Dear Clients, Associates, and Shareholders,
This year we are celebrating our 30th anniversary as a firm. For three decades, Artisan Partners has delivered investment excellence and successful long-term outcomes for our clients, our people, and our shareholders. Throughout, we have remained grounded in—and focused on—investments, people, and trust. While the core of Who We Are as an investment- and talent-driven firm has remained consistent, we have evolved and grown considerably.
Artisan Partners began operating in 1995 with a single investment strategy, U.S. Small-Cap Growth. The entire firm operated out of a modest office in Milwaukee, Wisconsin. The publicly traded domestic small-cap universe was large, with roughly the same number of securities that exist today. The IPO market was robust with new investable opportunities regularly coming to market. There was little private growth capital as an alternative to public markets. In this environment, our investment research consisted largely of public filings, sell-side reports, and management meetings. Trading and operations executed in a single market with a single currency. Technology was basic. There were no technology professionals, let alone an IT department. There was limited customization across client portfolios, reporting, or data and analytics. Distribution was focused on traditional institutional investors and the consultants who served as gatekeepers to them.
Source: World Bank Group, Investment Company Institute
From that starting point, we methodically added investment teams and strategies and built out our operations and distribution capabilities. We managed 12 investment strategies and $55 billion in AUM prior to the 2008 financial crisis. This growth occurred during a golden age for traditional investment management. Allocators were moving away from simple 60/40 stock/bond portfolios and increasing equity allocations via categories split by market cap (small, mid, large), style (growth, value), and geography (U.S., non-U.S.). Within each category, a relatively large and inefficient opportunity set allowed talented managers to differentiate themselves and justify a healthy fee rate. Index and ETF technology and adoption were immature.
During this period, the market for professional investment management was growing and fragmented. The traditional institutional market of pensions, foundations, and endowments was still early in adopting the barbelled allocation of exposure and alternatives that is well known today. The 401(k) market was growing rapidly with open architecture creating huge opportunity for high performing managers. Mutual fund marketplaces were committed to featuring best-in-breed funds. The private wealth channel was fragmented across broker-dealers, private banks, and independent RIAs—providing multiple points of entry for a diverse array of investment managers who were willing to pound the pavement and build relationships.
The investment world has changed dramatically since Artisan's early years. The relative size of the investment opportunity set has shifted away from U.S. public equities towards global markets, credit, private assets, and derivatives. Asset allocators increasingly use a combination of low-cost, beta products to gain exposure to style box categories and other narrow market segments. Their active allocations are directed towards alternative asset classes with broad opportunity sets where the objective is absolute risk/return as opposed to beating an index. In addition, the taxable wealth channel has overtaken the institutional marketplace as the industry's largest and fastest growing area of opportunity, presenting a large pool of demand that must be addressed with a more strategic mix of investment offerings, delivery mechanisms (wrappers), and relationships (both centralized and in the field).
Source: Artisan Partners. For illustrative purposes only.
Source: Percentages for 1995 are estimated based on information from the National Bureau of Economic Research; Preqin; EFID; Lipper Analytical Services International; and Goldman Sachs. Percentages for 2023 are from the Global Asset Management Report 2024, 22nd Edition, Boston Consulting Group. The traditional category is largely comprised of mutual funds and the alternatives category is generally comprised of hedge funds, private equity, real estate, infrastructure, commodities, private debt and liquid alternative mutual funds. The % of Industry Revenue assumes a 3% effective fee rate for Alternatives and 1% for traditional investments.
In response to these changes, we have been evolving our investment platform, our investment offerings, and our distribution structure. Where we operate in relatively narrow categories, we add degrees of freedom to differentiate from the competition and increase the probability of compelling outperformance. In designing and launching new investment strategies, we are leaning further into degrees of freedom to create absolute risk/return oriented offerings that fit allocator demand for alpha-oriented investments. And we go to market highly cognizant of the opportunity in intermediated wealth and the fact that we must market into that channel, as well as the institutional channel, in a way that is fundamentally different than the “bought not sold” mind-set of the past.
