Artisan Small Cap Value (ARTVX) merging into Mid Cap Value (ARTQX)

David_Snowball

No word yet on why, but the merger will be a tax-free event and will occur around May 23rd. The US Value team runs both funds. Both have great long-term records and sucky recent ones. Measured by sector allocations, their portfolios are dissimilar. Small Cap has been hurt by an major overweight in energy, which was recently trimmed. Scott Satterwhite, the founding manager, has been phasing out for more than a year with retirement coming in fall.

None of which is an answer, but they're the pieces I've got so far.

For what interest that holds,

David

mcmarasco

David, thank you for the heads-up!!

I have been a very long investor in ARTQX and obviously have been very disappointed in its recent performance. Do you have any thoughts on the impact this merger will have on ARTQX???

The additional AUM does not seem to be a good thing; will the mandate change?


Any thoughts and/or opinions are very welcome!!

Matt

TheShadow

Filing for the reorganization:
http://www.sec.gov/Archives/edgar/data/935015/000119312516472686/d144281d497.htm

David_Snowball

Asset bloat is the least of their worries. ARTQX is down by 70% in about two years; $10 billion to $3 billion, roughly. ARTVX is down 90% in four years; $3 billion to $300 million, again in rough numbers.

David

mcmarasco

Point well-taken David, thank you.

I am seriously considering moving out of ARTQX; the under-performance is extending into its long-term performance.

Any thoughts???

JoJo26

I think it's really more of a question of if you're comfortable with the type of tracking error that Artisan has. If not, then I'd agree that the team's approach probably isn't best suited for your risk tolerance. Artisan hasn't changed its stripes, however, so I would not get out just because of the lackluster performance (this is always a bad decision). It has been a rough patch, but if/when value comes back into favor and the energy sector recovers, Artisan should perform exceptionally well.

LewisBraham

I wonder if this decision isn't based on marketing the other funds at the shop. Like nation states with an ugly past, fund families often try to erase theirs from the history books by liquidating or merging their worst performers. I find the decision disheartening especially because the style hasn't changed and managers always urge clients to "stay the course" and invest long-term. And here they go running for cover when the going gets rough.

JoJo26

The team should be more focused now, IMO. The small cap strategy was taking up a majority of the team's time as it housed probably half of the names covered by the team across the U.S. value suite, but was very limited in terms of total assets managed by the team. Spending 50% of your time on less than 10% of your business isn't ideal... With the same size team (I know Scott is on his way out, but this has been known for awhile) now covering a smaller universe, I'd hope this leads to improved research on the rest of what they cover.

DlphcOracl

In the 21st century Artisan Funds has assumed the unenviable mantle of Royce Funds:

1. Too many funds, most of which are unnecessary.
2. Too expensive - expense ratios consistently above their category averages.
3. Too unfocused - performance of funds has become decidedly mediocre.

The time to move on and wean one's portfolio of Artisan Funds was several years ago.