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What changed in Artisan Partners Asset Management Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Artisan Partners Asset Management Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+397 added−385 removedSource: 10-K (2024-02-22) vs 10-K (2023-02-27)

Top changes in Artisan Partners Asset Management Inc.'s 2023 10-K

397 paragraphs added · 385 removed · 351 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

70 edited+3 added−3 removed80 unchanged
Biggest changeSee “Risk Factors—Risks Related to our Industry—We are subject to extensive, complex and sometimes overlapping rules, regulations and legal interpretations.” and “Risk Factors—Risks Related to our Industry—The regulatory environment in which we operate is subject to continual change, and regulatory developments may adversely affect our business.” Competition The investment management industry is highly competitive.
Biggest changeSee “Risk Factors—Risks Related to Legal or Regulatory Factors and Taxation—We are subject to extensive, complex and sometimes overlapping laws, rules and regulations.” and “Risk Factors—Risks Related to Legal or Regulatory Factors and Taxation—The regulatory environment in which we operate is subject to continual change, and regulatory developments may adversely affect our business.” Industry Trends and Competition The investment management industry continues to evolve as market trends and other forces, including the current regulatory environment, create headwinds for traditional asset management firms. • Passive and alternative investment options continue to grow organically while traditional actively managed strategies have had net organic outflows over the past five years. • A number of shifts in the distribution landscape are putting pressure on traditional distribution models.
Mid-Cap Growth and U.S. Small-Cap Growth. James D. Hamel, Matthew H. Kamm, Craigh A. Cepukenas, Jason L. White and Jay C. Warner are the portfolio managers of all four strategies. Mr. Hamel is the lead portfolio manager of the Global Opportunities strategy; Mr. White is the lead portfolio manager of the Global Discovery strategy; Mr.
Small-Cap Growth. James D. Hamel, Matthew H. Kamm, Craigh A. Cepukenas, Jason L. White and Jay C. Warner are the portfolio managers of all four strategies. Mr. Hamel is the lead portfolio manager of the Global Opportunities strategy; Mr. White is the lead portfolio manager of the Global Discovery strategy; Mr. Kamm is the lead portfolio manager of the U.S.
We have designed our distribution strategies and structured our distribution teams to use knowledgeable, seasoned marketing and client service professionals in a way intended to limit the time our investment professionals spend on marketing and client service activities.
We have designed our distribution strategies and structured our distribution teams to use knowledgeable, seasoned sales and client service professionals in a way intended to limit the time our investment professionals spend on marketing and client service activities.
FINRA has the authority to conduct periodic examinations of member broker-dealers, and may initiate administrative proceedings. Artisan Partners Distributors LLC is also subject to the SEC’s Uniform Net Capital Rule and the National Securities Clearing Corporation’s excess net capital requirement, which require that at least a minimum part of a registered broker-dealer’s assets be kept in relatively liquid form.
FINRA has the authority to conduct periodic examinations of member broker-dealers, and may initiate administrative proceedings. Artisan Partners Distributors LLC is also subject to the SEC’s Uniform Net Capital Rule and the National Securities Clearing Corporation’s excess net capital requirement, which require that at least a minimum amount of a registered broker-dealer’s assets be kept in relatively liquid form.
The diagram below depicts our organizational structure as of December 31, 2022: (1) Our employees to whom we have granted equity have entered into a stockholders agreement with respect to all shares of our common stock they have acquired from us and any shares they may acquire from us in the future, pursuant to which they granted an irrevocable voting proxy to a stockholders committee currently consisting of Eric R.
The diagram below depicts our organizational structure as of December 31, 2023: (1) Our employees to whom we have granted equity have entered into a stockholders agreement with respect to all shares of our common stock they have acquired from us and any shares they may acquire from us in the future, pursuant to which they granted an irrevocable voting proxy to a stockholders committee currently consisting of Eric R.
As a result, there is a level of uncertainty associated with the regulatory environments in which we operate. Accordingly, the discussion below is general in nature, does not purport to be complete and is current only as of the date of this report. 8 Table of Content s U.S.
As a result, there is a level of uncertainty associated with the regulatory environments in which we operate. Accordingly, the discussion below is general in nature, does not purport to be complete and is current only as of the date of this report. 8 Table of Contents U.S.
Kamm is the lead portfolio manager of the U.S. Mid-Cap Growth strategy; and Mr. Cepukenas is the lead portfolio manager of the U.S. Small-Cap Growth strategy.
Mid-Cap Growth strategy; and Mr. Cepukenas is the lead portfolio manager of the U.S. Small-Cap Growth strategy.
In addition to owning all of the shares of our Class B common stock, our employee-partners, together with our other employees, owned unvested restricted shares of our Class A common stock representing approximately 8% of our outstanding Class A common stock as of December 31, 2022.
In addition to owning all of the shares of our Class B common stock, our employee-partners, together with our other employees, owned unvested restricted shares of our Class A common stock representing approximately 8% of our outstanding Class A common stock as of December 31, 2023.
ESG disclosure rules, amendments to the names rule, liquidity risk management, reporting modernization, valuation). In addition, the SEC has proposed and/or adopted a number of rules impacting public companies (e.g. new disclosure requirements on topics such as climate change, human capital management, cybersecurity risk governance, and executive compensation) .
ESG disclosure rules, amendments to the names rule, liquidity risk management and reporting modernization). In addition, the SEC has proposed and/or adopted a number of rules impacting public companies (e.g. new disclosure requirements on topics such as climate change, human capital management and cybersecurity risk governance) .
Artisan Partners Limited Partnership is registered with the Commodity Futures Trading Commission (“CFTC”) as a commodity pool operator, and is a member of the National Futures Association (“NFA”), with respect to its management of certain Artisan Funds. The CFTC and NFA each administer a comparable regulatory system covering futures, swaps and other derivative instruments.
Artisan Partners Limited Partnership is registered with the Commodity Futures Trading Commission (“CFTC”) as a commodity pool operator, and is a member of the National Futures Association (“NFA”), with respect to its management of certain investment vehicles. The CFTC and NFA each administer a comparable regulatory system covering futures, swaps and other derivative instruments.
MiFID II’s soft dollar rules do not directly apply to our business because we currently conduct our investment management activities in the United States. However, in response to MiFID II and the industry-wide changes prompted by it, we have in the past experienced requests from clients to bear research expenses that are currently paid for using soft dollars.
MiFID II’s soft dollar rules do not directly apply to our business because we currently conduct our investment management activities in the U.S. However, in response to MiFID II and the industry-wide changes prompted by it, we have in the past experienced requests from clients to bear research expenses that are currently paid for using soft dollars.
Artisan Global Funds are registered for sale in many countries around the world, both in the EU and beyond, and thus are also subject to the laws of, and supervision by, the governmental authorities of those countries. 9 Table of Content s Artisan Partners Hong Kong Limited, our Hong Kong subsidiary, is licensed and regulated by the Hong Kong Securities and Futures Commission (the “SFC”).
Artisan Global Funds are registered for sale in many countries around the world, both in the EU and beyond, and thus are also subject to the laws of, and supervision by, the governmental authorities of those countries. Artisan Partners Hong Kong Limited, our Hong Kong subsidiary, is licensed and regulated by the Hong Kong Securities and Futures Commission (the “SFC”).
By taking care of our people and fulfilling our fiduciary duty to our clients, we create a waterfall effect that helps generate sustainable financial outcomes for our shareholders over the long term. 11 Table of Content s Our Structure Holding Company Structure We are a holding company and our assets principally consist of our ownership of partnership units of Artisan Partners Holdings, deferred tax assets and cash.
By taking care of our people and fulfilling our fiduciary duty to our clients, we create a waterfall effect that helps generate sustainable financial outcomes for our shareholders over the long term. 12 Table of Contents Our Structure Holding Company Structure We are a holding company and our assets principally consist of our ownership of partnership units of Artisan Partners Holdings, deferred tax assets and cash.
In response to such requests or as a result of changes in our operations, we may eventually bear a significant portion or all of the costs of research that are currently paid for using soft dollars, which would increase our operating expenses materially.
In response to such requests or as a result of changes in our operations, we may eventually bear more of the costs of research that are currently paid for using soft dollars, which would increase our operating expenses materially.
(2) Each class of common units generally entitles its holders to the same economic and voting rights in Artisan Partners Holdings as each other class of common units, except that the Class E common units have no voting rights except as required by law. 12 Table of Content s Available Information Our website address is www.artisanpartners.com.
(2) Each class of common units generally entitles its holders to the same economic and voting rights in Artisan Partners Holdings as each other class of common units, except that the Class E common units have no voting rights except as required by law. 13 Table of Contents Available Information Our website address is www.artisanpartners.com.
As of December 31, 2022, 43% of our U.S. associates were female and 22% of our U.S. associates self-identified as ethnically diverse. We invest significant energy in the recruitment of our associates as they are critical to ensuring the long-term success of our firm.
As of December 31, 2023, 41% of our U.S. associates were female and 22% of our U.S. associates self-identified as ethnically diverse. We invest significant energy in the recruitment of our associates as they are critical to ensuring the long-term success of our firm.
We act as investment adviser to the CITs and earn a management fee for providing this service. As of December 31, 2022, CITs represented approximately 5% of our assets under management. Certain of our investment strategies are primarily offered through Artisan-sponsored unregistered pooled investment vehicles, referred to as Artisan Private Funds.
We act as investment adviser to the CITs and earn a management fee for providing this service. As of December 31, 2023, CITs represented approximately 5% of our AUM. Certain of our investment strategies are primarily offered through Artisan-sponsored unregistered pooled investment vehicles, referred to as Artisan Private Funds.
We earn management fees, which are based on the average daily net assets of each Artisan Fund and are paid monthly, for serving as investment adviser to these funds. As of December 31, 2022, Artisan Funds represented approximately 45% of our assets under management. We also serve as investment manager of Artisan Global Funds, a family of Ireland-based UCITS funds.
We earn management fees, which are based on the average daily net assets of each Artisan Fund and are paid monthly, for serving as investment adviser to these funds. As of December 31, 2023, Artisan Funds represented approximately 44% of our AUM. We also serve as investment manager of Artisan Global Funds, a family of Ireland-based UCITS funds.
We are subject to the California Consumer Privacy Act, which took effect in January 2020, and provides for enhanced consumer protections for California residents. Since then, California has also adopted the California Privacy Rights Act and several additional states have proposed and/or adopted data privacy laws with which we are or may be required to comply. Non-U.S.
We are subject to the California Consumer Privacy Act (CCPA), which took effect in January 2020, and provides for enhanced consumer protections for California residents. Since then, California amended the CCPA by adopting the California Privacy Rights Act, and several additional states have proposed and/or adopted data privacy laws with which we are or may be required to comply. Non-U.S.
This relief is expiring for foreign financial service providers like us and, as a result, Artisan Partners Limited Partnership or one of its affiliates may need to apply for and obtain a securities license or a new exemption by April 2024.
This relief is set to expire for foreign financial service providers like us and, as a result, Artisan Partners Limited Partnership or one of its affiliates may need to apply for and obtain a securities license or a new exemption by April 2025.
For serving as investment adviser to Artisan Private Funds, we earn a management fee and, for certain funds, are entitled to receive either an allocation of profits or a performance-based fee. As of December 31, 2022, Artisan Private Funds comprised approximately 1% of our assets under management.
For serving as investment adviser to Artisan Private Funds, we earn a management fee and, for certain funds, are entitled to receive either an allocation of profits or a performance-based fee. As of December 31, 2023, Artisan Private Funds comprised approximately 1% of our AUM.
We also maintain relationships with a number of financial advisory firms and broker-dealer advisors that offer our investment products to their clients. These advisors range from relatively small firms to large organizations. As of December 31, 2022, approximately 31% of our assets under management were sourced through our intermediary channel.
We also maintain relationships with a number of financial advisory firms and broker-dealer advisors that offer our investment products to their clients. These advisors range from relatively small firms to large organizations. As of December 31, 2023, approximately 33% of our AUM were sourced through our intermediary channel.
As of December 31, 2022, Artisan Funds and Artisan Global Funds accounted for approximately 48% of our total assets under management, and approximately 52% of our assets under management were managed in separate accounts and other pooled vehicles. Separate Accounts and Other We manage traditional separate accounts within most of our investment strategies.
As of December 31, 2023, Artisan Funds and Artisan Global Funds accounted for approximately 48% of our total AUM, and approximately 52% of our AUM were managed in separate accounts and other pooled vehicles. Separate Accounts and Other We manage traditional separate accounts within most of our investment strategies.
As of December 31, 2022, we owned approximately 85% of Artisan Partners Holdings, and the other 15% was owned by the limited partners of Artisan Partners Holdings. Our holding company structure is predominantly a result of our IPO, which we completed in March 2013.
As of December 31, 2023, we owned approximately 86% of Artisan Partners Holdings, and the other 14% was owned by the limited partners of Artisan Partners Holdings. Our holding company structure is predominantly a result of our IPO, which we completed in March 2013.
As of December 31, 2022, Artisan Global Funds represented approximately 3% of our assets under management. Regulatory Environment and Compliance Our business is subject to extensive regulation in the United States at the federal level and, to a lesser extent, the state level, as well as by self-regulatory organizations and regulators located outside the United States.
As of December 31, 2023, Artisan Global Funds represented approximately 4% of our AUM. Regulatory Environment and Compliance Our business is subject to extensive regulation in the United States at the federal level and, to a lesser extent, the state level, as well as by self-regulatory organizations and regulators located outside the United States.
Certain regulatory reforms in the U.S. that have impacted, or may in the future impact, our business include the following items: • The SEC has recently proposed and/or adopted a number of new rules impacting registered investment advisers (e.g. private fund advisor rules, ESG disclosure rules, cybersecurity risk management and disclosure rules, beneficial ownership rules, service provider oversight requirements, amendments to Form PF and amended advertising rule) and registered investment companies (e.g.
Certain regulatory reforms in the U.S. that have impacted, or may in the future impact, our business include the following items: • The SEC has recently proposed and/or adopted a number of new rules impacting registered investment advisers (e.g. private fund adviser rules, ESG disclosure rules, cybersecurity risk management and disclosure rules, beneficial ownership rules, service provider oversight requirements, rules on safeguarding client assets and predictive data analytics, and amendments to Form PF) and registered investment companies (e.g.
Our business is also subject to the rules and regulations of the countries in which we conduct distribution or investment management activities. We have relationships with clients located outside of the United States, which may be subject to laws and regulations of the jurisdictions in which the client is domiciled.
Our business is also subject to the rules and regulations of the countries in which we conduct distribution or investment management activities. We have relationships with clients located outside of the U.S., which are subject to the laws and regulations of the jurisdictions in which the client is domiciled.
The company was incorporated in Wisconsin on March 21, 2011 and converted to a Delaware corporation on October 29, 2012. 13 Table of Content s
The company was incorporated in Wisconsin on March 21, 2011 and converted to a Delaware corporation on October 29, 2012. 14 Table of Contents
IPO investments may be unavailable in the future. (2) The Overall Morningstar Rating TM applicable to the Artisan Fund managed to each investment strategy is derived from a weighted average of the performance figures associated with its three-year, five-year, and ten-year (if applicable) Morningstar Ratings metrics. Growth Team Our Growth team manages four investment strategies: Global Opportunities, Global Discovery, U.S.
(2) The Overall Morningstar Rating TM applicable to the Artisan Fund managed to each investment strategy is derived from a weighted average of the performance figures associated with its three-year, five-year, and ten-year (if applicable) Morningstar Ratings metrics. 2 Table of Contents Growth Team Our Growth team manages four investment strategies: Global Opportunities, Global Discovery, U.S. Mid-Cap Growth and U.S.
