Objective
Multi-cap value equity. The managers have three broad criteria for equity selection: attractive valuation, sound financial condition and attractive business economics. The managers may invest in turnarounds, companies in transition, and companies that have experienced (short-term) earnings shortfalls. The minimum market cap $1.5 billion. While the primary focus is on U.S. companies, up to 25% of the portfolio can be invested in foreign firms.
Adviser
Artisan Partners, LP. Artisan manages $45 billion in eight mutual funds, including Opportunistic Value and separate accounts. Five of its seven existing funds are closed to new investors. Artisans’ managers are all co-owners of the advisory firm.
Managers
Daniel L. Kane, Thomas A. Reynolds IV, and Craig Inman.
Opening date
March 27, 2006
Minimum investment
$1000 for both regular and IRA accounts. The minimum is waived for investors establishing an automatic monthly investment of at least $50.
Expense ratio
1.06% on assets of $260 million, as of June 2023.
David’s comments
There are two concerns before investing in Opportunistic Value. First, is there any reason to believe that the managers have the expertise to invest large caps? That’s a good question and one for which there’s no immediate answer. And, second, with two closed funds and separate account assets already, are they overstretched? The fund assets sit around $5 billion, each has 50% turnover. That’s a lot of money, though certainly not beyond the range of what many multi-cap managers at smaller firms (Ron Muhlenkamp and four analysts handle over $3 billion, Wally Weitz handle $5 billion, the folks at Longleaf handle $9 billion). For both questions, the answer might be “a stretch but not necessarily overstretched.”
Weighed against that
(1) Artisan gets it right. Artisan has a great track record for new fund launches. The company launches a new fund only when two conditions are satisfied: it believes it can add significant value and it has a manager who has the potential to be a “category killer.” Almost all of Artisan’s new funds have had very strong first-year performance (their most recent launches – International Small Cap and International Value – finished in the top 1% and 24%, respectively) and above average long-term performance. All of the managers are risk-conscious, so even the “growth” managers tend toward the “value” end of the spectrum. Beyond that, Artisan tends to charge below average expenses, they don’t pay for marketing, and close their funds early.
(2) Satterwhite gets it right. Before joining Artisan in 1997, the lead manager – Scott Satterwhite – ran a very successful small-value portfolio called Biltmore (later, Wachovia) Special Values. His main charge at Artisan, Small Cap Value (ARTVX), tends to have modest volatility and above average returns. It tends to outperform its peers in rocky markets and trail only slightly in boisterous ones. His newer charge, Midcap Value (ARTQX) has had a phenomenal four-year history despite cooling over the past twelve months.
(3) A tested discipline should help them keep it right. Opportunistic Value will use the same stock selection criteria that have served the managers well for the past decade in their other two funds. As a result, there should be relatively few surprises in store.
Bottom line
For investors interested in a place on the “all cap” bandwagon, this is about as promising as a new offering can get.
Company link
http://www.artisanfunds.com/mutual_funds/artisan_funds/value.cfm
April 1, 2006
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