There is large and growing demand for alpha-oriented investment strategies that reflect creative, differentiated perspectives and invest across traditional and alternative asset classes. Equity and credit. Bonds, loans, and private credit. Securities and derivatives. Corporates, sovereigns, and currencies. Public equity and private equity. Core, value-add, and opportunistic real estate. Clients want and need talented investors to operate with high degrees of freedom to identify and execute on the best mix of reward and risk across broad opportunity sets. It is not easy to operate with high degrees of freedom. In addition to operational infrastructure, it requires a rare combination of intellectual capital and judgment. For those who can do it well, the rewards are large.
Source: S&P Capital IQ, as of April 2025.
This is where we have planted our flag. We have no competitive advantage in exposure-oriented investment products where scale, cost efficiencies, and distribution drive success. We focus on talent, differentiation, degrees of freedom, and outperformance, all of which Artisan Partners is custom built to bring together and amplify. We have a long history of repeatable success across investment leaders, generations, asset classes, and geographies. And we have a long history of methodically expanding our capabilities and strategies to align with changes in the investment industry.
Today, our investment platform supports 11 investment teams, 27 investment strategies, and an extremely broad array of securities, instruments, geographies, and investment types. We have built an operating platform that supports public and private equity; bonds, loans, and private credit; cleared and bilateral derivatives; and local investments in 89 markets around the world. We deliver these capabilities to clients via U.S. and non-U.S. registered funds, private funds, collective trusts, separate accounts, and model delivery. We have a full suite of services backing our investment and client service teams, including curated research services, custom investment technology, shared and dedicated execution, and performance and risk analytics.
| 1995 | Today | |
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| Research and Portfolio Construction |
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| Execution |
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| Performance, Risk and Analysis |
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| Capital and Distribution |
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| Business Services |
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| Strategic Advice |
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It is important to state that we are focused on both evolving existing investment teams to remain competitive and recruiting new talent and launching strategies designed de novo for today's opportunity set. The Artisan International Value Group and Global Value team illustrate how existing investment franchises can evolve to remain successful over long periods, while the Artisan Credit team and EMsights Capital Group are examples of newer investment franchises we have built from the beginning for the world we operate in today and expect in the future.
David Samra and Dan O'Keefe joined Artisan Partners in 2002 and launched the Artisan International Value strategy. They established a philosophy, process, team, culture, track record, and brand. Five years in, the strategy had generated 542 basis points of average annual outperformance versus its benchmark, net of fees, and was managing just over $4 billion as of June 30, 2007. Recognizing that the team's process applied equally well to domestic issuers and demand from non-U.S. investors for global strategies, we launched the Artisan Global Value strategy in 2007, which increased the team's investment opportunity set by over 50% and further enriched its research and culture. Over the next decade, David and Dan continued to generate strong performance and compound the business, managing nearly $42 billion by the end of 2017.
In 2018, in order to create additional investment capacity and opportunities for individual growth, David and Dan made the difficult decision to disrupt themselves and split into two separate investment franchises—the Artisan International Value Group under David's leadership and the Artisan Global Value team under Dan's leadership. Since then, the Global Value team has launched Artisan Select Equity, a highly concentrated U.S.-focused strategy, and the International Value Group has launched Artisan International Explorer, a concentrated international small-cap value strategy, and Artisan Global Special Situations, a global, multi-asset, opportunistic credit-focused strategy.
Critically, both teams have exercised and added degrees of freedom in their flagship strategies. Each of the International Value and Global Value strategies can hold up to 15% cash, and both investment teams use the full extent of that flexibility to mitigate risk and enable opportunistic buying while competing against fully-invested peers and indices. In addition, David and Dan have leveraged their experience and expertise in corporate strategy, governance, and capital allocation to advise and influence the management teams and boards of their portfolio companies, driving change in pursuit of value for Artisan's clients. Lastly, the International Value Group recently added dedicated fixed income and special situations talent, which can be deployed in both the Global Special Situations strategy as well as the International Value strategy, which can generally hold up to 10% in debt.