For additional information concerning the competitive risks that we face, see “Risks Factors—Risks Related to Our Industry—The investment management industry is intensely competitive.” 10 Table of Content s Human Capital Resources Since Artisan Partners was founded in 1994, our success as an investment management firm has been predicated on having talented associates throughout the organization in every role, at every level.
For additional information concerning the competitive risks that we face, see “Risk Factors—Competition and Distribution Risks—The investment management industry is intensely competitive.” 11 Table of Contents Human Capital Resources Since Artisan Partners was founded in 1994, our success as an investment management firm has been predicated on having talented associates throughout the organization in every role, at every level.
In addition, 47% of our assets under management were invested in securities denominated in currencies other than the U.S. dollar as of December 31, 2022. Our investments in these non-U.S. securities may subject us to certain laws and regulations of the jurisdictions in which the issuer resides or is traded.
In addition, 46% of our AUM were invested in securities denominated in currencies other than the U.S. dollar as of December 31, 2023. Our investments in these non-U.S. securities subject us to certain laws and regulations of the jurisdictions in which the issuer resides or is traded.
In order to be successful and grow our business, we must be able to compete effectively for assets under management.
In order to be successful and grow our business, we must be able to compete effectively for AUM.
The following table sets forth total assets under management and certain performance information for our investment teams and strategies as of December 31, 2022. 1 Table of Content s Investment Team and Strategy AUM as of December 31, 2022 Composite Inception Date Value-Added Since Inception Date (1) as of December 31, 2022 Fund Rating (2) as of December 31, 2022 (in millions) Growth Team Global Opportunities 18,676 February 1, 2007 473 «««« Global Discovery 1,392 September 1, 2017 491 ««««« U.S.
The following table sets forth total assets under management and certain performance information for our investment teams and strategies as of December 31, 2023. 1 Table of Contents Investment Team and Strategy AUM as of December 31, 2023 Composite Inception Date Value-Added Since Inception Date (1) as of December 31, 2023 Fund Rating (2) as of December 31, 2023 (in millions) Growth Team Global Opportunities 21,232 February 1, 2007 460 ««« Global Discovery 1,490 September 1, 2017 422 «««« U.S.
As of December 31, 2022 Investment Strategy (Composite Inception Date) 1 Year 3 Years 5 Years 10 Years Inception Global Unconstrained (April 4, 2022) 1 Average Annual Gross Returns — % — % — % — % 8.40 % ICE BofA 3-month Treasury Bill Index — % — % — % — % 1.42 % Emerging Markets Debt Opportunities (May 1, 2022) 1 Average Annual Gross Returns — % — % — % — % 8.28 % J.P.
As of December 31, 2023 Investment Strategy (Composite Inception Date) 1 Year 3 Years 5 Years 10 Years Inception Global Unconstrained (April 4, 2022) Average Annual Gross Returns 8.94 % — % — % — % 9.97 % ICE BofA 3-month Treasury Bill Index 5.01 % — % — % — % 3.67 % Emerging Markets Debt Opportunities (May 1, 2022) Average Annual Gross Returns 14.52 % — % — % — % 13.78 % J.P.
These rules impact us and the mutual funds we manage to varying degrees. • In recent years there has been an increased focus on the protection of customer privacy and data, and the need to secure sensitive information.
These rules impact us and the funds we manage to varying degrees. • There continues to be an increased focus on the protection of customer and personal privacy and data, and the need to secure sensitive information.
In our reporting materials, unless otherwise stated, our “separate accounts and other” AUM includes assets we manage in traditional separate accounts, Artisan-branded CITs and Artisan Private Funds, as well as assets under advisement representing less than 1% of our assets under management, related to clients for whom we provide investment models but do not have discretionary investment authority.
In our reporting materials, unless otherwise stated, our ‘separate accounts and other’ AUM includes assets we manage in traditional separate accounts, Artisan-branded CITs and Artisan Private Funds. In addition, assets under advisement related to clients for whom we provide investment models but do not have discretionary investment authority are also included within the ‘separate accounts and other’ category.
David Samra manages two investment strategies: International Value and International Explorer (formerly known as International Small Cap Value). N. David Samra serves as lead portfolio manager of the International Value strategy and managing director of the International Explorer strategy. Ian P. McGonigle serves as co-portfolio manager of the International Value strategy.
David Samra, manages two investment strategies: International Value and International Explorer. Mr. Samra serves as lead portfolio manager of the International Value strategy and managing director of the International Explorer strategy. Ian P. McGonigle serves as co-portfolio manager of the International Value strategy and Benjamin L. Herrick serves as associate portfolio manager.
As of December 31, 2022, we employed 549 associates. Approximately 29% of our associates work within our investment teams, 25% within our distribution teams and 46% within our business management and operations teams. Approximately 94% of our associates operate from our U.S. offices and 6% operate from our offices outside of the U.S.
As of December 31, 2023, we employed 573 associates. Approximately 31% of our associates work within our investment teams, 25% within our distribution teams and 45% within our business management and operations teams. Approximately 93% of our associates operate from our U.S. offices and 7% operate from our offices outside of the U.S.
Morgan GBI-EM Global Diversified — % — % — % — % 3.03 % 1 Periods less than one year are not annualized. Distribution, Investment Products and Client Relationships The goal of our marketing, distribution and client service efforts is to grow and maintain a client base that is diversified by investment strategy, client type, distribution channel and geographic region.
Morgan GBI-EM Global Diversified 12.70 % — % — % — % 11.12 % Distribution, Investment Products and Client Relationships The goal of our marketing, distribution and client service efforts is to grow and maintain a client base that is diversified by investment strategy, client type, distribution channel and geographic region.
Artisan Funds and Artisan Global Funds U.S. investors that do not meet our minimum account size for a separate account, or who otherwise prefer to invest through a mutual fund, can invest in our strategies through Artisan Funds.
As of December 31, 2023, these assets under advisement represented less than 1% of our AUM. Artisan Funds and Artisan Global Funds U.S. investors that do not meet our minimum account size for a separate account, or who otherwise prefer to invest through a mutual fund, can invest in our strategies through Artisan Funds.
As of December 31, 2022 Investment Strategy (Composite Inception Date) 1 Year 3 Years 5 Years 10 Years Inception High Income (April 1, 2014) Average Annual Gross Returns (9.15) % 2.62 % 4.31 % — % 5.83 % ICE BofA U.S.
As of December 31, 2023 Investment Strategy (Composite Inception Date) 1 Year 3 Years 5 Years 10 Years Inception High Income (April 1, 2014) Average Annual Gross Returns 16.95 % 4.42 % 7.78 % — % 6.92 % ICE BofA U.S.
As of December 31, 2022 Investment Strategy (Composite Inception Date) 1 Year 3 Years 5 Years 10 Years Inception Sustainable Emerging Markets (July 1, 2006) Average Annual Gross Returns (27.21) % (3.69) % (1.33) % 2.67 % 4.33 % MSCI Emerging Markets Index (20.09) % (2.69) % (1.40) % 1.44 % 3.94 % 5 Table of Content s Credit Team Our Credit team manages three investment strategies: High Income, Credit Opportunities and Floating Rate.
As of December 31, 2023 Investment Strategy (Composite Inception Date) 1 Year 3 Years 5 Years 10 Years Inception Sustainable Emerging Markets (July 1, 2006) Average Annual Gross Returns 18.30 % (4.95) % 5.22 % 4.69 % 5.08 % MSCI Emerging Markets Index 9.83 % (5.08) % 3.68 % 2.66 % 4.27 % 5 Table of Contents Credit Team Our Credit team manages three investment strategies: High Income, Credit Opportunities and Floating Rate.
Our institutional channel also includes assets under management sourced from defined contribution plans. We offer our investment products to institutional clients directly and by marketing our services to the investment consultants and advisors that advise them. As of December 31, 2022, approximately 37% of our assets under management were attributed to clients represented by investment consultants.
We offer our investment products to institutional clients directly and by marketing our services to the investment consultants and advisors that advise them. As of December 31, 2023, approximately 35% of our AUM were attributed to clients represented by investment consultants. As of December 31, 2023, 63% of our AUM were sourced through our institutional channel.
Morgan EMB Hard Currency/Local currency 50-50 — % — % — % — % (0.99) % Emerging Markets Local Opportunities (August 1, 2022) 1 Average Annual Gross Returns — % — % — % — % 3.72 % J.P.
Morgan EMB Hard Currency/Local Currency 50-50 11.43 % — % — % — % 6.08 % Emerging Markets Local Opportunities (August 1, 2022) Average Annual Gross Returns 16.16 % — % — % — % 14.05 % J.P.
As of December 31, 2022 Investment Strategy (Composite Inception Date) 1 Year 3 Years 5 Years 10 Years Inception International Value (July 1, 2002) Average Annual Gross Returns (6.12) % 6.76 % 5.45 % 8.74 % 11.13 % MSCI EAFE ® Index (14.45) % 0.87 % 1.54 % 4.67 % 5.45 % International Explorer (October 1, 2020) Average Annual Gross Returns (13.21) % — % — % — % 12.65 % MSCI All Country World Index Ex USA Small Cap (Net) (19.97) % — % — % — % 4.53 % Global Value Team Our Global Value team, led by Daniel J.
As of December 31, 2023 Investment Strategy (Composite Inception Date) 1 Year 3 Years 5 Years 10 Years Inception International Value (July 1, 2002) Average Annual Gross Returns 24.19 % 11.25 % 13.68 % 8.05 % 11.71 % MSCI EAFE ® Index 18.24 % 4.02 % 8.16 % 4.28 % 6.01 % International Explorer (October 1, 2020) Average Annual Gross Returns 22.42 % 8.63 % — % — % 15.65 % MSCI All Country World Index Ex USA Small Cap (Net) 15.66 % 1.49 % — % — % 7.92 % Global Value Team Our Global Value team, led by Daniel J.
As of December 31, 2022, we managed 226 traditional separate accounts spanning 133 client relationships with our largest separate account relationship representing approximately 10% of our assets under management.
As of December 31, 2023, we managed 212 traditional separate accounts spanning 128 client relationships with our largest separate account relationship representing approximately 11% of our AUM.
As of December 31, 2022 Investment Strategy (Composite Inception Date) 1 Year 3 Years 5 Years 10 Years Inception Global Value (July 1, 2007) Average Annual Gross Returns (12.69) % 3.22 % 3.95 % 8.80 % 7.61 % MSCI ACWI ® Index (18.36) % 4.00 % 5.22 % 7.97 % 4.79 % Select Equity (March 1, 2020) Average Annual Gross Returns (15.92) % — % — % — % 6.78 % S&P 500 Index (18.11) % — % — % — % 11.45 % Sustainable Emerging Markets Team Our Sustainable Emerging Markets team manages one investment strategy.
As of December 31, 2023 Investment Strategy (Composite Inception Date) 1 Year 3 Years 5 Years 10 Years Inception Global Value (July 1, 2007) Average Annual Gross Returns 28.05 % 9.34 % 12.04 % 8.33 % 8.75 % MSCI ACWI ® Index 22.20 % 5.75 % 11.71 % 7.92 % 5.77 % Select Equity (March 1, 2020) Average Annual Gross Returns 27.82 % 7.89 % — % — % 11.90 % S&P 500 Index 26.29 % 10.00 % — % — % 15.14 % Sustainable Emerging Markets Team Our Sustainable Emerging Markets team manages one investment strategy.
As of December 31, 2022 Investment Strategy (Composite Inception Date) 1 Year 3 Years 5 Years 10 Years Inception Antero Peak (May 1, 2017) Average Annual Gross Returns (24.90) % 7.13 % 12.96 % — % 16.58 % S&P 500 Index (18.11) % 7.65 % 9.42 % — % 10.74 % Antero Peak Hedge (November 1, 2017) Average Annual Gross Returns (22.96) % 4.24 % 9.92 % — % 10.27 % S&P 500 Index (18.11) % 7.65 % 9.42 % — % 9.98 % 6 Table of Content s EMsights Capital Group EMsights Capital Group manages three investment strategies: Emerging Markets Debt Opportunities, Global Unconstrained and Emerging Markets Local Opportunities.
As of December 31, 2023 Investment Strategy (Composite Inception Date) 1 Year 3 Years 5 Years 10 Years Inception Antero Peak (May 1, 2017) Average Annual Gross Returns 17.08 % 3.25 % 14.05 % — % 16.65 % S&P 500 Index 26.29 % 10.00 % 15.68 % — % 12.94 % Antero Peak Hedge (November 1, 2017) Average Annual Gross Returns 13.06 % 1.36 % 9.59 % — % 10.72 % S&P 500 Index 26.29 % 10.00 % 15.68 % — % 12.47 % 6 Table of Contents EMsights Capital Group EMsights Capital Group manages three investment strategies: Emerging Markets Debt Opportunities, Global Unconstrained and Emerging Markets Local Opportunities.
Tiffany Hsiao serves as portfolio manager and Yuanyuan Ji serves as associate portfolio manager of the China Post-Venture strategy. 3 Table of Content s As of December 31, 2022 Investment Strategy (Composite Inception Date) 1 Year 3 Years 5 Years 10 Years Inception Global Equity (April 1, 2010) Average Annual Gross Returns (19.79) % 3.60 % 7.69 % 10.41 % 10.97 % MSCI ACWI ® Index (18.36) % 4.00 % 5.22 % 7.97 % 7.55 % Non-U.S.
Tiffany Hsiao serves as portfolio manager and Yuan Yuan Ji serves as associate portfolio manager of the China Post-Venture strategy. 3 Table of Contents As of December 31, 2023 Investment Strategy (Composite Inception Date) 1 Year 3 Years 5 Years 10 Years Inception Global Equity (April 1, 2010) Average Annual Gross Returns 13.58 % (0.98) % 10.90 % 8.84 % 11.16 % MSCI ACWI ® Index 22.20 % 5.75 % 11.71 % 7.92 % 8.56 % Non-U.S.
Our distribution efforts are centrally managed by our Head of Global Distribution, who oversees and coordinates the efforts of our marketing and client service professionals. Institutional Channel Our institutional distribution channel includes institutional clients, such as U.S.-registered mutual funds, non-U.S. funds and collective investment trusts we sub-advise; state and local governments; employee benefit plans including Taft-Hartley plans; foundations; and endowments.
Institutional Channel Our institutional distribution channel includes institutional clients, such as U.S.-registered mutual funds, non-U.S. funds and collective investment trusts we advise; state and local governments; employee benefit plans including Taft-Hartley plans; foundations; and endowments. Our institutional channel also includes AUM sourced from defined contribution plans.
As of December 31, 2022 Investment Strategy (Composite Inception Date) 1 Year 3 Years 5 Years 10 Years Inception Developing World (July 1, 2015) Average Annual Gross Returns (40.56) % (0.15) % 4.06 % — % 7.04 % MSCI Emerging Markets Index (20.09) % (2.69) % (1.40) % — % 2.18 % Antero Peak Group Antero Peak Group manages two investment strategies: Antero Peak and Antero Peak Hedge.
As of December 31, 2023 Investment Strategy (Composite Inception Date) 1 Year 3 Years 5 Years 10 Years Inception Developing World (July 1, 2015) Average Annual Gross Returns 30.96 % (10.76) % 13.32 % — % 9.60 % MSCI Emerging Markets Index 9.83 % (5.08) % 3.68 % — % 3.05 % Antero Peak Group Antero Peak Group manages two investment strategies: Antero Peak and Antero Peak Hedge.
Value Team Value Equity 3,252 July 1, 2005 111 «« U.S.
Value Team Value Equity 4,227 July 1, 2005 176 «««« U.S.
