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A Global Portfolio of Sturdy Growers

Silver-rated Artisan Global Opportunities focuses on 40 or so financially healthy large-growth companies around the globe.

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The following is our latest Fund Analyst Report for Artisan Global Opportunities (ARTRX). Morningstar Premium Members have access to full analyst reports such as this for more than 1,000 of the largest and best mutual funds. Not a Premium Member? Gain full access to our analyst reports and advanced tools immediately when you try Morningstar Premium free for 14 days. 

Artisan Global Opportunities' deep team and prudent approach to global investing earn a Morningstar Analyst Rating of Silver.

The team behind this fund is stable, experienced, and well-resourced. Jim Hamel, who serves as lead manager, has been on the team since its 1997 founding. Comanagers Matt Kamm, Jason White, and Craigh Cepukenas joined the team in 2003, 2003, and 2009, respectively. Each of the managers serves as the lead on one of the team's four other charges--Artisan Global Discovery (APFDX),  Artisan Mid Cap (ARTMX), and Artisan Small Cap (ARTSX). Those funds cover a lot of ground. But eight analysts with an average tenure of eight years and industry experience of 15 years back the managers. Because of overlapping holdings across the portfolios, the team tracks about 150 names in all.

The team has consistently focused on sturdy growers with healthy balance sheets. The fund has tended to invest more in companies with solid competitive advantages than the MSCI ACWI Growth Index (arguably the fund's best benchmark given its growth tilt) according to Morningstar's risk model. The fund also has had more exposure to financially healthy firms than the index, according to the model.

The portfolio holds 40-50 stocks and often invests 35% to 45% of its assets in its 10 largest positions. But thanks to its focus on relatively stable fare, blowups have been few. Indeed, since the former large-growth fund moved to the world-stock Morningstar Category in 2012 and later to the recently created world large-cap stock category in 2017, the fund has lost 95% as much as the index when stocks decline while gaining 10% more in rising markets. From the start of 2012 through September 2018, the fund beat the growth index as well as the fund's MSCI ACWI benchmark, the typical world large-stock fund, and a subset of that category that--like this fund--resides in the large growth corner of the Morningstar Style Box (the strongest-performing portion of the style box during that period).

Process Pillar: Positive | Greg Carlson 10/11/2018
The fund's distinctive and prudent approach has been resilient in downturns and has produced solid long-term performance, earning a Positive Process rating.

The 15-person team behind this fund looks for companies that lead their industries, have (or will have) accelerating profits, and possess healthy balance sheets. The team is collaborative, meeting twice daily to discuss current and prospective holdings. The team slowly increases position sizes as it becomes more confident in their prospects and starts trimming holdings as they approach the team's estimate of private-market value. The fund's turnover has averaged about 42% over the past five years, and top holdings in this 40-50 stock portfolio typically don't get much above 5% of assets.

According to Morningstar's risk model, the fund has held more financially healthy companies with solid competitive advantages than the MSCI ACWI Growth Index.

The fund changed its name to Growth Opportunities as it moved to the world-stock category from large-growth in 2012 and then to world large-stock when Morningstar created that category in 2017. The team intended it to be a global fund from the start but ramped up its non-U.S. exposure gradually because the team had focused on U.S. stocks at its other charges. The non-U.S. stake is expected to stay above 30% of assets; since the start of 2012, it's averaged 39%.

The team expects a scarcity of sustainable growth--only those businesses with quality services and products will get rewarded, it says. Thus, expect the fund to remain concentrated at 40-50 holdings. At the end of June 2018, it held 46 stocks and stashed 36% of its assets in the 10 largest holdings.

The fund looks significantly different than what is arguably its best benchmark, the MSCI ACWI Growth Index. Active share versus the index at the end of June was 90.8%. The fund owned some of the growth darlings at the top of the index, such as Alphabet (GOOG) and  Tencent (TCEHY) (and it also owned Facebook (FB) until early 2018). But the fund doesn't own other growth titans such as Apple (AAPL), (AMZN), and Microsoft (MSFT).

Capacity is less of an issue at this large-cap fund than at the smaller-cap portfolios this team runs, but it's still worth watching at this still-open offering. The team manages $17.2 billion in this strategy, which is more than $2 billion above its previous capacity estimates. That said, most of the assets are outside the fund in separately managed accounts that have stopped accepting new money. Market appreciation accounts for some of the rise in strategy assets, and inflows have been modest in 2017 and 2018 to date. Two of the team's other charges, Artisan Mid Cap and Artisan Small Cap, also are closed to new investors.

