Artisan Partners Asset Management Inc.

What they do

Artisan offers active investment management primarily to institutions and institutional-like intermediaries through separate accounts and pooled vehicles, accessing clients via investment consultants, defined contribution platforms, financial advisors and broker-dealers. It derives essentially all revenue from investment management fees based on a percentage of clients' average AUM, with performance fees or incentive allocations from a small percentage of clients. The firm operates as a single segment through Artisan Partners Holdings LP, in which non-employee limited partners held about 12% of equity interests as of June 30, 2026.

Revenue drivers

• Investment management fees — Essentially all of revenue comes from fees set as a specified percentage of clients' average AUM, so revenue tracks average AUM; 2025 revenue was $1,196.7 million.
• Performance fees and incentive allocations — A small percentage of clients and investors pay fees or allocations based on performance relative to a benchmark.
• Credit strategies — Credit-oriented teams raised roughly $700 million of net inflows in 2Q26, a 15% annualized organic growth rate and a 16th consecutive quarter of positive organic growth.
• Alternatives and international strategies — Alternative strategies added about $300 million of net inflows in 2Q26 (25% annualized organic growth), while EMsights Capital Group surpassed $5 billion in AUM.

Recent performance

For 2Q26, AUM ended at a record $183.4 billion, up from $173.0 billion at March 31, 2026, driven by $21.2 billion of market appreciation partly offset by $10.5 billion of net client cash outflows. Revenue rose 9% year over year to $307.9 million, GAAP operating income increased 6% to $84.6 million, and GAAP operating margin was 27.5%, down from 28.2% a year earlier. Adjusted operating margin expanded 120 basis points to 32.9%, adjusted operating income rose 13% to $101.4 million, and GAAP EPS was $1.11 versus adjusted EPS of $0.94. The outflows included $6.4 billion from the U.S. Value team's strategies, largely from the loss of a single sub-advisory mandate, and the firm decided to wind down that team's business.

Strategy

Management describes the firm as a high value-added active manager and says long-term investment performance is the primary driver of long-term results, while near-term results are lumpy with market and flow swings. It plans to expand capabilities in areas of durable client demand and potential alpha, specifically credit and alternatives, while continuing to invest in high-performing investment teams. The firm aims to maintain a transparent, predictable financial model in which most compensation expense varies with revenue, and to pay out a majority of cash generated from operations through dividends and distributions. In 2Q26 it funded a $1 billion institutional mandate for the Global Discovery strategy and raised more than $200 million of net inflows into Sustainable Emerging Markets. Following the loss of two large U.S. Value mandates, it determined to wind down that team and return capital to investors in the U.S. Mid-Cap Value, Value Equity and Value Income strategies, expected to be largely complete by the end of 3Q26.

Risks

• Client cash outflows — Firmwide net outflows were $10.5 billion in 2Q26 and $13.6 billion for the first half of 2026, reducing AUM and the fee base.
• Key investment professional departures — The 10-K states the departure of a portfolio manager has in the past contributed to client withdrawals and could cause clients to terminate relationships or consultants to stop recommending a strategy.
• Strategy concentration and capacity actions — The U.S. Value wind-down followed the loss of two large institutional mandates, showing how a single mandate loss can materially reduce AUM in a team's strategies.
• Market-driven AUM swings — Because fees are based on average AUM, results depend heavily on market levels; 2Q26's $21.2 billion of market appreciation offset but did not fully counterbalance $10.5 billion of net outflows.

Outlook

Management said its long-term investment performance remains strong, with over 75% of AUM outperforming benchmarks across three-, five-, ten-year and since-inception periods. It expects the U.S. Value wind-down to be largely complete by the end of 3Q26. The firm describes its balance sheet, cash generation and disciplined capital allocation as positioning it to invest for long-term growth while returning meaningful capital to shareholders, with emphasis on credit and alternatives.