Small-Cap Growth (April 1, 1995) Average Annual Gross Returns (28.67) % 2.35 % 9.51 % 12.29 % 10.37 % Russell 2000 ® Index (20.44) % 3.10 % 4.12 % 9.01 % 8.56 % Russell 2000 ® Growth Index (26.36) % 0.65 % 3.50 % 9.20 % 7.16 % Global Equity Team Our Global Equity team currently manages four investment strategies: Global Equity, Non-U.S.
Small-Cap Growth (April 1, 1995) Average Annual Gross Returns 11.38 % (9.84) % 11.12 % 9.40 % 10.40 % Russell 2000 ® Index 16.93 % 2.22 % 9.97 % 7.15 % 8.84 % Russell 2000 ® Growth Index 18.66 % (3.50) % 9.22 % 7.16 % 7.54 % Global Equity Team Our Global Equity team currently manages four investment strategies: Global Equity, Non-U.S.
Artisan Partners Europe is authorized and regulated by the Central Bank of Ireland, which regulates our Irish business activities, including our management of Artisan Global Funds, a family of Ireland-domiciled UCITS funds.
The FCA’s rules under this system govern, among other things, capital resources requirements, senior management arrangements, business conduct, interaction with clients, and systems and controls. 9 Table of Contents Artisan Partners Europe is authorized and regulated by the Central Bank of Ireland, which regulates our Irish business activities, including our management of Artisan Global Funds, a family of Ireland-domiciled UCITS funds.
As of December 31, 2022 Investment Strategy (Composite Inception Date) 1 Year 3 Years 5 Years 10 Years Inception Value Equity (July 1, 2005) Average Annual Gross Returns (8.21) % 8.18 % 7.49 % 10.41 % 8.56 % Russell 1000 ® Index (19.13) % 7.34 % 9.13 % 12.37 % 9.07 % Russell 1000 ® Value Index (7.54) % 5.95 % 6.66 % 10.29 % 7.45 % U.S.
As of December 31, 2023 Investment Strategy (Composite Inception Date) 1 Year 3 Years 5 Years 10 Years Inception Value Equity (July 1, 2005) Average Annual Gross Returns 25.54 % 12.77 % 15.86 % 10.30 % 9.42 % Russell 1000 ® Index 26.53 % 8.97 % 15.51 % 11.80 % 9.95 % Russell 1000 ® Value Index 11.46 % 8.86 % 10.90 % 8.39 % 7.66 % U.S.
Artisan Partners Limited Partnership is a fiduciary under the Employee Retirement Income Security Act of 1974, as amended, (“ERISA”) with respect to assets that we manage for certain benefit plan clients. ERISA imposes duties on persons who are ERISA fiduciaries, and prohibits certain transactions between related parties to a retirement plan. The U.S.
As the commodity pool operator of these investment vehicles, Artisan Partners claims relief under the Commodity Exchange Act from certain reporting and recordkeeping requirements. Artisan Partners Limited Partnership is a fiduciary under the Employee Retirement Income Security Act of 1974, as amended, (“ERISA”) with respect to assets that we manage for certain benefit plan clients.
As of December 31, 2022 Investment Strategy (Composite Inception Date) 1 Year 3 Years 5 Years 10 Years Inception Global Opportunities (February 1, 2007) Average Annual Gross Returns (29.53) % 4.71 % 7.69 % 11.22 % 9.95 % MSCI ACWI ® Index (18.36) % 4.00 % 5.22 % 7.97 % 5.22 % Global Discovery (September 1, 2017) Average Annual Gross Returns (30.08) % 5.65 % 10.78 % — % 11.28 % MSCI ACWI ® Index (18.36) % 4.00 % 5.22 % — % 6.37 % U.S.
As of December 31, 2023 Investment Strategy (Composite Inception Date) 1 Year 3 Years 5 Years 10 Years Inception Global Opportunities (February 1, 2007) Average Annual Gross Returns 24.40 % 0.32 % 14.37 % 11.06 % 10.75 % MSCI ACWI ® Index 22.20 % 5.75 % 11.71 % 7.92 % 6.15 % Global Discovery (September 1, 2017) Average Annual Gross Returns 22.24 % (0.86) % 15.77 % — % 12.94 % MSCI ACWI ® Index 22.20 % 5.75 % 11.71 % — % 8.72 % U.S.
Small-Mid Growth (January 1, 2019) Average Annual Gross Returns (23.02) % 3.10 % — % — % 10.96 % MSCI All Country World Index Ex USA Small Mid Cap (Net) (19.49) % (0.22) % — % — % 5.00 % China Post-Venture (April 1, 2021) Average Annual Gross Returns (27.30) % — % — % — % (21.02) % MSCI China SMID Cap Index (22.17) % — % — % — % (20.70) % U.S.
Small-Mid Growth (January 1, 2019) Average Annual Gross Returns 12.42 % (3.09) % 11.25 % — % 11.25 % MSCI All Country World Index Ex USA Small Mid Cap (Net) 15.79 % 0.89 % 7.07 % — % 7.07 % China Post-Venture (April 1, 2021) Average Annual Gross Returns (4.99) % — % — % — % (15.54) % MSCI China SMID Cap Index (16.48) % — % — % — % (19.20) % U.S.
Mid-Cap Value 2,826 April 1, 1999 255 «« Value Income 10 March 1, 2022 324 Not yet rated International Value Team International Value 30,152 July 1, 2002 568 ««««« International Explorer 58 October 1, 2020 812 Not yet rated Global Value Team Global Value 21,432 July 1, 2007 282 ««« Select Equity 335 March 1, 2020 (467) Not yet rated Sustainable Emerging Markets Team Sustainable Emerging Markets 873 July 1, 2006 39 ««« Credit Team High Income 6,957 April 1, 2014 251 ««««« Credit Opportunities 136 July 1, 2017 951 Not Applicable Floating Rate 47 January 1, 2022 26 Not yet rated Developing World Team Developing World 3,466 July 1, 2015 486 «««« Antero Peak Group Antero Peak 2,948 May 1, 2017 584 «««« Antero Peak Hedge 728 November 1, 2017 29 Not Applicable EMsights Capital Group Global Unconstrained 16 April 1, 2022 698 Not yet rated Emerging Markets Debt Opportunities 45 May 1, 2022 927 Not yet rated Emerging Markets Local Opportunities 11 August 1, 2022 69 Not yet rated Total AUM as of December 31, 2022 127,892 2 Table of Content s (1) Value-added is the amount, in basis points, by which the average annual gross composite return of each of our strategies has outperformed or underperformed its respective benchmark.
Mid-Cap Value 2,818 April 1, 1999 270 «« Value Income 12 March 1, 2022 (468) Not yet rated International Value Team International Value 40,762 July 1, 2002 570 ««««« International Explorer 247 October 1, 2020 773 Not yet rated Global Value Team Global Value 25,349 July 1, 2007 298 ««« Select Equity 321 March 1, 2020 (324) «« Sustainable Emerging Markets Team Sustainable Emerging Markets 917 July 1, 2006 81 ««« Credit Team High Income 9,407 April 1, 2014 261 ««««« Credit Opportunities 215 July 1, 2017 1,132 Not Applicable Floating Rate 61 January 1, 2022 102 Not yet rated Developing World Team Developing World 3,453 July 1, 2015 655 ««« Antero Peak Group Antero Peak 1,897 May 1, 2017 371 «« Antero Peak Hedge 204 November 1, 2017 (175) Not Applicable EMsights Capital Group Global Unconstrained 313 April 1, 2022 630 Not yet rated Emerging Markets Debt Opportunities 92 May 1, 2022 770 Not yet rated Emerging Markets Local Opportunities 450 August 1, 2022 293 Not applicable Total AUM as of December 31, 2023 150,167 (1) Value-added is the amount, in basis points, by which the average annual gross composite return of each of our strategies has outperformed or underperformed its respective benchmark.
New legal or regulatory requirements often add further complexity to our business and operations, and addressing such new requirements may require substantial expenditures of time and capital.
The legislative and regulatory environment in the U.S. is subject to continual change. Political and electoral changes and developments have in the past introduced, and may in the future introduce, additional uncertainty. New legal or regulatory requirements often add further complexity to our business and operations, and addressing such new requirements may require substantial expenditures of time and capital.
See “Performance and Assets Under Management Information Used in this Report” for information regarding the benchmarks used. Value-added for periods less than one year is not annualized. The High Income strategy holds loans and other security types that are not included in its benchmark, which, at times, causes material differences in relative performance.
See “Investment Performance and Assets Under Management (AUM) Information Used in this Report” for information regarding the benchmarks used. Value-added for periods less than one year is not annualized.
Mid-Cap Growth 10,624 April 1, 1997 494 ««« U.S. Small-Cap Growth 3,285 April 1, 1995 321 ««« Global Equity Team Global Equity 413 April 1, 2010 342 ««« Non-U.S. Growth 13,285 January 1, 1996 462 ««« Non-U.S. Small-Mid Growth 6,752 January 1, 2019 596 «««« China Post-Venture 173 April 1, 2021 (32) Not Applicable U.S.
Mid-Cap Growth 12,646 April 1, 1997 476 ««« U.S. Small-Cap Growth 3,178 April 1, 1995 286 «« Global Equity Team Global Equity 347 April 1, 2010 260 ««« Non-U.S. Growth 13,218 January 1, 1996 438 ««« Non-U.S. Small-Mid Growth 7,151 January 1, 2019 418 ««« China Post-Venture 160 April 1, 2021 366 Not Applicable U.S.
Access Through a Range of Investment Vehicles Our clients access our investment strategies through a range of investment vehicles, including separate accounts and pooled vehicles.
As of December 31, 2023, approximately 4% of our AUM were sourced from investors we categorize as retail investors. 7 Table of Contents Access Through a Range of Investment Vehicles Our clients access our investment strategies through a range of investment vehicles, including separate accounts and pooled vehicles.
Mid-Cap Value (April 1, 1999) Average Annual Gross Returns (12.11) % 6.27 % 5.55 % 9.03 % 11.79 % Russell Midcap ® Index (17.32) % 5.87 % 7.10 % 10.95 % 9.09 % Russell Midcap ® Value Index (12.03) % 5.82 % 5.72 % 10.10 % 9.24 % Value Income (March 1, 2022) 1 Average Annual Gross Returns — % — % — % — % (7.74) % S&P 500 Market Index — % — % — % — % (10.98) % 1 Periods less than one year are not annualized. 4 Table of Content s International Value Team Our International Value team, led by N.
Mid-Cap Value (April 1, 1999) Average Annual Gross Returns 19.35 % 10.25 % 12.31 % 7.51 % 12.08 % Russell Midcap ® Index 17.23 % 5.92 % 12.67 % 9.42 % 9.41 % Russell Midcap ® Value Index 12.71 % 8.36 % 11.15 % 8.26 % 9.38 % Value Income (March 1, 2022) Average Annual Gross Returns 12.20 % — % — % — % 1.90 % S&P 500 Market Index 26.29 % — % — % — % 6.58 % 4 Table of Contents International Value Team Our International Value team, led by N.
We do not generally use direct marketing campaigns as we believe that their cost outweighs their potential benefits. 7 Table of Content s As of December 31, 2022, approximately 4% of our assets under management were sourced from investors we categorize as retail investors.
We do not generally use direct marketing campaigns as we believe that their cost outweighs their potential benefits.
High Yield Master II Total Return Index 1.21 % 0.82 % 1.42 % — % 1.41 % Floating Rate (January 1, 2022) Average Annual Gross Returns (0.80) % — % — % — % (0.80) % Credit Suisse Leveraged Loan Total Return Index (1.06) % — % — % — % (1.06) % Developing World Team Our Developing World team manages one investment strategy.
Dollar 3-Month Deposit Offered Rate Constant Maturity Index 5.12 % 2.15 % 2.02 % — % 1.97 % Floating Rate (January 1, 2022) Average Annual Gross Returns 14.94 % — % — % — % 6.78 % Credit Suisse Leveraged Loan Total Return Index 13.04 % — % — % — % 5.76 % Developing World Team Our Developing World team manages one investment strategy.
Growth (January 1, 1996) Average Annual Gross Returns (18.44) % (0.84) % 2.83 % 5.66 % 9.07 % MSCI EAFE ® Index (14.45) % 0.87 % 1.54 % 4.67 % 4.45 % Non-U.S.
Growth (January 1, 1996) Average Annual Gross Returns 15.53 % 1.22 % 8.04 % 4.62 % 9.29 % MSCI EAFE ® Index 18.24 % 4.02 % 8.16 % 4.28 % 4.91 % Non-U.S.
Mid-Cap Growth (April 1, 1997) Average Annual Gross Returns (36.04) % 4.51 % 9.18 % 11.30 % 13.90 % Russell Midcap ® Index (17.32) % 5.87 % 7.10 % 10.95 % 9.86 % Russell Midcap ® Growth Index (26.72) % 3.85 % 7.64 % 11.40 % 8.96 % U.S.
Mid-Cap Growth (April 1, 1997) Average Annual Gross Returns 25.45 % (3.59) % 14.88 % 10.17 % 14.31 % Russell Midcap ® Index 17.23 % 5.92 % 12.67 % 9.42 % 10.13 % Russell Midcap ® Growth Index 25.87 % 1.31 % 13.81 % 10.56 % 9.55 % U.S.
High Yield Master II Total Return Index (11.22) % (0.23) % 2.12 % — % 3.32 % Credit Opportunities (July 1, 2017) Average Annual Gross Returns (3.64) % 12.17 % 10.48 % — % 10.92 % ICE BofA U.S.
High Yield Index 13.46 % 2.00 % 5.21 % — % 4.31 % Credit Opportunities (July 1, 2017) Average Annual Gross Returns 27.22 % 13.24 % 15.52 % — % 13.29 % ICE BofA U.S.
Department of Labor administers ERISA and regulates plan fiduciaries, including investment advisers who service retirement plan clients. The legislative and regulatory environment in the U.S. is subject to continual change. Political and electoral changes and developments have in the past introduced, and may in the future introduce, additional uncertainty.
ERISA imposes duties on persons who are ERISA fiduciaries, and prohibits certain transactions between related parties to a retirement plan. The U.S. Department of Labor administers ERISA and regulates plan fiduciaries, including investment advisers who service retirement plan clients.
Removed
The Credit Opportunities strategy is benchmark agnostic and has been compared to the 3-month LIBOR for reference purposes only. The Antero Peak and Antero Peak Hedge strategies' investments in initial public offerings (IPOs) made a material contribution to performance. IPO investments may contribute significantly to a small portfolio’s return, an effect that will generally decrease as assets grow.
Added
During the fourth quarter of 2023, the Credit team closed on $130 million in commitments for its first closed-end fund designed to capture opportunities in dislocated credit markets.
Removed
As of December 31, 2022, 65% of our assets under management were sourced through our institutional channel.
Added
These shifts include: ◦ distribution partners becoming more selective and maintaining fewer relationships with investment managers ◦ intermediaries capturing a greater share of inflows via proprietary investment solutions ◦ client demand for new investment vehicles that may be lower fee or more tax efficient 10 Table of Contents In response to these and other headwinds, we have continued to build out our alternatives capabilities and increased degrees of investment freedom within our existing investment strategies.
Removed
As the commodity pool operator of these Funds, Artisan Partners claims relief under the Commodity Exchange Act from certain reporting and recordkeeping requirements.
Added
We also regularly evaluate potential new investment teams and talent to enhance and expand our investment platform. In addition, we have evolved our distribution structure, incorporating additional associates, re-aligning incentives and providing a robust set of resources, as well as making continued investments to deepen our digital distribution capabilities. The industry in which we operate is highly competitive.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

120 edited+22 added−10 removed172 unchanged
Biggest changeThere is no limit on the number of shares of our Class A common stock that our Class A limited partners or AIC are permitted to sell. As of February 23, 2023, our Class A limited partners owned approximately 4.4 million Class A common units and AIC owned approximately 3.5 million Class D common units.
