Artisan's Strong Investment Culture Trumps Fee Issues
Strong returns and a history of closing funds make this a topnotch firm.
Artisan Partners' structure is unusual and is a key to its corporate culture. As its name implies, the firm is a partnership, which is primarily composed of portfolio managers spread across the United States (as well as one manager in London). The company was founded in 1995 and has maintained a boutique nature all along; it has started new funds only after identifying skilled managers to run them and has kept its lineup relatively small--offering 12 funds in total. Managers join as partners and Artisan gives them the freedom to build their own investment teams as they see fit. Indeed, the team that runs the three domestic-value funds has five managers and analysts, while the domestic-growth team (which also manages three funds) has 12 members. Artisan also gives the managers a great deal of flexibility as to where they want to work. For example, the firm is based in Milwaukee, Wis., and the domestic-growth team is located there. Meanwhile, the domestic-value team is based in Atlanta, Ga. The two teams that manage its diversified foreign- and world-stock funds are located in San Francisco, Calif. (with a small office in London, too), and the emerging-markets team works out of New York.
Artisan has also tried to make managers' jobs easier (and protect fundholders' interests) by closing funds when capacity and liquidity issues loom on the horizon. Five of the 12 funds ( International Small Cap (ARTJX), Mid Cap (ARTMX), Mid Cap Value (ARTQX), Small Cap Value (ARTVX) and International Value (ARTKX)) are closed to new investors. International Value closed March 9, 2011, for the second time, because cash was pouring in and the managers run a concentrated, all-cap strategy. Thus, five of the seven Artisan funds with five-year track records have been closed to preserve managers' flexibility. Mid Cap arguably stayed open a bit too long and wasn't closed tightly enough; the number of holdings grew substantially and performance leveled off for a while (though management has since righted the ship). But the other closings have been handled quite well.
The Managers Have Delivered
The partnership structure and the freedom Artisan gives its managers have enabled the firm to attract talented, proven stock-pickers. For example, Mark Yockey amassed a strong five-year record at Waddell & Reed International Growth (UNCGX) before joining Artisan to start its second fund, Artisan International (ARTIX), in 1995. Scott Satterwhite posted fine returns in a four-year stint at the former Wachovia Special Values (now a Wells Fargo Advantage fund), then founded Artisan Small Cap Value in 1997. He also brought with him key analyst Jim Keiffer, who has since become the comanager of that fund and the team's other two charges.
Greg Carlson does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.