Investment Process

The investment team seeks to invest in issuers with high-quality business models that have compelling risk-adjusted return characteristics. The team will invest primarily in non-investment grade corporate bonds and secured and unsecured loans of US and non-US issuers.

Business Quality

  • Qualitative industry analysis
  • Evaluate business model resiliency using Porter’s 5 Forces
  • Examine management decision-making history

Financial Strength & Flexibility

  • Free cash flow analysis
  • Corporate structure review
  • Capital structure review

Downside Analysis

  • Conservative financial projections
  • Competitive dynamics
  • Capital structure position
  • Enterprise value support

Value Identification

  • Credit improvement opportunities
  • Relative value within the capital structure
  • Credit cycle awareness
  • Catalysts with optionality
  • Dislocation exploitation

In-depth Investment Process

 

Investment
Results (%)

As of 30 June 2017 QTD YTD 1 Yr 3 Yr 5 Yr 10 Yr Inception
Investor Class: ARTFX 2.35 5.50 12.81 6.68 6.88
BofA Merrill Lynch US High Yield Master II Index 2.14 4.91 12.75 4.48 4.97
As of 30 June 2017 QTD YTD 1 Yr 3 Yr 5 Yr 10 Yr Inception
Investor Class: ARTFX 2.35 5.50 12.81 6.68 6.88
BofA Merrill Lynch US High Yield Master II Index 2.14 4.91 12.75 4.48 4.97

Calendar Year Returns (%)

2015 2016
Investor Class: ARTFX 0.99 14.52
BofA Merrill Lynch US High Yield Master II Index -4.64 17.49

Returns for periods less than one year are not annualized. 

Past performance does not guarantee and is not a reliable indicator of future results. Investment returns and principal values will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than that shown. The performance information shown does not reflect the deduction of a 2% redemption fee on shares held by an investor for 90 days or less and, if reflected, the fee would reduce the performance quoted. Unlike the Index, Artisan High Income Fund may hold loans and other security types. At times, this causes material differences in relative performance. 

Ratings

Morningstar Overall RatingTM
As of 30 June 2017
     

Morningstar Rating and Analyst Rating Disclosure

Expense Ratio

Semi-Annual Report 31 March 2017 1.01%
Prospectus 30 September 2016 1.03%

Expense Ratio Disclosure

See prospectus for more information. Semi-Annual Report Figures: Unaudited, annualized for the six month period. 

Top 10 Holdings
(% of total portfolio as of 30 June 2017)
VEREIT Inc 6.0
Charter Communications Inc 5.0
Endeavor Energy Resources LP 3.7
HUB Holdings LLC 3.4
York Risk Services Holding Corp 3.2
Altice SA 2.9
First Data Corp 2.7
Williams Cos Inc 2.5
KIRS Midco 3 PLC 2.2
Intelsat Jackson Holdings SA 2.2
Total 33.8%
View Full Holdings Historical Holdings
Portfolio Statistics
(as of 30 June 2017)
Number of Securities 123
Number of Issuers 77
30-Day SEC Yield (ARTFX) 4.94%
View Supplemental Statistics
Portfolio Composition
(% of total portfolio as of 30 June 2017)
Corporate Bonds 74.2
Bank Loans 22.8
Equities 0.5
Cash and Equivalents 2.5
Total 100.0%
Ratings Distribution
(% as of 30 June 2017)
BBB 9.2
BB 23.8
B 38.4
CCC 27.0
CC 0.4
Unrated 1.2
Total 100.0%
Maturity Distribution
(% of total portfolio as of 30 June 2017)
< 1 year
1 - <3 years 5.7
3 - <5 years 19.5
5 - <7 years 40.5
7 - <10 years 33.1
10+ years 1.2
TOTAL 100.0%
The investment team leverages high degrees of experience and knowledge within a disciplined investment process. Learn more about the Team.
  • Bryan C. Krug, CFA
  • Portfolio Manager
  • 17Years Investment
    Experience

Artisan Partners Insights

Fixed income securities carry interest rate risk and credit risk for both the issuer and counterparty and investors may lose principal value. In general, when interest rates rise, fixed income values fall. High income securities (junk bonds) are speculative, experience greater price volatility and have a higher degree of credit and liquidity risk than bonds with a higher credit rating. The portfolio typically invests a significant portion of its assets in lower-rated high income securities (e.g., CCC). Loans carry risks including insolvency of the borrower, lending bank or other intermediary. Loans may be secured, unsecured, or not fully collateralized, trade infrequently, experience delayed settlement, and be subject to resale restrictions. Private placement and restricted securities may not be easily sold due to resale restrictions and are more difficult to value.  The use of derivatives in a portfolio may create investment leverage and increase the likelihood of volatility and risk of loss in excess of the amount invested.  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.  These risks are discussed in the prospectus. Please read it carefully before you invest or send money. 