Biggest changeAs of February 19, 2024, our Class A limited partners owned approximately 4.4 million Class A common units and AIC owned approximately 3.5 million Class D common units. Our board of directors has modified the limitations on the number of shares of our Class A common stock that our employee-partners are permitted to sell.
Any significant limitation, failure or security breach of the information security infrastructure, software applications, or other systems that are critical to our operations could disrupt our business, damage our reputation, and result in regulatory penalties or other additional costs to us.
Any significant limitation, failure or breach of the information security infrastructure, software applications, or other systems that are critical to our operations could disrupt our business, damage our reputation, and result in regulatory penalties or other additional costs to us.
Over our firm’s history we have sought to successfully design and implement compensation structures that align our investment professionals’ economic interests with those of our clients, investors and stockholders. We believe such alignment is important to our long-term growth and that objective, predictable, and transparent compensation structures work best to incentivize investment professionals to perform over the long-term.
Over our firm’s history we have sought to successfully design and implement compensation structures that align our investment professionals’ economic interests with those of our clients and stockholders. We believe such alignment is important to our long-term growth and that objective, predictable, and transparent compensation structures work best to incentivize investment professionals to perform over the long-term.
Although our investment management fees vary by client and investment strategy, we historically have been successful in maintaining an attractive overall rate of fee and profit margin due to the strength of our investment performance and our focus on high value-added investment strategies.
Although our investment management fees vary by client, investment strategy and investment vehicle, we historically have been successful in maintaining an attractive overall rate of fee and profit margin due to the strength of our investment performance and our focus on high value-added investment strategies.
We have obtained liability insurance insuring our directors, officers and members of our stockholders committee against liability for acts or omissions in their capacities as such, subject to certain exclusions.
We have obtained liability insurance insuring our directors, officers, members of our stockholders committee and our associates against liability for acts or omissions in their capacities as such, subject to certain exclusions.
Those provisions include: 26 Table of Content s • The right of the certain classes of our capital stock to vote, as separate classes, on certain amendments to our restated certificate of incorporation and certain fundamental transactions. • The ability of our board of directors to determine to issue shares of preferred stock. • Advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting. • A limitation that, generally, stockholder action may only be taken at an annual or special meeting or by unanimous written consent. • A requirement that a special meeting of stockholders may be called only by our board of directors, the Chair of the board or the Chief Executive Officer. • The ability of our board of directors to adopt, amend and repeal our amended and restated bylaws by majority vote, while such action by stockholders would require a super majority vote. • Except with respect to awards held by our named executive officers which are double trigger, single trigger vesting upon a change in control for unvested employee equity awards.
Those provisions include: • The right of the certain classes of our capital stock to vote, as separate classes, on certain amendments to our restated certificate of incorporation and certain fundamental transactions. • The ability of our board of directors to determine to issue shares of preferred stock. • Advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting. • A limitation that, generally, stockholder action may only be taken at an annual or special meeting or by unanimous written consent. • A requirement that a special meeting of stockholders may be called only by our board of directors, the Chair of the board or the Chief Executive Officer. • The ability of our board of directors to adopt, amend and repeal our amended and restated bylaws by majority vote, while such action by stockholders would require a super majority vote. • Except with respect to awards held by our named executive officers which are double trigger, single trigger vesting upon a change in control for unvested employee equity awards.
Substantial legal liability or significant regulatory action against us could materially adversely affect our business, financial condition or results of operations or cause significant reputational harm to us. A change of control could result in termination of our investment advisory agreements with SEC-registered mutual funds and could trigger consent requirements in our other investment advisory agreements.
Substantial legal liability or significant regulatory action against us could materially adversely affect our business, financial condition or results of operations or cause significant reputational harm to us. A change of control could result in termination of our investment advisory agreements with mutual funds and could trigger consent requirements in our other investment advisory agreements.
Many of the key service providers and vendors upon which we rely operate in a remote or hybrid environment, which subjects both us and third-party service providers and key vendors to risk of operational issues and interruptions as well as to a heightened risk of cyberattacks or other privacy or data security incidents.
Some of the key service providers and vendors upon which we rely operate in a remote or hybrid environment, which subjects both us and third-party service providers and key vendors to risk of operational issues and interruptions as well as to a heightened risk of cyberattacks or other privacy or data security incidents.
A number of factors, including the following, serve to increase our competitive risks: 22 Table of Content s • Unlike some of our competitors, we do not currently engage in impact investing, offer passive investment strategies or “solutions” products like target-date funds. • A number of our competitors have greater financial, technical, marketing and other resources, more comprehensive name recognition and more personnel than we do. • Potential competitors have a relatively low cost of entering the investment management industry. • Some investors may prefer to invest with an investment manager that is not publicly traded based on the perception that a publicly-traded asset manager may focus on the manager’s own growth to the detriment of investment performance. • Other industry participants may seek to recruit our investment professionals. • Many competitors charge lower fees for their investment management services than we do.
A number of factors, including the following, serve to increase our competitive risks: • Unlike some of our competitors, we do not currently engage in impact investing, offer passive investment strategies, exchange-traded funds or “solutions” products like target-date funds. • A number of our competitors have greater financial, technical, marketing and other resources, more comprehensive name recognition and more personnel than we do. • Potential competitors have a relatively low cost of entering the investment management industry. • Some investors may prefer to invest with an investment manager that is not publicly traded based on the perception that a publicly-traded asset manager may focus on the manager’s own growth to the detriment of investment performance. • Other industry participants may seek to recruit our investment professionals. • Many competitors charge lower fees for their investment management services than we do.
Similarly, we may establish new investment teams or strategies or expand operations into other geographic areas if we believe such actions are in the best interest of our clients, even though our profitability may be adversely affected in the short term.
Similarly, we may establish new investment teams or strategies or expand operations into other geographic areas if we believe such actions are in the best interests of our clients, even though our profitability may be adversely affected in the short term.
Changes in tax laws or exposure to additional tax liabilities could have a material impact on our financial condition, results of operations and liquidity. We are subject to income taxes, as well as non-income based taxes, in both the U.S. and various foreign jurisdictions at the 21 Table of Content s federal, state and local levels of government.
Changes in tax laws or exposure to additional tax liabilities could have a material impact on our financial condition, results of operations and liquidity. We are subject to income taxes, as well as non-income based taxes, in both the U.S. and various foreign jurisdictions at the federal, state and local levels of government.
See “Qualitative and Quantitative Disclosures Regarding Market Risk-Exchange Rate Risk” in Item 7A of this report for more information about exchange rate risk. Investments in non-U.S. issuers may also be affected by tax positions taken in countries or regions in which we are invested as well as political, social and economic uncertainty.
See “Qualitative and Quantitative Disclosures Regarding Market Risk-Exchange Rate Risk” in Item 7A of this report for more information about exchange rate risk. Investments in non-U.S. issuers are affected by tax positions taken in countries or regions in which we are invested as well as political, social and economic uncertainty.
As of December 31, 2022, we recorded a $399 million liability, representing amounts payable under the TRAs equal to 85% of the tax benefit we expected to realize from the H&F Corp merger described above, our purchase of partnership units from limited partners of Holdings and the exchange of partnership units from March 2013 through December 31, 2022, assuming no material changes in the related tax law and that APAM earns sufficient taxable income to realize all tax benefits subject to the TRAs.
As of December 31, 2023, we recorded a $364 million liability, representing amounts payable under the TRAs equal to 85% of the tax benefit we expected to realize from the H&F Corp merger described above, our purchase of partnership units from limited partners of Holdings and the exchange of partnership units from March 2013 through December 31, 2023, assuming no material changes in the related tax law and that APAM earns sufficient taxable income to realize all tax benefits subject to the TRAs.
In addition, from time to time, plan sponsors of 401(k) and other defined contribution assets that we manage choose to invest plan assets in vehicles with lower cost structures than mutual funds (such as a collective investment trust) or may choose to access our services through a separate account.
In addition, from time to time, plan sponsors of 401(k) and other defined contribution assets that we 17 Table of Contents manage choose to invest plan assets in vehicles with lower cost structures than mutual funds (such as a collective investment trust) or may choose to access our services through a separate account.
Under such scenario we would be required to pay the other parties to the TRAs 85% of such amount, or approximately $502 million, over generally a minimum of 15 years.
Under such scenario we would be required to pay the other parties to the TRAs 85% of such amount, or approximately $507 million, over generally a minimum of 15 years.
We have also entered into indemnification agreements with our directors and executive officers and each member of our stockholders committee, pursuant to which we will indemnify them to the fullest extent permitted by Delaware law in connection with their service in such capacities.
We have 28 Table of Contents also entered into indemnification agreements with our directors and executive officers and each member of our stockholders committee, pursuant to which we will indemnify them to the fullest extent permitted by Delaware law in connection with their service in such capacities.
We may be prohibited from selling these investments for a period of time and generally will be unable to sell these securities publicly unless their sale is registered under applicable securities law or unless an exemption from such registration is available.
We may be prohibited from selling these investments for a period of time and generally will be unable to sell these securities publicly unless their sale is registered under applicable securities law or unless an 19 Table of Contents exemption from such registration is available.
As a result, in certain circumstances, payments could be made under the TRAs in excess of the benefits that we actually realize in respect of the attributes to which the TRAs relate. In certain cases, payments under the TRAs may be accelerated and/or significantly exceed the actual benefits we realize in respect of the tax attributes subject to the TRAs.
As a result, in certain circumstances, payments could be made under the TRAs in excess of the benefits that we actually realize in respect of the attributes to which the TRAs relate. 26 Table of Contents In certain cases, payments under the TRAs may be accelerated and/or significantly exceed the actual benefits we realize in respect of the tax attributes subject to the TRAs.
Investors in many of the pooled vehicles we advise can redeem their investments in those funds at any time without prior notice or with fairly limited notice, which would reduce our assets under management and could adversely affect our earnings.
Investors in many of the funds we advise can redeem their investments at any time without prior notice or with fairly limited notice, which would reduce our assets under management and could adversely affect our earnings.
In addition, if our average assets under management for a fiscal quarter falls below $45 billion, Holdings will generally be required to offer to pre-pay the unsecured notes. Failure to comply with any of these restrictions could result in an event of default, giving our lenders the ability to accelerate repayment of our obligations.
In addition, if our average AUM for a fiscal quarter falls below $45 billion, Holdings will generally be required to offer to pre-pay the unsecured notes. Failure to comply with any of these restrictions could result in an event of default, giving our lenders the ability to accelerate repayment of our obligations.
Many financial markets are not as developed, or as efficient, as the U.S. financial markets and, as a result, those markets may have limited liquidity and higher price volatility, and may lack established regulations. Liquidity may also be adversely affected by political or economic events, government policies, and social or civil unrest within a particular country.
Many financial markets are not as developed, or as efficient, as the U.S. financial markets and, as a result, those markets typically have limited liquidity and higher price volatility, and in some cases lack established regulations. Liquidity may also be adversely affected by political or economic events, government policies, and social or civil unrest within a particular country.
Some investment consultants, for example, have implemented programs in which the consultant provides a range of services, including selection, in a fiduciary capacity, of asset managers to serve as sub-adviser at lower fee rates than the manager’s otherwise applicable rates, with the expectation of a larger amount of assets under management through that consultant.
Some investment consultants, for example, have implemented programs in which the consultant provides a range of services, including selection, in a fiduciary capacity, of asset managers to serve as sub-adviser at lower fee rates than the manager’s otherwise applicable rates, with the expectation of a larger amount of AUM through that consultant.
These investors may redeem for any number of reasons, including general financial market conditions, the absolute or relative investment performance we have achieved, or their own financial condition and requirements. In a declining stock market, the pace of redemptions could accelerate. These redemptions would reduce our assets under management and adversely affect our revenues.
These investors may redeem for any number of reasons, including general financial market conditions, the absolute or relative investment performance we have achieved, or their own financial condition and requirements. In a declining stock market, the pace of redemptions could accelerate. These redemptions would reduce our AUM and adversely affect our revenues.
We and our service providers are also subject to the risk that employees or contractors, or other third parties, may deliberately seek to circumvent established controls to commit fraud or act in ways that are inconsistent with our or their controls, policies, and procedures, and which may be harder to monitor in remote working environments.
We and our service providers are also subject to the risk that employees or contractors, or other third parties, may deliberately seek to circumvent established controls to commit 23 Table of Contents fraud or act in ways that are inconsistent with our or their controls, policies, and procedures, and which may be harder to monitor in remote working environments.
In the future, we expect to offer new investment strategies through different types of fund structures which could present different types of operational, regulatory and distribution-related risks with which we have little to no experience.
In the future, we expect to offer new investment strategies in new asset classes through different types of investment vehicles and fund structures which could present different types of operational, regulatory and distribution-related risks with which we have little to no experience.
The incorporation of new teams, strategies and types of investments could strain our resources and increase the likelihood of an error or failure, a risk which could be exacerbated by the increasingly specialized nature of newer investment teams and strategies.
The incorporation of new teams, strategies, vehicles and types of investments could strain our resources and increase the likelihood of an error or failure, a risk which is exacerbated by the increasingly specialized nature of newer investment teams and strategies.
Difficult market conditions may cause investors in the mutual funds we advise to redeem their investments in those funds which they can do at any time and without prior notice.
Difficult market conditions have in the past and may in the future cause investors in the mutual funds we advise to redeem their investments in those funds which they can do at any time and without prior notice.
Further, new laws, regulations or interpretations of existing laws may result in enhanced disclosure and other obligations, including with respect to climate change or other environmental, social and governance (ESG) matters and cybersecurity.
Further, new laws, regulations or interpretations of existing laws may result in enhanced disclosure 22 Table of Contents and other obligations, including with respect to climate change or other environmental, social and governance (ESG) matters and cybersecurity.
We are party to a resale and registration rights agreement pursuant to which the shares of our Class A common stock issued upon exchange of limited partnership units are eligible for resale.
We are party to a resale and registration rights agreement pursuant to which the shares of our Class A common stock issued upon exchange of limited partnership units, on a one-for-one basis, are eligible for resale.
Operational risks such as trading or other operational errors or interruption or failure of our financial, accounting, trading, compliance and other data processing systems, whether caused by human error, power or telecommunications failure, cyber-attack, ransomware or viruses, increased severity of weather events, natural disaster, fire, act of terrorism or war, pandemics or other unpredictable events, could result in a disruption of our business, liability to clients, regulatory intervention or reputational damage, and thus adversely affect our business.
Operational risks or errors or interruption or failure of our financial, trading, compliance and other data processing systems, whether caused by human error, power or telecommunications failure, cyber-attack, ransomware or viruses, severe weather events, natural disaster, fire, act of terrorism or war, pandemics or other unpredictable events, could result in a disruption of our business, liability to clients, regulatory intervention or reputational damage, and thus adversely affect our business.
The complexity of these vehicles could strain our resources and increase the likelihood of real or perceived problems, which could damage our reputation or result in regulatory scrutiny or legal liability.
In general, the complexity of these newer strategies and vehicles could strain our resources and increase the likelihood of real or perceived problems, which could damage our reputation or result in regulatory scrutiny or legal liability.
We compensate most of the intermediaries through which we gain access to investors in Artisan Funds by paying fees, most of which are a percentage of assets invested in Artisan Funds through that intermediary and with respect to which that intermediary 17 Table of Content s provides shareholder and administrative services.
We compensate most of the intermediaries through which we gain access to investors in Artisan Funds by paying fees, most of which are a percentage of assets invested in Artisan Funds through that intermediary and with respect to which that intermediary provides shareholder and administrative services.
