Artisan Partners Asset Management Inc. Class A

Hello, and thank you for standing by. My name is Carrie, and I will be your conference operator today. At this time, all participants are in a listen-only mode. After the prepared remarks, management will conduct a question and answer session, and conference participants will be given instructions at that time. As a reminder, this conference call is being recorded. At this time, I will turn the call over to Michaela Taphorn, Director, Investor Relations for Artisan Partners Asset Management.

Thank you. Welcome to the Artisan Partners Asset Management Business Update and Earnings Call. Today's call will include remarks from Eric Holson, Chairman and CEO, and CJ Daley, CFO. Our latest results and investor presentation are available on the Investor Relations section of our website. Following these remarks, we will open the line for questions. Before we begin, I'd like to remind you that comments made on today's call, including responses to your questions, may deal with forward-looking statements which are subject to risks and uncertainties. These are presented in the earnings release and detailed in our filings with the SEC. We are not required to update or revise any of these statements following this call. In addition, some of our remarks made today will include references to non-GAAP financial measures. You can find reconciliations for those measures to the most comparable GAAP measures in the earnings release. I will now turn the call over to Eric Holson.

Thank you, Michaela, and thank you everyone for joining the call or reading the transcript. As in the past, I will use this second quarter call to discuss our talent-driven business model, which is the core to who we are as a firm. Artisan Partners provides a unique platform for investment talent. We provide stability, support, transparency, predictability, and time. We're also extremely flexible. Established investors and teams evolve over time. New individuals and teams enter the markets with fresh perspectives. What they want and need changes over time. As a firm, our structure and culture allow for change while maintaining the discipline and alignment necessary to deliver for clients. In our earnings release, we reviewed three recent examples of the flexibility in our model. Last year, Rezo Canovic joined our firm to manage what is now the non-U.S. small-mid growth strategy. Rezo and his analysts operate within the global equity franchise, but they have control of their philosophy, process, research, and decision-making. They own their strategy and at the same time collaborate with a larger group of like-minded peers, without the responsibility of managing a larger entity. Also last year, we evolved our global value team into two separate teams, global value and international value. The division was driven by the buildup of high-quality talent, a good problem to have. To increase space for that talent to grow and thrive, we disrupted ourselves. We knew that consultants and clients would struggle to compare this reorganization to other industry examples. But that's because our structure is uniquely focused on managing talent over the long term. A third example of talent evolution within our model is Jason White on the growth team. Jason joined Artisan out of the United States Navy in 2000. He was promoted to associate portfolio manager in 2011 and portfolio manager in 2016. In September 2017, we launched the Global Discovery Strategy with Jason as lead portfolio manager. These are three very different approaches to optimizing for talent. With Rezzo, we assembled a team of established individuals and embedded it within an existing franchise to create a larger collaboration network while maintaining autonomy and the alignment and accountability that go with it. With the Global Value Team, we reorganized an established franchise creating space and opportunity for professional growth. And with Jason White, you see how our growth team has consciously built a platform for developing and unleashing internal talent. These examples are what we mean when we say our firm is talent-driven. They demonstrate the flexibility that distinguishes us and which is increasingly important as our people continue to grow and develop and as collaboration models and preferences change. Turning to slide two, when our firm was founded, there were limited options for great investors who wanted to build a unique investment franchise without the non-investment distractions of running a business. Artisan provided an ideal home for these free agents. At the same time, open architecture allowed independent investment managers to efficiently access clients through intermediaries, fund marketplaces, DC plans, and institutional consultants. Having established our firm, we evolved as the investment world globalized and as investment talent and asset allocators sought greater investment freedom. Today, these trends remain relevant and important. In addition, we have added two new defining trends to the timeline, investment talent platforms and client outcomes. Collaboration models are changing all around us, most notably in the gig and sharing economies. where technology enables individuals to access vast networks and a nearly unlimited array of tools and resources. Today's environment places a premium on the value we can add for talented investors by operating our firm and investment teams as flexible, high-value added platforms. We fulfill that role by providing stability, guidance, and time, curating and validating talent, vendors, and data, reducing transaction costs and distractions, and by creating alignment and accountability between an increasingly short-term and transactional marketplace on the one hand and clients trying to solve for long-term financial outcomes on the other. Today, we are pushing ourselves harder than ever before to think broadly about how we partner with and operate for talented investors, those at Artisan today and those who will join us in the future. Before moving on, let me say just a few words about the client outcomes concept. Clients are increasingly demanding more customized outcomes, which can include things like tax optimization, vehicle preference, alternative fee schedules, customized ESG, and the like. With many of these trends, we are still in the early stages. We expect to continue to evolve our business to align with those that are durable and fit with who we are as a talent-driven investment firm. You should expect to hear more from us on these topics as we move forward. Slide 3 shows our investment performance. No slide better summarizes why we believe our talent-driven model works. Long-term investment results are strong across the entire firm. For 11 of the 15 strategies, The corresponding mutual funds rank in the top 10% of its LIPR category since inception. Year-to-date returns across our growth, global equity, and developing world teams have been exceptional on both an absolute and relative basis. In particular, the global discovery strategy has outperformed its benchmark by 1,359 basis points after fees. And the strategy's corresponding mutual fund is ranked number one of 141. The non-U.S. small-mid growth strategy has outperformed its benchmark by 1,083 basis points. After fees, the strategy's corresponding fund is ranked nine of 222 funds in its peer group. And the developing world team has outperformed its benchmark by 2,028 basis points after fees. placing it in the top 1% of its mutual fund peer group. As a reminder, in these materials we show value added against each strategy's broad market benchmark. For several of our style-oriented strategies, many clients use a style benchmark to evaluate performance. At quarter end, the value equity strategy was outperforming its value index by 184 basis points year-to-date, and underperforming by just seven basis points since inception. Likewise, against its value index, the US mid-cap value strategy underperformed by only 34 basis points year-to-date and outperformed by 199 basis points since inception. Slide four shows how our investment platform has translated into AUM growth over time. For our investment talent, we think in terms of developing and growing over an entire career, 20 or 30 plus years. For our clients, we think about delivering results over a long time horizon through multiple market cycles. Accordingly, when we think about the growth and development of our business, we emphasize the importance of long-term timeframes. It takes time to build and develop an investment franchise, and the path is never linear. If we create an environment in which talented people can grow and thrive and deliver for clients, we are confident that our business will grow as well. It's also important to remember that the vast majority of long-term growth shown on this page is a result of investment returns, not net sales. That's what we expect and want. When we grow through investment returns, we grow with our clients. Year to date, Our strong absolute and relative returns for clients have translated into $19.2 billion of AUM growth. Approximately $4.4 billion, or 23% of that growth, represents returns we have generated in excess of broad market indexes. On slide five, we have broken out the growth of our newest strategies and teams and compared them to our historical experience. In the aggregate, the new strategies and teams highlighted on this page have seen 2.7 billion of net inflows in the first six months of 2019. Their growth is tracking very nicely against the growth of our earlier strategies. In the early years, we take the time to establish the talent, process, and track record that are the foundation for long-term success, like that shown on the prior slide. Each of the teams highlighted on this page is doing an excellent job building a foundation for long-term investment excellence and business growth, getting the hockey stick effect that some of our early strategies experience often requires an outside event, such as a change in asset allocation preference or a competitor blow-up. Our new teams and strategies remain focused on building their franchises and delivering for existing clients, We are confident their businesses will continue to grow. Our talent-driven model remains in high demand. We will continue to build and execute on that model. I will now turn it over to CJ to discuss our financial performance. Thanks, Eric.