Artisan Partners Asset Management Inc. Q3 FY2024 earnings call

• Eric Colson noted that since IPO in 2013, Artisan Partners has returned $36.47 per share in dividends relative to an IPO price of $30, with an annualized total shareholder return of 12.38% vs. the S&P 500's 12.05%.
• The company has invested in new talent and strategies such as the Artisan Credit team, Artisan Developing World team, Antero Peak Group, International Small Mid-Team, and EMsights Capital Group.
• Fixed income and alternative strategies have performed well. The four fixed income strategies generated 239 basis points of average annualized alpha net of fees, and the five alternative strategies generated 331 basis points of average annualized alpha net of fees.
• Jason Gottlieb discussed that the U.S. public company number has declined, and Artisan focuses on fixed income and alternatives. The Credit team's high income strategy has seen $9.7 billion in net inflows since inception, and the EMsights Capital Group manages over $2.3 billion in AUM with high-quality institutional anchors.
• Eric Colson emphasized that new teams add operational leverage to margin expansion.

Artisan Partners has various product segments. The four fixed income strategies have generated an average annualized alpha of 239 basis points net of fees. The five alternative strategies have generated 331 basis points of average annualized alpha net of fees. Specific teams like the Credit team's flagship high income strategy has generated 171 basis points of annual outperformance versus the benchmark net of fees, with $9.7 billion in net inflows since inception. The EMsights Capital Group manages over $2.3 billion in AUM, with strategies invested in 66 countries and using derivatives extensively. Fixed income strategies represent a portion of total AUM, and alternative strategies also contribute significantly. For example, the Credit team's credit opportunity strategy has an average annual return of 10.29% since inception after fees, and the EMsights Capital Group's Global Unconstrained has a sharp ratio of 1.88 since inception.

• C.J. Daley mentioned that the fourth quarter has an opportunity to add performance fees, but cautioned on guiding as the measurement date is the end of the year.
• On the expense side, there was improvement relative to revenues, with expectation of continued comp ratio improvement into the fourth quarter.
• The fourth quarter may see performance fee contributions, and expense growth is expected to pause after heavy investment in recent years.

Remarks included that comments may include forward-looking statements subject to known and unknown risks and uncertainties, including factors in the earnings release and SEC filings, which may cause actual results to differ materially from forward-looking statements.

Q: Alex Blostein asked about margins and expense outlook, and strategy-related gross sales trends.

A: Charles Daley and Eric Colson responded on expense growth pause, operational leverage from new teams, and capacity management in strategies.

Q: John Dunn asked about non-U.S. institutional business and capacity.

A: Eric Colson and Jason Gottlieb discussed strong non-U.S. institutional business, capacity in emerging market debt, global value, and global equity strategies.

Q: William Katz asked about fee rate dynamics on fixed income and subsidy abatement.

A: Charles Daley responded on subsidy from new teams earning into rev share and fee rate dynamics related to rounding and mandate types.

Q: Kenneth Lee asked about seed capital and new product development.

A: Charles Daley and Jason Gottlieb discussed seed capital recoupment and focus on private real estate as a key area for new product development.