Although we have not suffered material operational 18 Table of Content s errors, including material trading errors, in the past, we may experience such errors in the future, the losses related to which we would absorb. Insurance and other safeguards might not be available or might only partially reimburse us for our losses.
Although we have not suffered material operational errors, including material trading errors, in the past, we may experience such errors in the future, the losses related to which we would absorb. Insurance and other safeguards might not be available or might only partially reimburse us for our losses.
To do so, it is critical that we continue to foster an environment and provide compensation that is attractive for existing and prospective investment professionals.
To do so, it is critical that we continue to foster an environment and provide opportunities, compensation and benefits that are attractive for existing and prospective investment professionals.
The fees we earn under our investment management agreements are typically based on the market value of our assets under management, and to a much lesser extent based directly on investment performance. Difficult market conditions have led, and may continue to lead, to a decline in our assets under management, thereby resulting in a decline in our investment advisory fees.
The fees we earn under our investment management agreements are typically based on the market value of our AUM, and to a much lesser extent based directly on investment performance. Difficult market conditions have in the past led, and may again lead, to a decline in our AUM, thereby resulting in a decline in our investment advisory fees.
Any such alternatives may not be available to us on satisfactory terms or at all. 20 Table of Content s Our note purchase agreements and revolving credit agreement contain, and our future indebtedness may contain, various covenants that may limit our business activities.
Any such alternatives may not be available to us on satisfactory terms or at all. 24 Table of Contents Our note purchase agreements and revolving credit agreement contain, and our future indebtedness may contain, various covenants that may limit our business activities.
Item 1A. Risk Factors Risks Related to our Business The loss of key investment professionals or senior members of our distribution and management teams could have a material adverse effect on our business.
Item 1A. Risk Factors Human Capital Risks The loss of key investment professionals or senior members of our distribution and management teams could have a material adverse effect on our business.
In addition, an increase in the value of the U.S. dollar relative to non-U.S. currencies is likely to result in a decrease in the U.S. dollar value of our assets under management, which, in turn, would likely result in lower revenue and profits.
In addition, an increase in the value of the U.S. dollar relative to non-U.S. currencies is likely to result in a decrease in the U.S. dollar value of our AUM, which, in turn, would likely result in lower revenue and profits.
Assuming no material changes in the relevant tax law and that APAM earns sufficient taxable income to realize all tax benefits that are subject to the TRAs, we expect that the reduction in tax payments for us associated with (i) the merger described above; (ii) the purchase or exchange of partnership units from March 2013 through December 31, 2022; and (iii) projected future purchases or exchanges of partnership units would aggregate to approximately $548 million over generally a minimum of 15 years, assuming the future purchases or exchanges described in clause (iii) occurred at a price of $29.70 per share of our Class A common stock, the closing price of our Class A common stock on 24 Table of Content s December 31, 2022.
Assuming no material changes in the relevant tax law and that APAM earns sufficient taxable income to realize all tax benefits that are subject to the TRAs, we expect that the reduction in tax payments for us associated with (i) the merger described above; (ii) the purchase or exchange of partnership units from March 2013 through December 31, 2023; and (iii) projected future purchases or exchanges of partnership units would aggregate to approximately $553 million over generally a minimum of 15 years, assuming the future purchases or exchanges described in clause (iii) occurred at a price of $44.18 per share of our Class A common stock, the closing price of our Class A common stock on December 31, 2023.
For example, we may limit the growth of assets in or close strategies when we believe it is in the best interest of our clients even though our assets under management and investment advisory fees may be negatively impacted in the short term.
For example, we may limit the growth of assets in or close strategies when we believe it is in the best interests of our clients even though our AUM and investment advisory fees may be negatively impacted in the short term.
Brexit added complexity to our global operations, imposed additional risks and resulted in additional legal and compliance costs, without an increase in revenues to offset those costs. Despite those increased costs, we do not currently expect Brexit to have a material impact on our business.
Brexit added complexity to our global operations, imposed additional risks and resulted in additional legal and compliance costs, without an increase in revenues to offset those costs. Despite those increased costs, Brexit did not have a material impact on our business.
Declining tax revenues may cause governments to assert their ability to tax the local gains and/or income of foreign investors, which could adversely affect clients’ interests in investing outside their home markets.
Declining tax revenues have in the past and could in the future cause governments to assert their ability to tax the local gains and/or income of foreign investors, which has in the past and could in the future adversely affect clients’ interests in investing outside their home markets.
As of February 23, 2023, our employees to whom we have granted equity (including our employee-partners) held approximately 11% of the combined voting power of our capital stock.
As of February 19, 2024, our employees to whom we have granted equity (including our employee-partners) held approximately 11% of the combined voting power of our capital stock.
We may not be able to maintain our current fee rates as a result of poor investment performance, competitive pressures, as a result of changes in our business mix or for other reasons, which could have a material adverse effect on our profit margins and results of operations.
Competition and Distribution Risks We may not be able to maintain our current fee rates as a result of poor investment performance, competitive pressures, changes in global markets and asset classes, changes in our business mix or for other reasons, which could have a material adverse effect on our profit margins and results of operations.
New strategies, whether managed by a new team or by an existing team may make investments or present operational, legal, regulatory, or distribution-related issues and risks which we have not yet encountered.
New strategies or vehicles, whether managed by a new team or by an existing team, may make investments or present operational, legal, regulatory, or distribution-related issues and risks that we have not yet encountered or with which we have less experience.
The departure of a portfolio manager could also cause consultants and intermediaries to stop recommending a strategy, and clients to refrain from allocating additional funds to a strategy or delay such additional funds until a sufficient new track record has been established.
The departure of a portfolio manager has in the past and could in the future also cause consultants and intermediaries to stop recommending a strategy for a period of time, and clients to refrain from allocating additional funds to a strategy or delay such additional funds until a sufficient new track record has been established.
Non-compliance with applicable new laws, rules or regulations could result in litigation, governmental investigations and enforcement actions that could result in fines, penalties, suspensions of individual employees, or limitations on particular business activities, any of which could have an adverse impact on our reputation and business. The investment management industry is intensely competitive.
Non-compliance with applicable new laws, rules or regulations could result in litigation, governmental investigations and enforcement actions that could result in fines, penalties, suspensions of individual employees, or limitations on particular business activities, any of which could have an adverse impact on our reputation and business.
In addition to our Sustainable Emerging Markets and Developing World 16 Table of Content s strategies, and the strategies managed by the EMsights Capital Group, several of our other investment strategies are permitted to invest, and do invest, in emerging or less developed markets to a more limited extent.
In addition to our Sustainable Emerging Markets and Developing World strategies, and the strategies managed by the EMsights Capital Group, which invest primarily in emerging markets, several of our other investment strategies are permitted to invest, and do invest, in emerging or less developed markets to a more limited extent.
In addition, the prices of the securities held in the portfolios we manage may decline for any number of reasons beyond our control, including, among others, a declining market, general economic downturn or recession, political uncertainty, inflation rates, natural disasters, war, acts of terrorism, or other unpredictable events such as a global pandemic.
In addition, the prices of the securities held in the portfolios we manage have in the past and may in the future decline for any number of reasons beyond our control, including, among others, a declining market, general economic downturn or recession, political uncertainty, inflation rates, natural disasters, war, acts of terrorism, or other unpredictable events.
In addition, the prices of equity securities may fluctuate more widely than the prices of other types of securities, making the level of our assets under management and related revenues more volatile.
In addition, the prices of equity securities may fluctuate more widely than the prices of other types of securities, making the level of our AUM and related revenues more volatile.
However, because our clients invest in our investment strategies in order to gain exposure to the portfolio securities of the respective strategies, we have not adopted corporate-level risk management policies to manage market, interest rate, or exchange rate risks that would affect the value of our overall assets under management. Our indebtedness may expose us to material risks.
However, because our clients invest in our investment strategies in order to gain exposure to the portfolio securities of the respective strategies, we have not adopted corporate-level risk management policies to manage market, interest rate, or exchange rate risks that would affect the value of our overall AUM.
Poor performance would also adversely affect the portion of our revenues attributed to performance-based fees.
Poor performance also adversely affects the portion of our revenues attributed to performance-based fees.
Daley, Jr. (Chief Financial Officer) and Gregory K. Ramirez (Executive Vice President). All shares subject to the stockholders agreement are voted in accordance with the majority decision of those three members.
Daley, Jr. (Chief Financial Officer) and Gregory K. Ramirez (Executive Vice President). All shares subject to the stockholders agreement are voted in accordance with the majority decision of those three members providing the committee with approximately 11% of the aggregate voting power.
Operational risks may disrupt our business, result in losses, damage our reputation or limit our growth. We are heavily dependent on the capacity and reliability of the communications and information technology systems supporting our operations, whether developed, owned and operated by us or by third parties. We also rely on manual workflows and a variety of manual user controls.
Operational and Cybersecurity Risks Operational risks may disrupt our business, result in losses, damage our reputation or limit our growth. We are heavily dependent on the capacity and reliability of the communications and information technology systems supporting our operations, whether developed, owned and operated by us or by third parties.
We adjust these liabilities in light of changing facts and circumstances as well as consult with our outside tax advisors. However, due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our estimates.
We adjust these liabilities in light of changing facts and circumstances as well as consult with our outside tax advisors. However, due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our estimates. We are subject to extensive, complex and sometimes overlapping laws, rules and regulations.
We derive substantially all of our revenues from investment advisory and sub-advisory agreements, all of which are terminable by clients upon short or no notice.
We derive substantially all of our revenues from contracts and relationships that may be terminated upon short or no notice. We derive substantially all of our revenues from investment advisory and sub-advisory agreements, all of which are terminable by clients upon short or no notice.
We cannot be certain that future advances in criminal capabilities, the discovery of new vulnerabilities or other developments will not compromise or breach the security measures protecting the networks, systems and applications we use.
We cannot be certain that future advances in criminal capabilities, the discovery of new vulnerabilities or other developments will not compromise or breach the security measures protecting the networks, systems and applications we use. Indebtedness Risks Our indebtedness may expose us to material risks.
The majority of our existing assets under management are managed in primarily long-only, equity investment strategies, which exposes us to greater risk than certain of our competitors who may manage assets in more diverse strategies. 19 of our 25 investment strategies, which accounted for $120.7 billion of our $127.9 billion in assets under management as of December 31, 2022, invest primarily in publicly-traded equity securities.
The majority of our assets under management are managed in primarily long-only, equity investment strategies, which exposes us to greater risk than certain of our competitors who may manage more assets in diverse strategies. 19 of our 25 investment strategies, which accounted for over 90% of our AUM as of December 31, 2023, invest primarily in publicly-traded equity securities.
Because the revenue we earn is based on the value of our assets under management, fluctuations in our assets under management will result in corresponding fluctuations in our revenues and earnings.
Because the revenue we earn is based on the value of our AUM, fluctuations in our AUM result in corresponding fluctuations in our revenues and earnings.
Our success depends on our ability to retain the portfolio managers who manage our investment strategies and have been primarily responsible for the historically strong investment performance we have achieved.
Our success depends on our ability to attract, retain and motivate, including through competitive compensation packages, the portfolio managers who manage our investment strategies and have been primarily responsible for the historically strong investment performance we have achieved.
Poor reviews or evaluations of us or a particular strategy may result in client withdrawals or may impair our ability to attract new assets through these consultants.
Poor reviews or evaluations of us or a particular strategy may result in client withdrawals or may impair our ability to attract new assets through these consultants. The investment management industry is intensely competitive.
Difficult market conditions adversely affect our business in many ways, including by reducing the value of our assets under management and causing clients to withdraw funds, each of which could materially reduce our revenues and impact our financial condition.
Difficult market conditions typically adversely affect our business in many ways, including by reducing our assets under management and causing clients to withdraw funds, each of which reduces our revenues and impacts our financial condition.
This may create actual and potential conflicts of interest between us and certain of our investors and their affiliates (including certain of our directors).
This may create actual and potential conflicts of interest between us and certain of our investors and their affiliates (including certain of our directors). Item 1B. Unresolved Staff Comments None
During the first quarter of 2020, AUM levels decreased by approximately 24% from February 19, 2020 to March 31, 2020, as a result of sharp global equity market declines related to the COVID-19 pandemic, the unknown long-term effects of which continue to cause uncertainty in the markets.
During the first quarter of 2020, AUM levels decreased by approximately 24% from February 19, 2020 to March 31, 2020, as a result of sharp global equity market declines related to the COVID-19 pandemic.
The loss of any of these key professionals could limit our ability to successfully execute our business strategy or adversely affect our ability to retain existing and attract new client assets and related revenues. Any of our key professionals may resign at any time, join our competitors or form a competing company.
The loss of any of these key professionals could limit our ability to successfully execute our business strategy or adversely affect our ability to retain existing and attract new client assets and related revenues.
As we have since our founding, we continue to assess the effectiveness of our compensation arrangements and long-term incentive structures in aligning the long-term interests of our investment professionals with those of our clients, investors and 14 Table of Content s stockholders and whether different, or modified, arrangements or structures would enhance incentives for long-term growth and succession planning.
We regularly assess the effectiveness of our compensation arrangements and long-term incentive structures in aligning the long-term interests of our investment professionals with those of our clients and stockholders and whether different, or modified, arrangements or structures would enhance incentives for long-term growth and succession planning.
Our separate account clients may also reduce the aggregate amount of assets under management with us with minimal or no notice for any reason, including due to declining financial market conditions.
Our separate account clients have in the past and may in the future reduce the aggregate amount of AUM with us with minimal or no notice for any reason, including due to declining financial market conditions.
We are subject to extensive regulation in the United States, primarily at the federal level, including regulation by the SEC, the U.S. Department of Labor, the Financial Industry Regulatory Authority, and the Commodity Futures Trading Commission. Our business is also subject to the laws and regulations of the various countries in which we conduct distribution or investment management activities.
The industry in which we operate is subject to extensive and complex laws, rules and regulations. We are subject to extensive regulation in the United States, primarily at the federal level, including regulation by the SEC, the U.S. Department of Labor, the Financial Industry Regulatory Authority, and the Commodity Futures Trading Commission.
We provide shareholder services, accounting services including the supervision of the activities of Artisan Funds’ accounting services provider in the calculation of the funds’ net asset values, and tax services including calculation of dividend and distribution amounts. We also coordinate the audits of financial statements and supervise tax return preparation.
We prepare or supervise the preparation of Artisan Funds’ regulatory filings and financial statements, and manage compliance and regulatory matters. We provide shareholder services, accounting services including the supervision of the activities of Artisan Funds’ accounting services provider in the calculation of the funds’ net asset values, and tax services including calculation of dividend and distribution amounts.
Financial markets have experienced, and may continue to experience, volatility and disruption amid continued concerns about elevated inflation, interest rate increases, prolonged effects of the war in Ukraine, concerns about the risk of a recession and other global economic conditions. This continued volatility and uncertainty in global financial markets has impacted the value of our assets under management.
Financial markets have experienced, and may continue to experience, volatility and disruption amid continued concerns about elevated inflation, interest rate increases, effects of geopolitical tensions, conflicts, and wars, and other global economic conditions. This continued volatility and uncertainty in global financial markets has impacted the value of our AUM.
In connection with the severe market dislocations of 2008 and 2009, for example, the value of our assets under management declined substantially due primarily to the sizable decline in stock prices worldwide. In the period from June 30, 2008 through March 31, 2009, our assets under management decreased by approximately 43%, primarily as a result of general market conditions.
In connection with the severe market dislocations of 2008 and 2009, for example, the value of our AUM declined substantially. In the period from June 30, 2008 through March 31, 2009, our AUM decreased by approximately 43%, primarily as a result of 16 Table of Contents general market conditions.
