The Artisan Investor: Crafting a Sustainable Portfolio

In today's complex financial landscape, the pursuit of sustainable investing has moved from niche to necessity.

Artisan Partners stands out with a philosophy that blends franchise characteristics and long-term value creation.

This approach isn't just about returns; it's about crafting portfolios with purpose and impact.

At its core, the Artisan method emphasizes investing in companies that exhibit sustainable growth and are often overlooked by the market.

By integrating environmental, social, and governance (ESG) factors, they aim to uncover hidden gems that promise both profit and positive change.

The journey begins with a unique framework called Garden, Crop, Harvest® Investing, which guides every decision with precision.

Understanding the Artisan Philosophy

The Artisan philosophy is built on three pillars: franchise characteristics, sustainable growth, and attractive valuations.

These elements are woven together through a meticulous and patient process.

Central to this is the Garden, Crop, Harvest® model, which involves building positions during early profit cycles.

This cyclical approach ensures portfolios are dynamic and responsive to market shifts.

Investors are encouraged to focus on companies with defensible market positions and emerging profit opportunities.

This mindset helps navigate short-term volatility with confidence.

Key Funds for Sustainable Growth

Artisan offers several funds tailored to sustainable investing, each aligning with the core philosophy.

• Artisan Sustainable Emerging Markets Fund (ARTZX): Focuses on emerging markets with rigorous sustainability screens.
• Artisan Global Opportunities Fund: A global strategy seeking growth across diverse economies.
• Artisan Emerging Markets Fund: Emphasizes sustainable growth themes with custom country classifications.
• Brighthouse/Artisan International Portfolio: Targets international companies at discounts for value alignment.

For example, the Global Opportunities Fund has total net assets of $1,072 million and a high active share of 91.4%.

This indicates a strong commitment to selective, conviction-based investing.

Portfolio Construction Strategies

Constructing a portfolio with Artisan involves key strategies that balance risk and reward.

• Security Selection: Focus on companies with defensible positions and assessed for ESG impact.
• Capital Allocation: Uses conviction-based sizing through the Garden, Crop, Harvest model.
• Diversification: Spreads risk across sectors and geographies to enhance stability.

However, investors must be aware of inherent risks in this approach.

• Currency fluctuation and liquidity challenges in global markets.
• Political and economic differences in emerging regions.
• Volatility associated with small and mid-cap stocks during growth phases.
• Potential underperformance when market trends shift unexpectedly.

Fees vary, with the Global Opportunities Fund charging 1.75% for Class A, reflecting the cost of active management.

Performance and Risks

Historical performance data provides context, though it's not predictive of future results.

For the Artisan Global Opportunities Fund, returns have shown variability, emphasizing the need for a long-term perspective.

This table illustrates the fund's fluctuations, with periods of both gains and losses.

Key metrics like weighted average market cap are monitored to gauge fund health against benchmarks.

ESG Integration: More Than Just a Buzzword

ESG factors are integral to Artisan's approach, going beyond ethical considerations to impact returns.

For instance, the ARTZX fund has a fossil fuel exposure of 4.94%, tracked through climate tools.

The firm uses the S&P Global ESG Score to assess material risks and opportunities daily.

Broader screening includes issues like deforestation, prison systems, and military weapons.

• Tools like Fossil Free Funds help investors verify sustainability alignment.
• Screening for deforestation-risk commodities adds environmental responsibility.
• Monitoring military weapons exposure ensures ethical investment choices.

These factors are seen as return-impact factors in selection, crucial for long-term success.

The Team Behind the Craft

Artisan's success is driven by a team of experienced portfolio managers with deep market knowledge.

• James D. Hamel with 25 years of investment experience.
• Matthew H. Kamm with 22 years of focused strategy.
• Craigh A. Cepukenas with 33 years of industry insight.
• Jason L. White with 22 years of global perspective.
• Jay C. Warner with 20 years of commitment to value creation.

This collective expertise ensures that every investment decision is informed and aligned with the Artisan philosophy.

The firm, Artisan Partners UK LLP, provides a regulated foundation for investor trust and confidence.

Tools and Benchmarks for Informed Investing

To navigate sustainable investing, Artisan relies on specific benchmarks and tools for guidance.

• Benchmarks like MSCI ACWI provide performance comparisons for global markets.
• Investor tools such as Invest Your Values offer sustainability checks for conscious choices.
• Disclaimers remind that past performance is no guarantee of future results.

Key stats include a high active share of 91.4% and low annual turnover of 48.7%.

Moreover, the use of Corporate Sustainability Assessment (CSA) scores ensures daily updates on ESG factors.

Crafting a sustainable portfolio with Artisan is about embracing a philosophy that values growth, responsibility, and vision.

By understanding the strategies, funds, and risks, investors can make informed choices aligned with their values.

Remember, investing is a journey where profit and purpose can coexist harmoniously with the right approach.