High Income Fund

Ticker: ARTFX
Inception: 3/19/14
Availability: Open
Fund Assets: $629 M
(All Shares as of 28-Feb-2015)
   
Manager: Krug
Expense Ratio: 1.11%
For the fiscal year ended 9/30/14.
Expense Ratio Disclosure
Distributions: Current/Historical
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Investor Share Class (ARTFX). Also available Advisor Share Class (APDFX), designed for clients of investment professionals, employee benefit plans and certain other investors. Visit our Investment Professionals website or call 888.454.1880 for more information.

PROCESS & CURRENT INFORMATION
Investment Process Highlights In-depth Philosophy & Process (PDF)
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.

The team’s research process has four primary pillars:

Business Quality. The team uses a variety of sources to understand an issuer’s business model resiliency. The team analyzes the general health of the industry in which an issuer operates, the issuer’s competitive position, the dynamics of industry participants, and the decision-making history of the issuer’s management.

Financial Strength and Flexibility. The team believes that analyzing the history and trend of free cash flow generation is critical to understanding an issuer’s financial health. The team’s financial analysis also considers an issuer’s capital structure, refinancing options, financial covenants, amortization schedules and overall financial transparency.

Downside Analysis. The team believes that credit instruments by their nature have an asymmetric risk profile. The risk of loss is often greater than the potential for gain, particularly when looking at below investment grade issuers. The team seeks to manage this risk with what it believes to be conservative financial projections that account for industry position, competitive dynamics and positioning within the capital structure.

Value Identification. The team uses multiple metrics to determine the value of an investment opportunity. The team looks for credit improvement potential, relative value within an issuer’s capital structure, catalysts for business improvement and potential value stemming from market or industry dislocations.
Portfolio Construction Highlights

The team generally determines the amount of assets invested in each issuer based on conviction, valuation and availability of supply. Based on the team’s analysis it divides the portfolio into three parts. Core investments are generally positions with stable to improving credit profiles and lower loan to value ratios. Spread investments are those where the team has an out-of-consensus view about a company’s credit improvement potential. Opportunistic investments are driven by market dislocations that have created a unique investment opportunity. Allocations to each group will vary over time based on market conditions.

 
PERFORMANCE  
     
  NAV1 Change
($)
Change
(%)
PERFORMANCE TO DATE2
MTD YTD3
High Income $9.90 $0.01 0.10% –0.03% 2.96%
 
 
1Net Asset Value (NAV)
2Returns for periods less than one year are not annualized.
3For the period to date from the Fund's commencement of operations on 19-Mar-2014.
Source: Artisan Partners

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 portfolio’s return may vary greatly over short periods, and current performance may be materially lower or higher than the performance data quoted. 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. The Fund’s performance information reflects Artisan Partners’ agreement to limit the Fund’s expenses and has had a material impact on the Fund’s performance, which would have been lower in its absence. Unlike the Index, the High Income Fund may hold loans and other security types. At times, this can cause material differences in relative performance. 

  Average Annual Total Returns
Fund/Index YTD1 3 Mo1 1 Yr 3 Yr 5 Yr 10 Yr Since
Inception
2
High Income 2.99% 1.22% n/a n/a n/a n/a 5.02%
BofA Merrill Lynch High Yield Master II Index 3.09% 1.57% n/a n/a n/a n/a 2.86%
View Distributions
1Returns for periods less than one year are not annualized.
2Fund Inception 3/19/14.

Source: Artisan Partners/ BofA Merrill Lynch
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 portfolio’s return may vary greatly over short periods, and current performance may be materially lower or higher than the performance data quoted. 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. The Fund’s performance information reflects Artisan Partners’ agreement to limit the Fund’s expenses and has had a material impact on the Fund’s performance, which would have been lower in its absence. Unlike the Index, the High Income Fund may hold loans and other security types. At times, this can cause material differences in relative performance. 
  Average Annual Total Returns
Fund/Index YTD1 3 Mo1 1 Yr 3 Yr 5 Yr 10 Yr Since
Inception
2
High Income n/a -0.11% n/a n/a n/a n/a 1.97%
BofA Merrill Lynch High Yield Master II Index n/a -1.06% n/a n/a n/a n/a -0.22%
View Distributions
1Returns for periods less than one year are not annualized.
2Fund Inception 3/19/14.

Source: Artisan Partners/ BofA Merrill Lynch
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 portfolio’s return may vary greatly over short periods, and current performance may be materially lower or higher than the performance data quoted. 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. The Fund’s performance information reflects Artisan Partners’ agreement to limit the Fund’s expenses and has had a material impact on the Fund’s performance, which would have been lower in its absence. Unlike the Index, the High Income Fund may hold loans and other security types. At times, this can cause material differences in relative performance. 
PERFORMANCE  as of 12/31/14

  Average Annual Total Returns
Fund/Index YTD1 3 Mo1 1 Yr 3 Yr 5 Yr 10 Yr Since
Inception
2
High Income n/a -0.11% n/a n/a n/a n/a 1.97%
BofA Merrill Lynch High Yield Master II Index n/a -1.06% n/a n/a n/a n/a -0.22%
View Distributions
1Returns for periods less than one year are not annualized.
2Fund Inception 3/19/14.