Poor investment performance could lead to a loss of assets under management which could reduce our revenues and negatively impact our financial condition. The performance of our investment strategies is critical in retaining existing client assets and in attracting new client assets.
Market and Investment Performance Risks Poor investment performance over the long-term leads to a loss of assets under management which reduces our revenues and negatively impacts our financial condition. The performance of our investment strategies is critical in retaining existing client assets and in attracting new client assets.
If we were to elect to terminate the TRAs associated with (i) the merger described above; (ii) the purchase or exchange of partnership units from March 2013 through December 31, 2022; and (iii) projected future purchases or exchanges of partnership units, as of December 31, 2022, based on an assumed discount rate equal to one-year LIBOR plus 100 basis points and a price of $29.70 per share of our Class A common stock (the closing price of our Class A common stock on December 31, 2022), we estimate that we would be required to pay approximately $354 million in the aggregate under the TRAs.
If we were to elect to terminate the TRAs associated with (i) the merger described above; (ii) the purchase or exchange of partnership units from March 2013 through December 31, 2023; and (iii) projected future purchases or exchanges of partnership units, as of December 31, 2023, based on a share price of $44.18 per share of Class A common stock and certain other assumptions, we estimate that we would be required to pay approximately $349 million in the aggregate under the TRAs.
Any changes, upgrades or expansions to our systems to support increased volumes or complexity of transactions or to otherwise support growth of the business may require significant expenditures and may increase the probability that we will experience operational errors.
Moreover, the introduction of new technologies, such as artificial intelligence, presents new challenges and introduces operational and legal risks. Any changes or upgrades to our systems to support increased volumes or complexity of transactions or to otherwise support growth of the business may require significant expenditures and may increase the probability that we will experience operational errors.
In the future, our expenses in connection with those intermediary relationships could increase if the portion of those fees determined to be in connection with marketing and distribution, or otherwise allocated to us or payable by us, increased.
In the future, our expenses in connection with those intermediary relationships could increase if the portion of those fees determined to be in connection with marketing and distribution, or otherwise allocated to us or payable by us, increased. We access institutional clients primarily through consultants upon whose referrals our institutional business is highly dependent.
These voting and class approval rights may enable the holders of Class A common units to prevent the consummation of transactions that may be in the best interests of the holders of our Class A common stock. 23 Table of Content s In addition, because the majority of our pre-IPO owners (including certain members of our board of directors) hold a portion of their ownership interests in our business through Holdings, rather than through Artisan Partners Asset Management, these pre-IPO owners may have conflicting interests with holders of our Class A common stock.
In addition, because the majority of our pre-IPO owners (including certain members of our board of directors) hold or held a portion of their ownership interests in our business through Holdings, rather than through Artisan Partners Asset Management, these pre-IPO owners may have conflicting interests with holders of our Class A common stock.
In general, equity awarded to our investment professionals consists of a mix of standard restricted shares which vest pro rata over five years from the date of grant, and career or franchise shares that generally vest on, or 18 months after, a qualified retirement.
The equity we award to our investment professionals consists of a mix of standard restricted shares which vest pro rata over the five years following the year of grant, and career or franchise shares that generally vest on, or 18 months after, a “qualified retirement” as defined in the applicable award agreement.
Although less extensive than the range of services we provide to Artisan Funds, we provide a range of similar services to Artisan Global Funds and Artisan Private Funds.
We also coordinate the audits of financial statements and supervise tax return preparation. Although less extensive than the range of services we provide to Artisan Funds, we provide a range of similar services to Artisan Global Funds and Artisan Private Funds.
Regulators in non-U.S. jurisdictions in which we currently operate could change their laws or regulations, or change the way they interpret existing laws and regulations, in a manner that might restrict or otherwise impede our ability to operate in their respective markets.
Expanding our business into new markets may also place significant demands on our existing operational infrastructure and on our existing employees. 21 Table of Contents Regulators in non-U.S. jurisdictions in which we currently operate could change their laws or regulations, or change the way they interpret existing laws and regulations, in a manner that might restrict or otherwise impede our ability to operate in their respective markets.
As of February 23, 2023, our employee-partners owned 2.5 million Class B common units, approximately 1.5 million of which are eligible for sale during the remainder of 2023. In addition, approximately 1.2 million Class E common units are eligible for exchange and sale by former employee-partners in 2023.
As of February 19, 2024, our employee-partners owned 2.2 million Class B common units, all of which are now eligible for sale. In addition, approximately 0.8 million Class E common units are eligible for exchange and sale by former employee-partners in 2024.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeRamirez is currently head of vehicle administration for Artisan Partners and serves as chair of the Artisan Risk and Integrity Committee. Mr. Ramirez was named a managing director of Artisan Partners in April 2003. Samuel B. Sellers, age 40, has been executive vice president and chief operating officer of Artisan Partners Asset Management since January 2023.
Biggest changeFrom October 2013 to February 2016, he served as senior vice president and from April 2013 to October 2013 as assistant treasurer. Mr. Ramirez is currently head of Vehicle and Investor Operations for Artisan Partners and serves as chair of the Artisan Risk and Integrity Committee. Mr. Ramirez was named a managing director of Artisan Partners in April 2003.
Colson served as chief operating officer of investment operations from March 2007 through January 2010. Mr. Colson has been a managing director of Artisan Partners since he joined the firm in January 2005. Charles J. Daley, Jr., age 60, has been executive vice president, chief financial officer and treasurer of Artisan Partners Asset Management since March 2011.
Colson served as chief operating officer of investment operations from March 2007 through January 2010. Mr. Colson has been a managing director of Artisan Partners since he joined the firm in January 2005. Charles J. Daley, Jr., age 61, has been executive vice president, chief financial officer and treasurer of Artisan Partners Asset Management since March 2011.
Item 4. Mine Safety Disclosures Not applicable Information about our Executive Officers Information regarding our executive officers is as follows: Eric R. Colson, age 53, has been chief executive officer and a director of Artisan Partners Asset Management since March 2011. Mr.
Item 4. Mine Safety Disclosures Not applicable Information about our Executive Officers Information regarding our executive officers is as follows: Eric R. Colson, age 54, has been chief executive officer and a director of Artisan Partners Asset Management since March 2011. Mr.
He has served as the chief financial officer of Artisan Partners since August 2010 and has been a managing director since July 2010 when he joined the firm. Jason A. Gottlieb, age 53, has been president of Artisan Partners Asset Management since January 2021.
He has served as the chief financial officer of Artisan Partners since August 2010 and has been a managing director since July 2010 when he joined the firm. Jason A. Gottlieb, age 54, has been president of Artisan Partners Asset Management since January 2021.
From February 2017 to January 2021, he served as executive vice president of Artisan Partners Asset Management. Mr. Gottlieb joined Artisan Partners in October 2016 as a managing director and the chief operating officer of investments. Sarah A. Johnson, age 51, has been executive vice president, chief legal officer and secretary of Artisan Partners Asset Management since October 2013.
From February 2017 to January 2021, he served as executive vice president of Artisan Partners Asset Management. Mr. Gottlieb joined Artisan Partners in October 2016 as a managing director and the chief operating officer of investments. Christopher J.
Kwei, age 44, has been executive vice president of Artisan Partners Asset Management and Artisan Partners’ chief administrative officer since January 2021. From February 2018 to January 2021, Ms. Kwei was responsible for institutional marketing and client service for the Artisan Credit team. Prior to February 2018, Ms. Kwei was a relationship manager for the Artisan Global Equity team. Ms.
Krein has been a managing director of Artisan Partners since he joined the firm in September 2015. Eileen L. Kwei, age 45, has been executive vice president and chief administrative officer of Artisan Partners Asset Management since January 2021. From February 2018 to January 2021, Ms. Kwei was responsible for institutional marketing and client service for the Artisan Credit team.
Kwei joined Artisan Partners in June 2013 and has been a managing director of Artisan Partners since 2018. Gregory K. Ramirez, age 52, was appointed executive vice president of Artisan Partners Asset Management in February 2016. From October 2013 to February 2016, he served as senior vice president and from April 2013 to October 2013 as assistant treasurer. Mr.
Prior to February 2018, Ms. Kwei was a relationship manager for the Artisan Global Equity team. Ms. Kwei joined Artisan Partners in June 2013 and has been a managing director of Artisan Partners since 2018. Gregory K. Ramirez, age 53, has been executive vice president of Artisan Partners Asset Management since February 2016.
Prior to becoming head of Global Distribution, Mr. Krein was responsible for institutional marketing and client service for the Artisan Developing World team. Mr. Krein has been a managing director of Artisan Partners since he joined the firm in September 2015. Eileen L.
Krein, age 52, has been executive vice president of Artisan Partners Asset Management and Artisan Partners’ head of Global Distribution since January 2020. Prior to becoming head of Global Distribution, Mr. Krein was responsible for institutional marketing and client service for the Artisan Developing World team. Mr.
Prior to his current role, Mr. Sellers was head of Investment Operations from January 2021. Previously, he served as deputy general counsel from January 2015 and associate counsel from April 2013. 28 Table of Content s PART II
Samuel B. Sellers, age 41, has been executive vice president and chief operating officer of Artisan Partners Asset Management since January 2023. Prior to his current role, Mr. Sellers was head of Investment Operations from January 2021. Previously, he served as deputy general counsel from January 2015 and associate counsel from April 2013. Laura E.
From April 2013 to October 2013 she served as assistant secretary of Artisan Partners Asset Management. Ms. Johnson was named a managing director of Artisan Partners in March 2010. Christopher J. Krein, age 51, has been executive vice president of Artisan Partners Asset Management and Artisan Partners’ head of Global Distribution since January 2020.
Simpson, age 48, has been executive vice president, chief legal officer and secretary of Artisan Partners Asset Management since October 2023. From January 2023 to October 2023 she served as assistant secretary of Artisan Partners Asset Management. She has served as general counsel of Artisan Partners since October 2022.
Added
Prior to then she served as deputy general counsel from January 2015 and associate counsel from April 2011. 31 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeFor the Years Ended December 31, 2018 2019 2020 2021 2022 Artisan Partners Asset Management Inc. $ 61.88 $ 103.04 $ 176.16 $ 180.92 $ 124.31 S&P 500 Index $ 95.62 $ 125.72 $ 148.85 $ 191.58 $ 156.88 Dow Jones U.S.
Biggest changeFor the Years Ended December 31, 2019 2020 2021 2022 2023 Artisan Partners Asset Management Inc. $ 166.53 $ 284.70 $ 292.39 $ 200.90 $ 321.79 S&P 500 Index $ 131.49 $ 155.68 $ 200.37 $ 164.08 $ 207.21 Dow Jones U.S.
We expect quarterly cash generation to approximate adjusted net income plus long-term incentive compensation award expense, less cash reserved for future franchise capital awards (which we expect will approximate 4% of investment management revenues each quarter), with additional adjustments made for certain other sources and uses of cash, including capital expenditures .
We expect quarterly cash generation to approximate adjusted net income plus long-term incentive compensation award expense, less cash reserved for future franchise capital awards (which we expect will generally approximate 4% of investment management revenues each quarter), with additional adjustments made for certain other sources and uses of cash, including capital expenditures.
Performance Graph The following graph compares the year-end cumulative total stockholder return of our Class A common stock during the five-year period ended December 31, 2022, with the year-end cumulative total return of the S&P 500 ® and the Dow Jones U.S. Asset Managers Index.
Performance Graph The following graph compares the year-end cumulative total stockholder return of our Class A common stock during the five-year period ended December 31, 2023, with the year-end cumulative total return of the S&P 500 ® and the Dow Jones U.S. Asset Managers Index.
Our note purchase and revolving credit agreements contain covenants limiting Holdings’ ability to make distributions if a default has occurred and is continuing or would result from such a distribution. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources”.
Our note purchase and revolving credit agreements contain covenants limiting Holdings’ ability to make distributions if a default has occurred and is continuing or would result from such a distribution. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity, Capital Resources, and Contractual Obligations”.
A stockholder who invested in APAM at its IPO on March 7, 2013, at the IPO price of $30 per share would have experienced an 8% annual total return as of December 31, 2022 if all dividends were retained, compared to a 9% annual total return if all dividends were reinvested.
A stockholder who invested in APAM at its IPO on March 7, 2013, at the IPO price of $30 per share would have experienced a 9% annual total return as of December 31, 2023 if all dividends were retained, compared to a 13% annual total return if all dividends were reinvested.
Although we expect to pay dividends according to our dividend policy, we may not pay dividends according to our policy or at all. 29 Table of Content s We intend to fund dividends from our portion of distributions made by Holdings from its available cash generated from operations.
Although we expect to pay dividends according to our dividend policy, we may not pay dividends according to our policy or at all. 32 Table of Contents We intend to fund dividends from our portion of distributions made by Holdings from its available cash generated from operations.
Dividend Policy During the first quarter of 2023, our board of directors declared a variable quarterly dividend of $0.55 per share with respect to the fourth quarter of 2022 and a special annual dividend of $0.35 per share. The variable quarterly dividend of $0.55 per share represents approximately 80% of the cash generated in the fourth quarter of 2022.
Dividend Policy During the first quarter of 2024, our board of directors declared a variable quarterly dividend of $0.68 per share with respect to the fourth quarter of 2023 and a special annual dividend of $0.34 per share. The variable quarterly dividend of $0.68 per share represents approximately 80% of the cash generated in the fourth quarter of 2023.
As of February 23, 2023, there were approximately 117 stockholders of record of our Class A common stock, 25 stockholders of record of our Class B common stock, and 26 stockholders of record of our Class C common stock.
As of February 19, 2024, there were approximately 123 stockholders of record of our Class A common stock, 22 stockholders of record of our Class B common stock, and 25 stockholders of record of our Class C common stock.
Asset Managers Index $ 74.95 $ 94.98 $ 109.37 $ 153.79 $ 120.54 The above table is provided pursuant to SEC regulations and the outcomes are impacted significantly by beginning- and end-point stock price, as well as the price at which dividends are reinvested.
Asset Managers Index $ 126.72 $ 145.92 $ 205.19 $ 160.83 $ 197.56 The above table is provided pursuant to SEC regulations and the outcomes are impacted significantly by beginning- and end-point stock price, as well as the price at which dividends are reinvested.
There were no such issuances during the three months ended December 31, 2022.
