Management & Investment Process

Management

The investment team leverages high degrees of experience and knowledge within a disciplined investment process. Learn more about the Team.
  • Maria Negrete-Gruson, CFA
  • Portfolio Manager
  • 27Years Investment
    Experience

Investment Process

The investment team seeks to invest in companies that are uniquely positioned to benefit from the growth potential in emerging markets and that possess a sustainable global competitive advantage.

Sustainable Earnings

  • In-depth financial and strategic analyses to determine a sustainable ROE
  • Financial analysis focuses on identifying historical drivers of ROE
  • Strategic analysis examines a company's competitive advantages

Risk Analysis

  • Assess and incorporate company-specific risks into valuation analysis
  • Assess country-appropriate macroeconomic risks to which a company is exposed

Valuation

  • Determine risk-adjusted target price based on sustainable earnings estimates, cash flow expectations and risk analysis
  • Invest in companies that are undervalued relative to peers and historical, industry, country and regional valuations

In-depth Investment Process

 

Investment Results (%)

As of 30 November 2018 QTD YTD 1 Yr 3 Yr 5 Yr 10 Yr Inception
Composite — Gross -2.14 -10.76 -6.62 12.65 4.80 9.73 5.39
Composite — Net -2.31 -11.58 -7.56 11.51 3.73 8.60 4.30
MSCI Emerging Markets Index -4.95 -12.24 -9.09 9.40 1.90 9.12 4.76
As of 30 September 2018 QTD YTD 1 Yr 3 Yr 5 Yr 10 Yr Inception
Composite — Gross -2.42 -8.80 -1.29 17.23 6.07 5.52 5.66
Composite — Net -2.67 -9.49 -2.28 16.04 4.98 4.42 4.56
MSCI Emerging Markets Index -1.09 -7.68 -0.81 12.35 3.61 5.40 5.26

Annual Returns (%)

12 Months Ended 30 September 2014 2015 2016 2017 2018
Composite — Gross 3.46 -19.47 29.40 26.19 -1.29

Calendar Year Returns (%)

2013 2014 2015 2016 2017
Composite — Gross -2.69 -2.80 -10.95 17.03 41.19
Composite — Net -3.70 -3.81 -11.90 15.82 39.79
MSCI Emerging Markets Index -2.60 -2.19 -14.92 11.19 37.28

Returns for periods less than one year are not annualized. 

Past performance does not guarantee and is not a reliable indicator of future results. Current performance may be lower or higher than the performance shown. Composite performance has been presented in both gross and net of investment management fees. 

Investment Risk: Investments will rise and fall with market fluctuations and investor capital is at risk. Investors investing in funds denominated in non-local currency should be aware of the risk of currency exchange fluctuations that may cause a loss of principal. These risks, among others, are further described in the Important Disclosures section which should be read in conjunction with this material. 

Top 10 Holdings
(% of total portfolio as of 30 November 2018)
Samsung Electronics Co Ltd (Korea) 6.1
Alibaba Group Holding Ltd (China) 5.7
Taiwan Semiconductor Manufacturing Co Ltd (Taiwan) 5.4
Reliance Industries Ltd (India) 2.7
Naspers Ltd (South Africa) 2.5
Zhuzhou CRRC Times Electric Co Ltd (China) 2.3
LUKOIL PJSC (Russia) 2.1
ICICI Bank Ltd (India) 2.1
Sberbank of Russia PJSC (Russia) 2.1
Noah Holdings Ltd (China) 2.0
Total 32.9%
Portfolio Statistics
(as of 30 November 2018)
Median Market Cap (Billions) $8.8
Weighted Avg. Market Cap (Billions) $73.5
Weighted Harmonic Avg. P/E (FY1) 13.6X
Weighted Harmonic Avg. P/E (FY2) 12.0X
Weighted Avg. LT EPS Growth Rate (3-5 Yr) 15.6%
Weighted Avg. ROE 17.4%
Median Price/Book Value 2.5X
Active Share 74.9%
Portfolio Turnover Rate 23.3%
Number of Securities 73
Number of Countries 25
Cash (% of total portfolio) 1.2%
Region Allocation
(% of total portfolio equities as of 30 November 2018)
Emerging Asia 61.3
Europe, Middle East and Africa 20.7
Latin America 16.5
Developed Markets 1.5
Total 100.0%
Top 10 Countries
(% of total portfolio equities as of 30 November 2018)
China 22.8
Korea 12.9
Taiwan 9.9
India 9.1
Brazil 8.6
Russia 7.9
South Africa 5.1
Indonesia 4.6
Turkey 2.3
Argentina 1.9
Sector Diversification
(% of total portfolio equities as of 30 November 2018)
Communication Services 8.3
Consumer Discretionary 14.9
Consumer Staples 1.9
Energy 7.9
Financials 22.3
Health Care 8.8
Industrials 9.5
Information Technology 16.3
Materials 6.8
Real Estate 1.6
Utilities 1.8
Total 100.0%

