Newcomer Artisan Developing World earns a Bronze rating thanks to its seasoned manager, attractive approach, and good parent with a long record of success.
The following is our latest Fund Analyst Report for Artisan Developing World Fund Advisor Shares APDYX.
Artisan Developing World Fund earns a Morningstar Analyst Rating of Bronze because it has a number of strengths, including a seasoned and skilled manager.
Lewis Kaufman, who has been at the helm of this fund since it opened in mid-2015, has a good resume. He has nearly two decades of relevant experience, including 10 years at Thornburg, where he ran a foreign-stock offering for roughly six years and a diversified emerging-markets fund, where he delivered excellent results for roughly five years. That fund, Thornburg Developing World THDAX, posted an annualized return of 8.5% and a Morningstar Risk-Adjusted Return of 4.9% on his watch versus 3.2% and negative 1.0% for the average diversified emerging-markets offering and 2.7% and negative 1.6% for the MSCI Emerging Markets Index.
The process that Kaufman employs here is essentially the same as the one he used at Thornburg Developing World. That strategy has an attractive combination of more reserved and aggressive characteristics. On the tamer side, Kaufman favors steady, high-quality firms with good business models as well as strong cash flows and balance sheets. He normally invests a significant portion of the portfolio in developed-markets companies with major economic ties to the developing world. Such companies, which the majority of this fund’s rivals and the MSCI Emerging Markets Index ignore, tend to hold up well in emerging-markets sell-offs. On the bolder side, he regularly allows his stock selection to drive portfolio construction, resulting in sizable country and sector overweightings, and he runs a relatively compact portfolio of roughly 45-50 names.
Kaufman has produced superior results with this approach thus far here, and Artisan is a good parent with a long record of success with its equity offerings. All 10 of the other stock funds in its lineup with Morningstar Analyst Ratings are Morningstar Medalists, in fact, including all six of the other international-equity funds.
For all these reasons, this fund is good emerging-markets vehicle for the long haul.
Process Pillar: Positive | William Samuel Rocco 07/18/2017
The process in place here has a healthy mix of tamer and bolder traits and earns a Positive Process rating.
The strategy Lewis Kaufman uses here is quite similar to the one he employed very successfully at Thornburg Developing World. Specifically he focuses on financially sound, free cash flow generative companies that don't use a lot of financial leverage and are less likely to impair capital during periods of duress. He favors high-quality companies with good business models. And he avoids companies that are vulnerable to abrupt, cyclical, or franchise changes.