There were no such issuances during the three months ended December 31, 2023. Item 6. [Reserved] 33 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

127 edited+20 added−20 removed110 unchanged
Biggest changeValue International Value Global Value Sustainable Emerging Markets Credit Developing World Antero Peak Group EMsights Capital Group Total December 31, 2022 (unaudited; in millions) Beginning assets under management $ 52,434 $ 32,998 $ 8,053 $ 31,816 $ 26,744 $ 1,173 $ 8,157 $ 8,102 $ 5,277 $ — $ 174,754 Gross client cash inflows 7,069 3,252 544 7,560 2,759 293 3,021 1,599 1,064 66 27,227 Gross client cash outflows (8,579) (8,681) (1,617) (6,617) (4,003) (226) (3,033) (2,998) (1,286) — (37,040) Net client cash flows (1,510) (5,429) (1,073) 943 (1,244) 67 (12) (1,399) (222) 66 (9,813) Artisan Funds’ distributions not reinvested (1) (5) (35) (47) (173) (16) — (209) (7) (5) — (497) Investment returns and other (2) (16,942) (6,911) (845) (2,376) (3,717) (367) (796) (3,230) (1,374) 6 (36,552) Ending assets under management $ 33,977 $ 20,623 $ 6,088 $ 30,210 $ 21,767 $ 873 $ 7,140 $ 3,466 $ 3,676 $ 72 $ 127,892 Average assets under management $ 38,565 $ 24,019 $ 7,146 $ 30,406 $ 23,574 $ 996 $ 7,548 $ 4,872 $ 4,350 $ 53 $ 141,516 December 31, 2021 Beginning assets under management $ 52,685 $ 32,056 $ 7,149 $ 24,123 $ 22,417 $ 679 $ 6,338 $ 8,853 $ 3,476 $ — $ 157,776 Gross client cash inflows 7,418 4,384 407 8,121 4,723 499 3,158 3,499 1,516 — 33,725 Gross client cash outflows (12,528) (5,313) (1,189) (4,057) (3,809) (54) (1,582) (3,035) (480) — (32,047) Net client cash flows (5,110) (929) (782) 4,064 914 445 1,576 464 1,036 — 1,678 Artisan Funds’ distributions not reinvested (1) (302) (545) (47) (701) (46) — (217) (286) (151) — (2,295) Investment returns and other (2) 5,161 2,416 1,733 4,330 3,459 49 460 (929) 916 — 17,595 Ending assets under management $ 52,434 $ 32,998 $ 8,053 $ 31,816 $ 26,744 $ 1,173 $ 8,157 $ 8,102 $ 5,277 $ — $ 174,754 Average assets under management $ 53,375 $ 33,679 $ 7,835 $ 28,998 $ 25,463 $ 924 $ 7,576 $ 9,541 $ 4,376 $ — $ 171,767 December 31, 2020 Beginning assets under management $ 34,793 $ 27,860 $ 7,402 $ 22,000 $ 19,707 $ 234 $ 3,850 $ 3,374 $ 1,796 $ — $ 121,016 Gross client cash inflows 9,532 6,479 786 6,165 4,681 349 3,438 3,527 1,381 — 36,338 Gross client cash outflows (8,616) (5,885) (1,687) (6,101) (3,535) (25) (1,415) (1,487) (433) — (29,184) Net client cash flows 916 594 (901) 64 1,146 324 2,023 2,040 948 — 7,154 Artisan Funds’ distributions not reinvested (1) (222) (115) (12) (46) — — (130) (142) (23) — (690) Investment returns and other (2) 17,198 3,717 660 2,105 1,564 121 595 3,581 755 — 30,296 Ending assets under management $ 52,685 $ 32,056 $ 7,149 $ 24,123 $ 22,417 $ 679 $ 6,338 $ 8,853 $ 3,476 $ — $ 157,776 Average assets under management $ 40,806 $ 26,991 $ 6,266 $ 20,045 $ 17,780 $ 476 $ 4,493 $ 5,465 $ 2,579 $ — $ 124,901 (1) Artisan Funds’ distributions not reinvested represents the amount of income and capital gain distributions that were not reinvested in the Artisan Funds.
Biggest changeValue International Value Global Value Sustainable Emerging Markets Credit Developing World Antero Peak Group EMsights Capital Group Total December 31, 2023 (unaudited; in millions) Beginning assets under management $ 33,977 $ 20,623 $ 6,088 $ 30,210 $ 21,767 $ 873 $ 7,140 $ 3,466 $ 3,676 $ 72 $ 127,892 Gross client cash inflows 3,730 1,486 452 8,190 2,092 138 3,623 585 342 757 21,395 Gross client cash outflows (6,570) (3,822) (762) (4,415) (3,755) (236) (2,063) (1,513) (2,331) (4) (25,471) Net client cash flows (2,840) (2,336) (310) 3,775 (1,663) (98) 1,560 (928) (1,989) 753 (4,076) Artisan Funds’ distributions not reinvested (1) (11) (27) (36) (325) (15) — (270) — — — (684) Investment returns and other (2) 7,420 2,616 1,315 7,349 5,581 142 1,253 915 414 30 27,035 Ending assets under management $ 38,546 $ 20,876 $ 7,057 $ 41,009 $ 25,670 $ 917 $ 9,683 $ 3,453 $ 2,101 $ 855 $ 150,167 Average assets under management $ 36,541 $ 20,798 $ 6,514 $ 35,990 $ 23,332 $ 874 $ 8,328 $ 3,512 $ 3,041 $ 391 $ 139,321 December 31, 2022 Beginning assets under management $ 52,434 $ 32,998 $ 8,053 $ 31,816 $ 26,744 $ 1,173 $ 8,157 $ 8,102 $ 5,277 $ — $ 174,754 Gross client cash inflows 7,069 3,252 544 7,560 2,759 293 3,021 1,599 1,064 66 27,227 Gross client cash outflows (8,579) (8,681) (1,617) (6,617) (4,003) (226) (3,033) (2,998) (1,286) — (37,040) Net client cash flows (1,510) (5,429) (1,073) 943 (1,244) 67 (12) (1,399) (222) 66 (9,813) Artisan Funds’ distributions not reinvested (1) (5) (35) (47) (173) (16) — (209) (7) (5) — (497) Investment returns and other (2) (16,942) (6,911) (845) (2,376) (3,717) (367) (796) (3,230) (1,374) 6 (36,552) Ending assets under management $ 33,977 $ 20,623 $ 6,088 $ 30,210 $ 21,767 $ 873 $ 7,140 $ 3,466 $ 3,676 $ 72 $ 127,892 Average assets under management $ 38,565 $ 24,019 $ 7,146 $ 30,406 $ 23,574 $ 996 $ 7,548 $ 4,872 $ 4,350 $ 53 $ 141,516 December 31, 2021 Beginning assets under management $ 52,685 $ 32,056 $ 7,149 $ 24,123 $ 22,417 $ 679 $ 6,338 $ 8,853 $ 3,476 $ — $ 157,776 Gross client cash inflows 7,418 4,384 407 8,121 4,723 499 3,158 3,499 1,516 — 33,725 Gross client cash outflows (12,528) (5,313) (1,189) (4,057) (3,809) (54) (1,582) (3,035) (480) — (32,047) Net client cash flows (5,110) (929) (782) 4,064 914 445 1,576 464 1,036 — 1,678 Artisan Funds’ distributions not reinvested (1) (302) (545) (47) (701) (46) — (217) (286) (151) — (2,295) Investment returns and other (2) 5,161 2,416 1,733 4,330 3,459 49 460 (929) 916 — 17,595 Ending assets under management $ 52,434 $ 32,998 $ 8,053 $ 31,816 $ 26,744 $ 1,173 $ 8,157 $ 8,102 $ 5,277 $ — $ 174,754 Average assets under management $ 53,375 $ 33,679 $ 7,835 $ 28,998 $ 25,463 $ 924 $ 7,576 $ 9,541 $ 4,376 $ — $ 171,767 (1) Artisan Funds’ distributions not reinvested represents the amount of income and capital gain distributions that were not reinvested in the Artisan Funds.
Our investment advisory fees, which are comprised of management fees and performance fees, fluctuate based on a number of factors, including the total value of our assets under management, the composition of assets under management among investment vehicles and our investment strategies, changes in the investment management fee rates on our products, the extent to which we enter into fee arrangements that differ from our standard fee schedules, which can be affected by custom and the competitive landscape in the relevant market, and, for the accounts on which we earn performance fees, the investment performance of those accounts.
Investment advisory fees, which are comprised of management fees and performance fees, fluctuate based on a number of factors, including the total value of our assets under management, the composition of assets under management among investment vehicles and our investment strategies, changes in the investment management fee rates on our products, the extent to which we enter into fee arrangements that differ from our standard fee schedules, which can be affected by custom and the competitive landscape in the relevant market, and, for the accounts on which we earn performance fees, the investment performance of those accounts.
We grant cash-based long-term incentive awards, referred to as franchise capital awards, to certain investment team members in lieu of additional equity awards. Franchise capital awards are subject to the same long-term vesting and forfeiture provisions as the equity awards. Prior to vesting, franchise capital awards are generally allocated to one or more of Artisan’s investment strategies.
We grant cash-based long-term incentive awards, referred to as franchise capital awards, to certain investment team members in lieu of additional equity awards. Franchise capital awards are subject to the same vesting and forfeiture provisions as the equity awards. Prior to vesting, franchise capital awards are generally allocated to one or more of Artisan’s investment strategies.
For our U.S.-registered mutual fund and UCITS funds clients, including Artisan Funds and Artisan Global Funds, and for Artisan Private Funds, our fees are based on the values of the funds’ assets as determined for purposes of calculating their net asset values.
For our U.S.-registered mutual fund and UCITS fund clients, including Artisan Funds and Artisan Global Funds, and for Artisan Private Funds, our fees are based on the values of the funds’ assets as determined for purposes of calculating their net asset values.
We expect our quarterly cash generation to approximate adjusted net income plus long-term incentive compensation award expense, less cash reserved for future franchise capital awards (which we expect will approximate 4% of investment management revenues each quarter) with additional adjustments made for certain other sources and uses of cash, including capital expenditures.
We expect our quarterly cash generation to approximate adjusted net income plus long-term incentive compensation award expense, less cash reserved for future franchise capital awards (which we generally expect will approximate 4% of investment management revenues each quarter) with additional adjustments made for certain other sources and uses of cash, including capital expenditures.
Information and print subscriptions represent the costs we pay to obtain investment research and other data we need to operate our business. A portion of these expenses generally increase or decrease in relative proportion to the number of our employees and the overall size and scale of our business operations.
Information and data subscriptions represent the costs we pay to obtain investment research and other data we need to operate our business. A portion of these expenses generally increase or decrease in relative proportion to the number of our employees and the overall size and scale of our business operations.
In response to such requests or as a result of changes in our operations, we may eventually bear a significant portion or all of the costs of research that are currently paid for using soft dollars, which would increase our operating expenses materially.
In response to such requests or as a result of changes in our operations, we may eventually bear a significant portion of the costs of research that are currently paid for using soft dollars, which would increase our operating expenses materially.
Net investment gain (loss) of investment products represents the non-operating income (expense) related to the Company’s investments, in both consolidated investment products and nonconsolidated investment products, including investments held to economically hedge compensation plans.
Net investment gain (loss) of investment products represents the non-operating income (expense) related to the Company’s investments, in both consolidated sponsored investment products and nonconsolidated sponsored investment products, including investments in sponsored investment products held to economically hedge compensation plans.
The $100 million revolving credit facility was unused as of and for the year ended December 31, 2022. The fixed interest rate on each series of unsecured notes is subject to a 100 basis point increase in the event Holdings receives a below-investment grade rating and any such increase will continue to apply until an investment grade rating is received.
The $100 million revolving credit facility was unused as of and for the year ended December 31, 2023. The fixed interest rate on each series of unsecured notes is subject to a 100 basis point increase in the event Holdings receives a below-investment grade rating and any such increase will continue to apply until an investment grade rating is received.
The special dividend represents the remainder of undistributed cash generated during the year ended December 31, 2022, less cash reserved for future growth initiatives including seed investments in new investment strategies and vehicles. Subject to Board approval each quarter, we currently expect to pay a quarterly dividend of approximately 80% of the cash the Company generates each quarter.
The special dividend represents the remainder of undistributed cash generated during the year ended December 31, 2023, less cash reserved for future growth initiatives including seed investments in new investment strategies and vehicles. Subject to Board approval each quarter, we currently expect to pay a quarterly dividend of approximately 80% of the cash the Company generates each quarter.
These borrowings contain certain customary covenants including limitations on Artisan Partners Holdings’ ability to: (i) incur additional indebtedness or liens, (ii) engage in mergers or other fundamental changes, (iii) sell or otherwise dispose of assets including equity interests, and (iv) make dividend payments or other distributions to Artisan Partners Holdings’ partners (other than, among others, tax distributions paid to partners for the purpose of funding tax liabilities attributable to their interests) when a default occurred and is continuing or would result from such a distribution.
These borrowings contain certain customary covenants including limitations on Artisan Partners Holdings’ ability to: (i) incur additional indebtedness or liens, (ii) engage in mergers or other fundamental changes, (iii) sell or otherwise dispose of assets 55 Table of Contents including equity interests, and (iv) make dividend payments or other distributions to Artisan Partners Holdings’ partners (other than, among others, tax distributions paid to partners for the purpose of funding tax liabilities attributable to their interests) when a default occurred and is continuing or would result from such a distribution.
Overview and Recent Highlights We are an investment management firm focused on providing high-value added, active investment strategies in asset classes for sophisticated clients around the world. As of December 31, 2022, our ten autonomous investment teams managed a total of 25 investment strategies across multiple asset classes and investment styles.
Overview and Recent Highlights We are an investment management firm focused on providing high-value added, active investment strategies in asset classes for sophisticated clients around the world. As of December 31, 2023, our ten autonomous investment teams managed a total of 25 investment strategies across multiple asset classes and investment styles.
For each of the years ended December 31, 2022, 2021 and 2020, approximately 82%, 83%, and 83%, respectively, of our investment advisory fees were earned from clients located in the United States. Operating Expenses Our operating expenses consist primarily of compensation and benefits, distribution, servicing and marketing, occupancy, communication and technology, and general and administrative expenses.
For each of the years ended December 31, 2023, 2022 and 2021, approximately 82%, 82%, and 83%, respectively, of our investment advisory fees were earned from clients located in the United States. Operating Expenses Our operating expenses consist primarily of compensation and benefits, distribution, servicing and marketing, occupancy, communication and technology, and general and administrative expenses.
As of December 31, 2022, we have $200 million in unsecured notes outstanding and a $100 million revolving credit facility with a five-year term ending in August 2027. The notes are comprised of three series, Series D, Series E, and Series F, each with a balloon payment at maturity.
As of December 31, 2023, we have $200 million in unsecured notes outstanding and a $100 million revolving credit facility with a five-year term ending in August 2027. The notes are comprised of three series, Series D, Series E, and Series F, each with a balloon payment at maturity.
Our management is required to exercise judgment in developing our provision for income taxes, including the determination of deferred tax assets and liabilities and any valuation allowance that might be required against deferred tax assets. As of December 31, 2022, we have not recorded a valuation allowance on any deferred tax assets.
Our management is required to exercise judgment in developing our provision for income taxes, including the determination of deferred tax assets and liabilities and any valuation allowance that might be required against deferred tax assets. As of December 31, 2023, we have not recorded a valuation allowance on any deferred tax assets.
Our failure to comply with any of the covenants or restrictions described above could result in an event of default under the agreements, giving our lenders the ability to accelerate repayment of our obligations. We were in compliance with all debt covenants as of December 31, 2022.
Our failure to comply with any of the covenants or restrictions described above could result in an event of default under the agreements, giving our lenders the ability to accelerate repayment of our obligations. We were in compliance with all debt covenants as of December 31, 2023.
Once determined the extent to which the performance conditions have been met, 50% of the PSUs eligible for vesting will vest, and 50% of the PSUs eligible for vesting will vest upon a qualified retirement. No performance share units were granted in 2023.
Once determined the extent to which the performance conditions have been met, 50% of the PSUs eligible for vesting will vest, and 50% of the PSUs eligible for vesting will vest upon a qualified retirement. No performance share units were granted in 2023 or 2024.
Occupancy Occupancy expenses include operating leases for facilities, furniture and office equipment, miscellaneous facility related costs and depreciation expense associated with furniture purchases and leasehold improvements. We expect 2023 occupancy expenses to be relatively consistent with 2022.
Occupancy Occupancy expenses include operating leases for facilities, furniture and office equipment, miscellaneous facility related costs and depreciation expense associated with furniture purchases and leasehold improvements. We expect 2024 occupancy expenses to be relatively consistent with 2023.
(4) Adjusted measures are non-GAAP measures and are explained and reconciled to the comparable GAAP measures in “Supplemental Non-GAAP Financial Information” below. Investment advisory fees and assets under management within our consolidated investment products are excluded from the weighted average fee calculations and from total revenues, since any such revenues are eliminated upon consolidation.
