The top five holdings of this fund are: Googl Call Usd 1275 15/Nov/2019 (7.84% of assets); Fidelity National Information Services Inc (FIS, 7.16%); Microsoft Corp (MSFT, 4.27%); IHS Markit Ltd (INFO.PA, 4.14%); and Air Liquide SA (AI, 4.00%).
Artisan Thematic Fund Investor Shares (ARTTX)
From Moneyletter
Artisan Thematic Fund Investor Shares (ARTTX), launched in April 2017 with less than $10 million in assets, has grown quickly. As of March 2019, assets had exceeded $300 million, and had hit $691 million by September 30.
Strong performance has certainly attracted investor assets. In 2018, its first full calendar year of operation, the fund returned 11.2%, far outpacing the stock market overall and the Morningstar large growth fund category, and ranking in the top 1% of that category. In 2019 (as of October 30), the fund’s 25.6% gain is again besting the category (ranking in the top 29%). Plus, its return from inception through the end of the third quarter (26.8%) stands up well against the 11.9% return of the S&P 500 over the same time frame.
Boiled down to one sentence, this fund’s portfolio is based on identifying secular themes as they reach an inflection point, systematically analyzing companies that will capitalize on these themes, while proactively managing risk. To pinpoint firms most likely to benefit from the identified themes, the team uses fundamental analysis to analyze companies across sectors and
themes. That analysis focuses on (among other factors) multi-year earnings power and return on invested capital on a five-year forward basis, and expected outcomes based on discounted cash flow analysis and the estimates of forward returns. The team constantly re-evaluates positions across the portfolio.
The six themes and allocations within the portfolio are as follows:
• Portfolio Exposure by Theme (% of assets)
• Network Modernization 33.8
• Data Monetization 15.9
• Payments Transformation 13.2
• Life Sciences 12.7
• Industrial Gases 7.9
• Digital Advertising 6.2
Given the thematic aspect of this fund, one would suspect that the portfolio might be rather concentrated, and it is. There are only 36 total holdings in the fund. The top five stocks account for 24.0% of assets, and the top ten for 46% of the total. Plus, the fund’s sector weightings differ markedly from that of the S&P 500 and the large growth category. It is notably overweight the index and its category in materials, communication services, and industrials, and underweight in consumer cyclical and technology.
The fund can make sizable sector bets, which means returns can be quite different from its peers, especially over shorter time periods. That said, there is some comfort to be had in the fact that
investments are chosen in a very disciplined and nondiscretionary process.
Brian W. Kelly, Moneyletter, www.moneyletter.com, 800-890-9670, November 2019