Performance Pillar: Positive | Greg Carlson 10/11/2018
This fund's strong record overall earns a Positive Performance rating.

This was a large-growth vehicle at its late 2008 inception, but it gradually boosted its exposure to non-U.S. stocks and moved to the world-stock category in 2012 and then the recently created world large-stock category in 2017. From the start of 2012 through Sept. 30, 2018, the fund surpassed more than 90% of its world large-stock peers on both a total return and risk-adjusted basis. It beat its MSCI ACWI benchmark, as well as the MSCI ACWI Growth Index, to which the fund has been more correlated, by an annualized 4.5 and 2.8 percentage points, respectively. The fund gained significantly more than either index in rising markets during the period, while losing less when stocks decline.

The fund did gain an advantage over much of that span thanks to a larger U.S. stock stake than the world large-stock norm and relevant indexes. The difference--an average of less than 10 percentage points--doesn't account for all of the fund's margin of victory. Decent stock picks in varied regions and sectors, such as Japanese cosmetics maker Shiseido and Danish drug developer Genmab, helped.

The fund's performance when it resided in the large-growth category, from its September 2008 inception through 2011, was mixed. It outpaced 60% of that peer group while lagging the Russell 1000 Growth Index.

People Pillar: Positive | Greg Carlson 10/11/2018
A deep, experienced, and heavily invested team earns a Positive People rating.

Jim Hamel, who joined the team at its 1997 founding, has led the fund since its 2008 inception. Matt Kamm, who joined in 2003, has served as a manager since 2010, and Craigh Cepukenas, who joined in 2009, was named a comanager in 2013. Jason White, an analyst since 2003, became an associate manager on all of the team's funds in 2011 and later became a manager. Eight analysts with an average of eight years tenure back the managers. Most of the analysts have sector-specific roles, and five have worked on the team since at least early 2010. There are also three research associates.

Andy Stephens, who founded the team in 1997, relinquished his portfolio manager title in 2014 and conducted research and mentored analysts until his March 2018 retirement.

The team has also managed Artisan Mid Cap since 1997 launch, Artisan Small Cap since 2009, and Artisan Global Discovery since 2017. The team is still well-resourced. There is considerable holding overlap among the four portfolios. In all, the team oversees about 150 holdings across its charges.

The team also invests significantly in its funds; the four portfolio managers together have between $12.6 million and $14.5 million in the funds, according to filings.

Parent Pillar: Positive | Greg Carlson 03/28/2018
Artisan hires proven or promising managers and allows them to build and run their teams with a large degree of autonomy. Four of the five teams with long histories have performed strongly over longer-term periods. The emerging-markets team lags its benchmark since the strategy's June 2008 founding, though performance has rebounded lately. Three teams have joined since early 2014, and two of those reflect the firm's broadened lineup, which previously focused strictly on equities: One invests in high-yield debt, while another runs a thematically driven alternatives strategy. It's unlikely the firm will launch another equity strategy in the near future.

Beyond delivering largely solid performance, the firm tends to close funds to preserve their flexibility and increase the chances that they will continue to outperform. Indeed, five of the firm's 15 funds are currently closed to new investors. (Two others have been closed in the past.) The firm also has a clean regulatory history.

Artisan went public in March 2013. While this could pressure management (led by Eric Colson, who became CEO in 2010) into keeping popular funds open to boost revenue, it has thus far continued to close them. Its executives no longer control the stock's voting shares, but the firm's employees, founders Andy and Carlene Ziegler, and two private equity firms who have owned stakes since Artisan's 1994 founding own close to 40% of the firm combined.

Price Pillar: Neutral | Greg Carlson 10/11/2018
This fund's fees aren't high, but they aren't a good deal either. The fund earns a Neutral rating for Price.

The fund's Institutional shares hold 48% of the assets and charge 0.93%, which is near the median for similarly distributed world-stock funds. The Investor shares hold 35% of the assets and charge 1.15%--just a bit more than its typical no-load peer. The Advisor shares hold 17% of the assets and charge 1.03%, which lands in the middle quintile of the comparison group.

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Greg Carlson does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.