Performance Source: Artisan Partners/BofA Merrill Lynch. Data & Statistics Sources: Artisan Partners/S&P/Moody’s/Bloomberg. Unless otherwise indicated, percentages shown are of total fixed income securities in the portfolio. Portfolio turnover is reported as of the Fund’s fiscal year end. Portfolio statistics are intended to provide a general view of the entire portfolio, or Index, at a certain point in time and are calculated using information obtained from various data sources. Portfolio statistics include accrued interest unless otherwise stated and may vary from the official books and records of the Fund. 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. Unless otherwise noted, portfolio statistics represent the weighted average of the portfolio’s fixed-income securities and exclude cash and cash equivalents. For the purpose of determining the Fund's holdings, securities of the same issuer are aggregated to determine the weight in the Fund. Totals may not sum due to rounding. 

30-Day SEC Yield is based on a formula specified by the SEC that calculates a fund's hypothetical annualized income, as a percentage of its assets. This hypothetical yield will differ from the fund's actual experience and as a result, income distributions from the fund may be higher or lower. Credit Quality ratings are from S&P and/or Moody's. Ratings typically range from AAA (highest) to D (lowest) and are subject to change. The ratings apply to underlying holdings of the Portfolio and not the Portfolio itself. If securities are rated by both agencies, the higher rating was used. Securities not rated by S&P or Moody's are categorized as Unrated/Not Rated. Maturity Distribution represents the weighted average of the maturity dates of the securities held in the Portfolio. Free Cash Flow is a measure of financial performance calculated as operating cash flow minus capital expenditures. Porter’s 5 Forces: Adapted with the permission of The Free Press, a Division of Simon & Schuster Adult Publishing Group, from Competitive Advantage: Creating and Sustaining Superior Performance by Michael E. Porter. ©1985,1998 by Michael E. Porter. All rights reserved. 

BofA Merrill Lynch US High Yield Master II Index measures the performance of below investment grade $US-denominated corporate bonds publicly issued in the US market. The index(es) are unmanaged; include net reinvested dividends; do not reflect fees or expenses; and are not available for direct investment. 

Source Merrill Lynch, Pierce, Fenner & Smith Incorporated (“BofAML”), used with permission. BofAML permits use of the BofAML indices and related data on an "as is" basis, makes no warranties regarding same, does not guarantee the suitability, quality, accuracy, timeliness, and/or completeness of the BofAML indices or any data included in, related to, or derived therefrom, assumes no liability in connection with the use of the foregoing, and does not sponsor, endorse, or recommend Artisan Partners or any of its products or services. 

The Morningstar RatingTM for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. 

The Morningstar Analyst Rating is not a credit or risk rating. It is a subjective evaluation performed by the mutual fund analysts of Morningstar, Inc. Morningstar evaluates funds based on five key pillars, which are process, performance, people, parent, and price. Morningstar's analysts use this five pillar evaluation to identify funds they believe are more likely to outperform over the long term on a risk-adjusted basis. Analysts consider quantitative and qualitative factors in their research, and the weighting of each pillar may vary. The Analyst Rating ultimately reflects the analyst's overall assessment and is overseen by Morningstar's Analyst Rating Committee. The approach serves not as a formula but as a framework to ensure consistency across Morningstar's global coverage universe.

The Analyst Rating scale ranges from Gold to Negative, with Gold being the highest rating and Negative being the lowest rating. A fund with a "Gold" rating distinguishes itself across the five pillars and has garnered the analysts' highest level of conviction. A fund with a 'Silver' rating has notable advantages across several, but perhaps not all, of the five pillars-strengths that give the analysts a high level of conviction. A "Bronze"-rated fund has advantages that outweigh the disadvantages across the five pillars, with sufficient level of analyst conviction to warrant a positive rating. A fund with a 'Neutral' rating isn't seriously flawed across the five pillars, nor does it distinguish itself very positively. A "Negative" rated fund is flawed in at least one if not more pillars and is considered an inferior offering to its peers. Analyst Ratings are reevaluated at least every 14 months. View detailed information about Morningstar’s Analyst Rating, including its methodology .