Artisan Partners Asset Management Inc. Class A

Hello, and thank you for standing by. My name is Jason, 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 Artisan Partners Asset Management.

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

Thank you all for joining the call or reading the transcript. Artisan Partners is a high-value-added investment firm designed for talent to thrive in a thoughtful growth environment. Since our founding in 1994, we have methodically delivered quality outcomes for clients, quality business growth, and quality returns for our shareholders. The power of compounding underlies each of these outcomes. Compounding client capital in excess of benchmarks and peers extend client duration and grows our AUM. Compounding business outcomes with each successful investment team, strategy, and asset class increases our future opportunity set, as well as the quality and probability of those opportunities. Success begets success. As we compound client capital and business outcomes, our shareholders are the residual beneficiaries. Compounding requires time, and time requires trust. Trust is established by communicating who we are and what we plan to do. Trust is maintained by staying true to our word and by sticking to our philosophy and process. We strive to do this day in and day out, over and over again. The development of our fixed income capabilities shows how we compound our business. The performance of our six credit-oriented strategies is shown on slide two. This performance is net of fees. We launched the credit team 10 years ago in 2013 on the basis of our foundational success in equities. We partnered with portfolio manager Brian Krug to methodically build a premier credit franchise. In turn, the credit team has methodically generated high-value added returns for clients. Over nine-plus years, the Artisan High Income Strategy has generated average annual alpha of 186 basis points after fees. That is, on average, a return of 50% more per year than the Strategy's benchmark index. The High Income Strategy has also outpaced peers since inception, The Artisan High Income Fund is ranked number five out of 330 funds in the LIPR High Yield category. On the foundation of our credit team success, we recruited Mike Cerami, Sarah Orban, and Mike O'Brien to Artisan Partners in 2021 and established the MSITES Capital Group. With MSITES, we launched our second credit-oriented team and further expanded our investment platform into Sovereign Credit, FX, and greater use of derivatives. Each of the three MSITE strategies has passed its first anniversary. The team's early performance and reputation in the marketplace are translating into a healthy level of early interest. On July 1, they received their first large institutional mandate, a $425 million investment in the Artisan Emerging Markets Local Opportunities Strategy. We are making significant progress towards similar foundational investments in the team's MDO and global unconstrained strategies. Slide three shows the year-to-date AUM growth of our credit-oriented strategies. As of July 15th, between the credit team and MSITE's capital group, we have raised a net $1.1 billion from clients and investors. The pipeline for both the credit team and MSITE's capital group is strong, and we expect strong business development throughout the remainder of 2023 and beyond for both teams. It's also worth noting that these investment teams are winning business as differentiated alpha generators, not as providers of benchmark-hugging exposure in hot-dot asset classes. Based on mutual fund data year-to-date, high-yield bonds, bank loan, emerging market debt, and non-traditional bond funds are all in net outflow. That's in contrast to the headline generating flows into money market and investment grade bond funds. This is consistent with who we are. We are investing with great talent in spaces where they can differentiate and compound capital to deliver absolute return over extended periods of time. We believe that demographic change and expanding credit opportunity sets bode very well for both the credit and MSITES teams. In short, we believe we are in the early innings with both these investment teams with considerable opportunity in front of us. One year ago, we showed the information on slide four during our second quarter earnings call. Since our founding in 1994, there have been 12 calendar quarters in which the indexes to which our strategies are compared have declined by more than 10%. On average, a 10% quarterly drawdown occurs about every two years, though not evenly distributed over time. On the way down, assets tend to sell off across the board. Things become highly correlated, making it more difficult to generate differentiated outcomes in the short term. Higher correlation on the way down, though, creates opportunity for active managers with extended time horizons. Historically, our investment teams have taken advantage of that dynamic. A year ago, we observed that our firm-wide asset weighted performance had exceeded benchmark performance in 8 of 11 12-month periods, following a greater than 10% quarterly drawdown. We can now update that to 9 of 12. Markets have rebounded from a year ago, and in the aggregate, we have outperformed. Looking at three-year periods following a greater than 10 percent quarterly drawdown, we have outperformed in eight of 10 periods, with the outperformance averaging 308 basis points. The important point is that Artisan Partners is built for the uncertainty and volatility of financial markets. In the midst of last year's drawdown, we continued to methodically invest in our investment platform, in particular, the build-out of the MSITES Capital Group. We were patient and played the long game. We have come out the other side with a healthy, diversified business and multiple vectors for future growth. Slide 5 shows the since-inception performance of our 10 strategies with more than 10 years of performance. As you go from one year to three years to ten years and beyond, our record of investment success becomes stronger and stronger. This is not a surprise. High value-added investment results require talent plus degrees of freedom plus time. We attract and retain exceptional investment talent by designing and operating our firm as an ideal long-term home for investment talent. We provide talented investors with a broad and growing opportunity set of asset classes, markets, and instruments, increasing the available levers for generating return and managing risk for clients. And we extend duration by clearly and repeatedly articulating our long-term horizon to all of our stakeholders and by putting our money where our mouth is, supporting investment teams through market cycles. This slide is a good summary of the quality of our investment business. It shows the breadth of performance across teams, categories, and time, and the repeatability of our business philosophy and process. What gets us particularly excited is that we are applying the same business philosophy and process to the 15 artisan strategies not shown on this slide, strategies that have yet to reach the 10-year mark. We expect our newer teams, asset classes, and strategies to compound client capital with similar success. And we expect high-quality client outcomes will continue to translate into high-quality outcomes for our business and our shareholders. I will now turn it over to CJ to discuss our recent financial results. Thanks, Eric.