of Digital Realty Trust, Inc. (NYSE:DLR) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DIGITAL REALTY TRUST, INC. (NYSE:DLR) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Digital Realty Trust, Inc. (NYSE:DLR) and shared the list of best data center stocks to invest in according to billionaires. In addition, please check out our hedge fund investor letters Q1 2026 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