| Strategy Inception | Strategy Average Annual Value Added ITD (Net) |
Artisan Fund ITD Lipper Ranking Percentile |
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|---|---|---|---|
| International Value Group | |||
| International Value | 1 Jul 2002 | 446 bps | 1st |
| International Explorer | 1 Nov 2020 | 541 bps | 2nd |
| Global Special Situations | 1 Apr 2025 | — | — |
| Global Value Team | |||
| Global Value | 1 Jul 2007 | 205 bps | 1st |
| Select Equity | 1 Mar 2020 | -247 bps | 59th |
Sources: Artisan Partners/MSCI/S&P 500. Data as of March 31, 2025. Value added is the percentage by which the average annual net composite return of each strategy has outperformed or underperformed its respective benchmark since inception. Past performance is not indicative of future results. Lipper performance rankings are based on the relevant investment strategy's mutual fund compared to its peer category as classified by Lipper, Inc. See Notes and Disclosures for more information about how we calculate our investment performance and the benchmarks used.
The long-term outcome is two highly differentiated investment teams with impressive track records, compelling brands, durable businesses, and degrees of freedom for further differentiation and growth. Combined, the International Value Group and Global Value team manage approximately $78 billion, of which approximately $54 billion was from the intermediated wealth channel, as of February 28, 2025.
David and Dan have executed as investors and leaders and created outcomes for their clients, their teams, and the firm that would have seemed improbable when they joined Artisan 23 years ago. They have also demonstrated that it is possible to navigate from the simpler, more categorized, more institutional world of two decades ago to today's world of intense competition, degrees of freedom, and secular growth in the wealth channel. We applaud David and Dan for their investment results and relentless business building and view them as a model for what is possible for any team, new or existing, on the Artisan platform.
When I joined Artisan Partners in 2005, the firm was entirely long-only public equity. Over time, we recognized what we fully appreciate today: the Artisan Partners combination of talent, resources, and time can work across generations, geographies, and asset classes.
We entered credit investing in 2013 with the addition of Bryan Krug, an exceptionally talented investor who wanted to push the boundaries of the traditional high-yield opportunity set by opportunistically allocating significant capital to leveraged loans to better optimize the absolute risk/return outcome versus simply beating the index. In addition, Bryan wanted to design, launch, and manage a credit hedge fund with additional degrees of freedom to invest in private and distressed credit as well as equities and short positions.
Bryan and the Credit team have delivered on all fronts. Since inception in 2014 and 2017, the Artisan High Income and Artisan Credit Opportunities strategies have generated average annual returns of 6.37% and 10.19% net of fees, respectively, as of March 31, 2025. As of that date, the team managed over $12 billion across the two strategies as well as the Artisan Floating Rate strategy. Starting without a marketable track record, fixed income operations, or a fixed income brand, we have raised over $10 billion of net new capital for Bryan over the last 12 years, averaging almost $900 million per year. That growth was largely sourced from the intermediated wealth channel, which accounted for approximately 73% of the Credit team's business as of February 28, 2025.
Having demonstrated success in credit investments, operations, and distribution, in 2021, we recruited a talented group of emerging markets debt investors to join Artisan and launch the EMsights Capital Group. Consistent with the themes I have described, the EMsights Capital Group invests across a vast opportunity set of rates, sovereign and corporate credit, and FX using an array of securities and derivatives to take and manage risk. The EMsights team incorporates a much broader set of countries, securities, and instruments than the index products and most active competitors, which we believe enhances their ability to outperform and manage risk. The team's Global Unconstrained strategy has the broadest degrees of freedom and invests across markets, issuers, currencies, and instruments to generate an absolute return outcome. Since inception over three years ago, the strategy has generated an average annual return of 9.87%, net of fees, and a Sharpe Ratio of 2.13, as of March 31, 2025.
With the EMsights Capital Group, we further expanded our investment platform and did so with speed and quality. Within seven months of Mike Cirami, Mike O'Brien, and Sarah Orvin leaving their former employer, they were managing money at Artisan. During the interim, we recruited a team of research and trading associates, stood up new, customized research management and trading technology, and established direct access to 84 markets at initial launch. The team recently passed their three-year anniversary at Artisan and manages over $3 billion with strong demand across investment strategies, distribution channels, and geographies. We have demonstrated yet again that our platform can work in entirely new asset classes.
