Structured to capitalize on the Artisan Partners Growth Team’s 20-plus years’ experience of growth investing, the Artisan Global Discovery Strategy is a highly flexible portfolio of companies representing some of the team’s best ideas across the global economy. Some key attributes of the strategy include:
Unconstrained Market Cap and Geographic Mandates
Absent an upper limit on the strategy’s market-cap mandate, the team can stick with its global investment campaigns through their profit cycles.
Opportunistically Targeting Initial Investments in Global Mid- and Small-Cap Franchises
The strategy’s initial investments have historically been in mid- and small-cap companies (Exhibit 1), in-line with the MSCI AC World SMID Index. The team has found mid-cap stocks represent a compelling intersection of quality and growth—mature enough to be high-quality franchises with solid competitive advantages, financially sound with the capacity to generate cash flow to fund future growth, a tendency to be a purer profit cycle play given a tighter business focus and in possession of experienced, savvy management teams. That said, these features can be found up and down the market-cap spectrum, and the Global Discovery strategy possesses the flexibility to identify these global profit cycle opportunities without being inhibited by company size.
Please note the benchmark used for the following analysis is the MSCI AC World Small Mid Index in USD, which is different from the Australian domiciled benchmark used by the Artisan Global Discovery Fund that is distributed by Copia Investment Partners - MSCI All Country World SMID Cap Net Index in AUD.
This analysis is provided for illustrative purposes only and is not indicative of the actual results against the Australian domiciled benchmark used by the Fund.
Exhibit 1: Artisan Global Discovery Strategy Market Cap At Time of Purchase ($USD in millions)
Sources: FactSet/MSCI. As of 30 Jun 2021 Artisan Global Discovery Strategy ATOP represents the weighted average market cap for all the holdings in a representative portfolio within the Artisan Global Discovery Composite at their initial purchase dates. Inception of the representative portfolio was 21 Aug 2017.
Outperformance in Up and Down Markets Driven by Stock Selection
As can be seen in the chart below, the strategy’s cumulative attribution since inception has primarily been driven by the selection effect (stock picking skill).
Exhibit 2: The Growth team’s bottom-up oriented investment process has been a key ingredient in the strategy’s relative outperformance.
Source: Artisan Partners/FactSet/MSCI. Benchmark: MSCI AC World Index. As of 30 Jun 2021. Attribution is based on a representative account since the inception of the Composite (Gross of fees) on 1 Sep 2017 through 30 Jun 2021. An upside capture ratio over 100 indicates that a portfolio has outperformed the index during months when the Index is positive. A downside capture ratio of less than 100 indicates that a portfolio has lost less than the index during months when the Index is negative. Refer to disclosures for additional information on attribution. Past performance does not guarantee future results.
A Time-Tested Approach to Growth Investing
The team fundamentally believes stocks follow profits and identifying high-quality franchises on the cusp of a compelling profit cycle, based on catalysts the team can understand, selling at a discount to the team’s estimate of private market value is a highly effective way to compound assets over the long term. High-quality franchises characteristics can include low cost production capability, dominant market position, possession of a proprietary asset, or a defensible brand name. The strategy capitalizes on the team’s 10+ years’ experience investing in companies worldwide and 20+ years’ experience in mid-cap growth investing.
Picking Stocks on the Premise of Profit Growth—A Core Belief of The Team—Has Historically Been an Effective Strategy
Data shows profit growth has been the predominant reason for value, or cyclical, stocks’ outperformance in the 2000s and the rotation into growth stocks in the post-global financial crisis decade. This concept is explored in the following article available at www.copiaartisan.com.au, The Importance of Profit Growth in Equity Returns.
Exhibit 3: Dividend, EPS Growth and Multiple Expansion/Contraction Contribution to Total Return
Sources: FactSet/Russell, Artisan Partners. Economic expansions are defined as the periods between the end date and start date of recessions. The two expansions occurred between 12/3/2001 to 12/31/2007 and 7/1/2009 to 2/29/2020 per FactSet. EPS growth is based on FY1 EPS during each respective period. Past performance does not guarantee future results.
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