Source: Artisan Partners/ BofA Merrill Lynch
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 portfolio’s return may vary greatly over short periods, and current performance may be materially lower or higher than the performance data quoted. 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. The Fund’s performance information reflects Artisan Partners’ agreement to limit the Fund’s expenses and has had a material impact on the Fund’s performance, which would have been lower in its absence. Unlike the Index, the High Income Fund may hold loans and other security types. At times, this can cause material differences in relative performance. 


PERFORMANCE  as of 9/30/14

  Average Annual Total Returns
Fund/Index YTD1 3 Mo1 1 Yr 3 Yr 5 Yr 10 Yr Since
Inception
2
High Income n/a -0.11% n/a n/a n/a n/a 1.97%
BofA Merrill Lynch High Yield Master II Index n/a -1.06% n/a n/a n/a n/a -0.22%
View Distributions
1Returns for periods less than one year are not annualized.
2Fund Inception 3/19/14.

Source: Artisan Partners/ BofA Merrill Lynch
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 portfolio’s return may vary greatly over short periods, and current performance may be materially lower or higher than the performance data quoted. 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. The Fund’s performance information reflects Artisan Partners’ agreement to limit the Fund’s expenses and has had a material impact on the Fund’s performance, which would have been lower in its absence. Unlike the Index, the High Income Fund may hold loans and other security types. At times, this can cause material differences in relative performance. 


PERFORMANCE  as of 3/30/15

     
  NAV1 Change
($)
Change
(%)
PERFORMANCE TO DATE2
MTD YTD3
High Income $9.90 $0.01 0.10% –0.03% 2.96%
 
 
1Net Asset Value (NAV)
2Returns for periods less than one year are not annualized.
3For the period to date from the Fund's commencement of operations on 19-Mar-2014.
Source: Artisan Partners

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 portfolio’s return may vary greatly over short periods, and current performance may be materially lower or higher than the performance data quoted. 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. The Fund’s performance information reflects Artisan Partners’ agreement to limit the Fund’s expenses and has had a material impact on the Fund’s performance, which would have been lower in its absence. Unlike the Index, the High Income Fund may hold loans and other security types. At times, this can cause material differences in relative performance. 



 
DATA/STATISTICS  
Portfolio Composition1
  Fund
Corporate Bonds 62.3
Bank Loans 30.8
Cash & Cash Equivalent 6.9
Total 100.0%


Characteristics
Number of Holdings 87
Number of Issuers 68


Credit Quality2
BBB 0.0
BB 17.2
B 27.5
CCC 53.8
Unrated 1.5
Total 100.0%


Maturity Distribution3
<1 Year 0.0
1–<3 Years 1.2
3–<5 Years 4.4
5–<7 Years 36.7
7–<10 Years 56.4
10+ Years 1.3
Total 100.0%


Top 10 Holdings
Issuer Name Weight
Opal Acquisition Inc 5.6
Renaissance Learning Inc 4.7
York Risk Service Holding Corp 4.4
Altice SA 4.2
WP Mustang Holdings LLC 2.9
Dish DBS Corp 2.7
USI Inc 2.5
Infinity Acquisition LLC/INF 2.5
CCO Holdings LLC 2.4
Tibco Software Inc 2.2
Total 34.1%
Holdings: Current | Historical
For the purpose of determining the Fund's holdings, securities of the same issuer are aggregrated to determine the weight in the Fund.



1 Source: Artisan Partners
2 S&P/Moody’s
3 Source: Artisan Partners. Percentages shown are of total fixed income securities in the portfolio.
 
FUND MANAGER



Bryan C. Krug, CFA

Bryan C. Krug, CFA
Bryan C. Krug, CFA, is a managing director of Artisan Partners and a portfolio manager on the Credit team. In this role, he is the portfolio manager for the Artisan High Income Strategy, including Artisan High Income Fund. Prior to joining Artisan Partners in December 2013, Mr. Krug was the portfolio manager of Ivy High Income Fund at Waddell & Reed from February 2006 to November 2013. Mr. Krug joined Waddell & Reed in 2001 as a high yield investment analyst and was later promoted to portfolio manager. Earlier in his career, he was affiliated with Pacholder Associates as the primary analyst for a distressed portfolio. Mr. Krug holds a bachelor’s degree in Finance from Miami University, Richard T. Farmer School of Business.



 
This material is not an offer of any mutual funds mentioned other than Artisan Funds.
 
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