With both the Credit team and EMsights Capital Group, we have expanded opportunity sets inside of traditional categories—and launched strategies that can go anywhere and are intended for allocators looking for absolute return and risk management. These investment teams have one foot in the more traditional, categorized investment world, and one foot in the more absolute risk/return oriented world. They are excellent examples of how we are—and have been—changing Artisan Partners to adapt to the demand of today's asset allocators and the growth of the intermediated wealth channel.
Looking across Artisan Partners today, we have a more capable investment platform than ever before. We currently manage 17 equity strategies, four fixed income strategies, and six alternative strategies. Five of our 11 investment teams manage an alternative strategy. We have evolved beyond a traditional long-only manager into a multi-asset class investment platform. We fully expect to continue this evolution.
Data for 1995 is as of January 1, 1995. Data for 2012 and 2024 is as of December 31, 2012 and 2024, respectively.
We are also firmly established in the private wealth marketplace. Of our $168 billion in AUM, approximately $98 billion is sourced from what we consider the intermediated wealth channel. In intermediated wealth, we have 172 relationships of greater than $50 million, of which 117 are invested in three or more strategies. We have reoriented our distribution structure and team to better access and service this channel while maintaining our close connection with traditional institutions and the consultants who serve them. Today we have a greater combination of distribution talent, organizational structure, and sales prioritization than we have ever had before. I am extremely excited to see how this combination performs in 2025 and beyond.
In March, we announced that Jason Gottlieb, our President, would succeed me as Chief Executive Officer effective in June. Appointing Jason as CEO is the culmination of a long-term succession plan and natural evolution of his current responsibilities. Since joining Artisan in 2016, Jason has been central to the changes I have described in this letter: broadening our investment platform, expanding into credit, and launching and developing alternative strategies.
Jason will assume the CEO role in a world far different than when I was appointed CEO in 2010. He is particularly well-suited to lead Artisan Partners given his knowledge of the firm and the instrumental role he has played in developing our investment platform and evolving our business for today's environment. Jason will be supported by a management team that we have methodically assembled to lead the firm in its continued evolution towards higher degrees of freedom, alternatives, and the private wealth market. The Board and I are extremely confident in Jason, the broader management team, the firm, and its future.
I will remain at Artisan Partners in the role of Executive Chair. I plan to stay heavily engaged in our governance, strategy, culture, and people. During my 20 years at Artisan Partners, we have evolved from a long-only public equity manager to a multi-asset investment platform. Doing so has enabled us to continue to generate compelling results for our clients, attract and retain outstanding investment talent, deliver a healthy financial outcome for shareholders, and position ourselves for success in the future. At the same time, we have worked incredibly hard to preserve Artisan's unique culture focused on investments, people, and trust. In my new role, I am excited to spend more time on the future of high value-added investing, the people who will drive Artisan's continued success, and the trust that underpins everything we do. I have never been more excited about being a part of Artisan Partners.
We have a proven track record of investment success: our 11 investment strategies with track records of greater than 10 years have generated average absolute returns of 9.3% since inception, net of fees. Nine of those strategies have outperformed their indexes by more than 100 basis points annually, net of fees. We have built an investment platform that supports a full spectrum of asset classes, securities, derivatives, currencies, geographies, and investment styles. Today we manage public and private equities, public and private credit, derivatives, and currencies across the globe and with follow-the-sun execution and operations. We believe we can quickly, efficiently, and with high-quality outcomes support investment talent operating within and across a broad range of opportunity sets, including areas where we do not operate today. And we have established global distribution operations with clients in 46 countries across the world and broad and deep penetration of the traditional institutional and intermediated wealth markets.
Source: Artisan Partners. As of 12/31/2024.
This foundation of investment, operational, and distribution success gives us tremendous flexibility and optionality for developing our existing businesses and adding a broad array of new investment talent and capabilities. As we have for 30 years, we will continue to methodically and thoughtfully grow an investment firm designed for investment talent and servicing sophisticated investors and allocators around the world.
Thank you for your continued support.
Sincerely,
Eric Colson
Chief Executive Officer
Artisan Partners