Portfolio Manager Viewpoints

  • Finding the True Emerging Markets Opportunity Set
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  • Video Update—A Volatile Q3 for Emerging Markets
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  • Assessing Corporate Governance—A Bulwark Against Emerging Markets Volatility
  • View PDF

Artisan Partners Insights

  • Emerging Markets: The Changing Dynamics
  • View PDF
International investments involve special risks, including currency fluctuation, lower liquidity, different accounting methods and economic and political systems, and higher transaction costs. These risks typically are greater in emerging markets.  Such risks include new and rapidly changing political and economic structures, which may cause instability; underdeveloped securities markets; and higher likelihood of high levels of inflation, deflation or currency devaluations.  Securities of small- and medium-sized companies tend to have a shorter history of operations, be more volatile and less liquid and may have underperformed securities of large companies during some periods.  These risks, among others, are further described in Artisan Partners Form ADV, which is available upon request. 

Unless otherwise indicated, strategy characteristics relate to that of a representative account managed within the investment composite. It is intended to provide a general illustration of the investment strategy and considerations used by Artisan Partners in managing that strategy. Individual accounts managed to the strategy may differ, at times significantly, from the reference data shown due to varying account restrictions, fees and expenses, and longevity periods, among others. Where applicable, this information is supplemental to, and not to be construed with, a current or prospective client's investment account information.

Performance Source: Artisan Partners/MSCI. Net-of-fees composite returns were calculated using the highest model investment advisory fees applicable to portfolios within the composite. Fees may be higher for certain pooled vehicles and the composite may include accounts with performance-based fees. All performance results are net of commissions and transaction costs, and have been presented gross and net of investment advisory fees. Dividend income is recorded net of foreign withholding taxes on ex-dividend date or as soon after the ex-dividend date as the information becomes available to Artisan Partners. Interest income is recorded on the accrual basis. Performance results for the Index include reinvested dividends and are presented net of foreign withholding taxes but, unlike the portfolio's returns, do not reflect the payment of sales commissions or other expenses incurred in the purchase or sale of the securities included in the indices. 

Data & Statistics Sources: Artisan Partners/FactSet/MSCI. Country Classification Source: Artisan Partners. Portfolio country classifications are defined by the investment team and may differ substantially from MSCI classifications. Upon request, Artisan Partners will provide the portfolio’s country breakdown according to MSCI methodology.  Portfolio turnover is reported as of the strategy’s fiscal year end. Artisan Partners may exclude outliers when calculating portfolio statistics. If information is unavailable for a particular security Artisan may use data from a related security to calculate portfolio statistics. Securities of the same issuer are aggregated to determine a holding’s weight in the portfolio. Cash weighting includes cash and cash equivalents. Totals may not sum due to rounding. 

Median is the data's midpoint value. Market Cap is the aggregate value of all of a company's outstanding equity securities. Weighted Average is the average of values weighted to the data set's composition. Weighted Harmonic Average is a calculation of weighted average commonly used for rates or ratios. Price-to-Earnings Ratio (P/E Ratio) measures how expensive a stock is. Earnings figures used for FY1 and FY2 are estimates for the current and next unreported fiscal years. LT EPS Growth Rate is the average of the 3-5 year forecasted EPS growth rate of a company. Return on Equity (ROE) is a profitability ratio that measures the amount of net income returned as a percentage of shareholders equity. Price-to-Book Ratio (P/B Ratio) is a valuation measure used to compare a stock's market value to its book value. Active Share is defined as the percentage of a portfolio that differs from its benchmark index. Active Share can range from 0% for an index fund that perfectly mirrors its benchmark to 100% for a portfolio with no overlap with an index. Portfolio Turnover is a measure of the trading activity in an investment portfolio—how often securities are bought and sold by a portfolio. 

MSCI Emerging Markets Index measures the performance of emerging markets. The index(es) are unmanaged; include net reinvested dividends; do not reflect fees or expenses; and are not available for direct investment. 

MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used to create indices or financial products. This report is not approved or produced by MSCI. 

The Global Industry Classification Standard (GICS®) is the exclusive intellectual property of MSCI Inc. (MSCI) and Standard & Poor’s Financial Services, LLC (S&P). Neither MSCI, S&P, their affiliates, nor any of their third party providers (“GICS Parties”) makes any representations or warranties, express or implied, with respect to GICS or the results to be obtained by the use thereof, and expressly disclaim all warranties, including warranties of accuracy, completeness, merchantability and fitness for a particular purpose. The GICS Parties shall not have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of such damages.