Assets under management within our consolidated investment products, and any investment advisory fees earned thereon, are excluded from our weighted average fee calculations since any such revenues are eliminated upon consolidation. (4) Adjusted measures are non-GAAP measures and are explained and reconciled to the comparable GAAP measures in “Supplemental Non-GAAP Financial Information” below.
After the end of the year, our Board will consider paying a special dividend after determining the amount of cash needed for general corporate purposes and investments in growth and strategic initiatives. Although we expect to pay dividends according to our dividend policy, we may not pay dividends according to our policy or at all.
After the end of the year, our Board will consider paying a special dividend after determining the amount of cash needed for general corporate purposes and investments in growth and strategic initiatives. 56 Table of Contents Although we expect to pay dividends according to our dividend policy, we may not pay dividends according to our policy or at all.
Communication and technology Communication and technology expenses include information and print subscriptions, telephone costs, information systems consulting fees, equipment and software maintenance expenses, operating leases for information technology equipment and depreciation and amortization expenses associated with computer hardware and software.
Communication and technology Communication and technology expenses include information and data subscriptions, telephone costs, information systems consulting fees, equipment and software maintenance expenses, operating leases for information technology equipment and depreciation and amortization expenses associated with computer hardware and software.
As of December 31, 2022, AUM for certain strategies include the following amounts for which Artisan Partners provides investment models to managed account sponsors (reported on a one-month lag): Artisan Sustainable Emerging Markets $48 million. (2) Artisan Funds’ distributions not reinvested represents the amount of income and capital gain distributions that were not reinvested in the Artisan Funds.
As of December 31, 2023, AUM for certain strategies include the following amounts for which Artisan Partners provides investment models to managed account sponsors (reported on a one-month lag): Artisan Sustainable Emerging Markets $78 million. (2) Artisan Funds’ distributions not reinvested represents the amount of income and capital gain distributions that were not reinvested in the Artisan Funds.
As of December 31, 2022, approximately 76% of our assets under management were managed for clients and investors domiciled in the U.S. and 24% of our assets under management were managed for clients and investors domiciled outside of the U.S.
As of December 31, 2023, approximately 76% of our assets under management were managed for clients and investors domiciled in the U.S. and 24% of our assets under management were managed for clients and investors domiciled outside of the U.S.
We expect our investment portfolio to continue to grow as we grant additional annual franchise capital awards and make seed investments in new investment strategies and vehicles.
We expect our investment portfolio to continue to grow as we grant additional annual franchise capital awards and make additional seed capital investments in new strategies and vehicles to support our growth.
Because, as is typical in the asset management industry, our rates of fee decline as the assets under our management in a relationship increase, and because of differences in our fees by investment strategy, a change in the composition of our assets under management, in particular a shift to strategies, clients or relationships with lower effective rates of fees, could have a material impact on our overall weighted average rate of fee.
Because, as is typical in the asset management industry, our rates of fee decline as the assets under our management in a relationship increase, and because of differences in our fees by investment strategy or investment vehicle, a change in the composition of our assets under management, in particular a shift of assets to strategies or vehicles with lower effective rates of fees, could have a material impact on our overall weighted average rate of fee.
Earnings Per Share Weighted average basic and diluted shares of Class A common stock outstanding were higher for the year ended December 31, 2022, compared to the year ended December 31, 2021, as a result of the 2021 stock offering, unit exchanges, and equity award grants.
Earnings Per Share Weighted average basic and diluted shares of Class A common stock outstanding were higher for the year ended December 31, 2023, compared to the year ended December 31, 2022, as a result of unit exchanges and equity award grants.
Separate Accounts and Other “Separate accounts and other” consists of assets we manage in or through vehicles other than Artisan Funds or Artisan Global Funds, including traditional separate accounts, Artisan-branded collective investment trusts and Artisan Private Funds, as well as assets under advisement related to clients for whom we provide investment models but do not have discretionary investment authority.
Separate Accounts and Other Assets under management within the “separate accounts and other” category consists of assets we manage in or through vehicles other than Artisan Funds or Artisan Global Funds, including traditional separate accounts, Artisan-branded collective investment trusts and Artisan Private Funds, as well as assets under advisement related to clients for whom we provide investment models but do not have discretionary investment authority.
We act as investment adviser to the collective investment trusts and earn a management fee for providing this service. The weighted average management fee rate paid by our Artisan-branded collective investment trust clients was 0.714%, 0.729%, and 0.735% for the years ended December 31, 2022, 2021 and 2020, respectively.
We act as investment adviser to the collective investment trusts and earn a management fee for providing this service. The weighted average management fee rate paid by our Artisan-branded collective investment trust clients was 0.665%, 0.714%, and 0.729% for the years ended December 31, 2023, 2022 and 2021, respectively.
Our non-GAAP measures are as follows: • Adjusted net income represents net income excluding the impact of (1) net gain (loss) on the tax receivable agreements (if any), (2) compensation expense (reversal) related to market valuation changes in compensation plans, (3) net investment gain (loss) of investment products, and (4) the remeasurement of deferred taxes.
Our non-GAAP measures are as follows: • Adjusted net income represents net income excluding the impact of (1) net gain (loss) on the tax receivable agreements (if any), (2) compensation expense (reversal) related to market valuation changes in compensation plans, and (3) net investment gain (loss) of investment products.
Our investment management fees also differ by investment strategy, with higher-capacity strategies having lower standard fee rates than strategies with more limited capacity. 40 Table of Content s Certain separate account clients pay us fees based on the performance of their accounts relative to agreed-upon benchmarks, which typically results in a lower base fee, but allows us to earn higher fees if the performance we achieve for that client is superior to the performance of an agreed-upon benchmark.
Our investment management fees also differ by investment strategy, with higher-capacity strategies having lower standard fee rates than strategies with more limited capacity. 44 Table of Contents Certain separate account clients pay us fees based on the performance of their accounts relative to agreed-upon benchmarks, which typically results in a lower base fee, but allows us to earn higher fees if the performance we achieve for that client is superior to the performance of the agreed-upon benchmark.
Several factors contribute to the effective tax rate, including a rate benefit attributable to the fact that approximately 17% and 19% of Holdings’ full year projected taxable earnings were not subject to corporate-level taxes for the years ended December 31, 2022 and 2021, respectively.
Several factors contribute to the effective tax rate, including a rate benefit attributable to the fact that approximately 16% and 17% of Holdings’ full year projected taxable earnings were not subject to corporate-level taxes for the years ended December 31, 2023 and 2022, respectively.
APAM’s equity ownership interest in Holdings increased from 84% at December 31, 2021 to 85% at December 31, 2022, as a result of these transactions and other equity transactions during the period. Financial Overview Economic Environment Global market conditions materially affect our financial performance.
APAM’s equity ownership interest in Holdings increased from 85% at December 31, 2022 to 86% at December 31, 2023, as a result of these transactions and other equity transactions during the period. Financial Overview Economic Environment Global market conditions materially affect our financial performance.
(2) AUM for certain strategies include the following amounts for which Artisan Partners provides investment models to managed account sponsors (reported on a one-month lag): Artisan Sustainable Emerging Markets $48 million. 36 Table of Content s The tables below set forth changes in our assets under management by investment team: By Investment Team Year Ended Growth Global Equity U.S.
(2) AUM for certain strategies include the following amounts for which Artisan Partners provides investment models to managed account sponsors (reported on a one-month lag): Artisan Sustainable Emerging Markets $78 million. 39 Table of Contents The tables below set forth changes in our assets under management by investment team: By Investment Team Year Ended Growth Global Equity U.S.
Significant portions of net investment gain (loss) of consolidated investment products are offset by noncontrolling interests in our Consolidated Statements of Operations. Net Investment Income Net investment income includes realized and unrealized investment gains (losses) related to nonconsolidated investment products, income earned on excess cash balances, and dividends earned on nonconsolidated equity securities.
Significant portions of net investment gain (loss) of consolidated investment products are offset by noncontrolling interests in our Consolidated Statements of Operations. Net Investment Gain (Loss) of Nonconsolidated Investment Products Net investment gain (loss) of nonconsolidated investment products includes realized and unrealized investment gains (losses) related to nonconsolidated investment products and dividends earned on nonconsolidated equity securities.
These adjusted measures remove the impact of (1) net gain (loss) on the tax receivable agreements (if any), (2) compensation expense (reversal) related to market valuation changes in compensation plans, (3) net investment gain (loss) of investment products, and (4) the remeasurement of deferred taxes.
These adjusted measures remove the impact of (1) net gain (loss) on the tax receivable agreements (if any), (2) compensation expense (reversal) related to market valuation changes in compensation plans, and (3) net investment gain (loss) of investment products.
We expect to continue to invest in the growth of the business, with a focus on adding new investment capabilities and more degrees of freedom in areas where both opportunity and client demand exist, and in which we can differentiate our active management and add value for clients. Business highlights for 2022 included: • Our U.S.
We expect to continue to invest in the growth of the business, with a focus on adding new investment capabilities and more degrees of freedom in areas where both opportunity and client demand exist, and in which we can differentiate our active management and add value for clients.
The variable quarterly dividend of $0.55 per share represents approximately 80% of the cash generated (as described below) in the December quarter of 2022 and a pro-rata portion of 2022 tax savings related to our tax receivable agreements.
The variable quarterly dividend of $0.68 per share represents approximately 80% of the cash generated (as described below) in the December quarter of 2023 and a pro-rata portion of 2023 tax savings related to our tax receivable agreements.
For the year, 10 of our 25 investment strategies had net inflows totaling $1.2 billion, which were offset by $11.0 billion of net outflows from the remaining strategies. Over the long-term, we expect to generate the majority of our AUM growth through investment returns, which has been our historical experience.
For the year, 10 of our 25 investment strategies had net inflows totaling $6.2 billion, which were offset by $10.3 billion of net outflows from the remaining strategies. Over the long-term, we expect to generate the majority of our AUM growth through investment returns, which has been our historical experience.
Dividend income from these investments is recognized when earned and is included in net investment income in the Consolidated Statements of Operations. 54 Table of Content s Revenue Recognition Investment management fees are generally computed as a percentage of assets under management and are recognized as revenue at the end of each distinct service period.
Dividend income from these investments is recognized when earned and is included in net investment income in the Consolidated Statements of Operations. 59 Table of Contents Revenue Recognition Investment management fees are generally computed as a percentage of assets under management and are recognized as revenue at the end of each distinct service period.
As of December 31, 2022, Artisan Global Funds comprised $5.0 billion, or 3%, of our assets under management. For the year ended December 31, 2022, fees from Artisan Global Funds represented $43.1 million, or 4%, of our revenues. Our contractual fee rates for Artisan Global Funds range from 0.70% to 1.85% of assets under management.
As of December 31, 2023, Artisan Global Funds comprised $6.3 billion, or 4%, of our assets under management. For the year ended December 31, 2023, fees from Artisan Global Funds represented $43.5 million, or 4%, of our revenues. Our contractual fee rates for Artisan Global Funds range from 0.50% to 1.85% of assets under management.
The weighted average management fee rate paid by our Artisan Funds and Artisan Global Funds clients in the aggregate was 0.907%, 0.912%, and 0.916%, for the years ended December 31, 2022, 2021 and 2020, respectively.
The weighted average management fee rate paid by our Artisan Funds and Artisan Global Funds clients in the aggregate was 0.901%, 0.907%, and 0.912%, for the years ended December 31, 2023, 2022 and 2021, respectively.
(GAAP) $ 206.8 $ 336.5 $ 212.6 Add back: Net income attributable to noncontrolling interests - Artisan Partners Holdings 49.1 96.9 81.1 Add back: Compensation expense (reversal) related to market valuation changes in compensation plans (3.8) 0.3 — Add back: Net (gain) loss on the tax receivable agreements (1.0) (0.4) 4.7 Add back: Net investment (gain) loss of investment products attributable to APAM 16.9 (9.3) (10.3) Add back: Interest expense 9.9 10.8 10.8 Add back: Provision for income taxes 63.4 107.1 60.8 Add back: Depreciation and amortization 7.9 7.0 6.6 Adjusted EBITDA (Non-GAAP) $ 349.2 $ 548.9 $ 366.3 50 Table of Content s Liquidity, Capital Resources, and Contractual Obligations Our working capital needs, including accrued incentive compensation payments, have been and are expected to be met primarily through cash generated by our operations.
(GAAP) $ 222.3 $ 206.8 $ 336.5 Add back: Net income attributable to noncontrolling interests - Artisan Partners Holdings 49.5 49.1 96.9 Add back: Compensation expense (reversal) related to market valuation changes in compensation plans 4.8 (3.8) 0.3 Add back: Net (gain) loss on the tax receivable agreements (0.5) (1.0) (0.4) Add back: Net investment (gain) loss of investment products attributable to APAM (38.4) 16.9 (9.3) Add back: Interest expense 8.6 9.9 10.8 Add back: Provision for income taxes 71.9 63.4 107.1 Add back: Depreciation and amortization 9.3 7.9 7.0 Adjusted EBITDA (Non-GAAP) $ 327.5 $ 349.2 $ 548.9 54 Table of Contents Liquidity, Capital Resources, and Contractual Obligations Our working capital needs, including accrued incentive compensation payments, have been and are expected to be met primarily through cash generated by our operations.
For the year ended December 31, 2022, fees from Artisan Funds represented $573.9 million, or 58%, of our revenues. Our contractual tiered fee rates for the series of Artisan Funds range from 0.60% to 1.05% of fund assets, depending on the investment strategy, the amount invested and other factors.
For the year ended December 31, 2023, fees from Artisan Funds represented $562.8 million, or 58%, of our revenues. Our contractual tiered fee rates for the series of Artisan Funds range from 0.60% to 1.05% of fund assets, depending on the investment strategy, the amount invested and other factors.
The weighted average management fee rate paid by our Artisan Private Funds clients was 0.809%, 0.786%, and 0.800% for the years ended December 31, 2022, 2021 and 2020, respectively.
The weighted average management fee rate paid by our Artisan Private Funds clients was 0.654%, 0.809%, and 0.786% for the years ended December 31, 2023, 2022 and 2021, respectively.
See Note 5, “Borrowings”, for further information on our outstanding notes and revolving credit facility. As of December 31, 2022, we had approximately $143.9 million of future minimum rent commitments under non-cancellable leasing arrangements.
See Note 5, “Borrowings”, for further information on our outstanding notes and revolving credit facility. As of December 31, 2023, we had approximately $133.5 million of future minimum rent commitments under non-cancellable leasing arrangements.
The weighted average management fee rate paid by our traditional separate account clients was 0.484%, 0.484%, and 0.498% for the years ended December 31, 2022, 2021 and 2020, respectively.
The weighted average management fee rate paid by our traditional separate account clients was 0.489%, 0.484%, and 0.484% for the years ended December 31, 2023, 2022 and 2021, respectively.
Tax Receivable Agreements (“TRAs”) In addition to funding our normal operations, we will be required to fund amounts payable under the TRAs that we entered into in connection with the IPO, which resulted in the recognition of a $398.8 million liability as of December 31, 2022.
Tax Receivable Agreements (“TRAs”) In addition to funding our normal operations, we will be required to fund amounts payable under the TRAs that we entered into in connection with the IPO, which resulted in the recognition of a $364.0 million liability as of December 31, 2023.
Non-Operating Income (Expense) Interest Expense Interest expense primarily relates to the interest we pay on our debt. For a description of the terms of our debt, see “—Liquidity and Capital Resources”.
Non-Operating Income (Expense) Interest Expense Interest expense primarily relates to the interest we pay on our debt. For a description of the terms of our debt, see “—Liquidity, Capital Resources, and Contractual Obligations”.
Separate Accounts and Other (2) Artisan Funds and Artisan Global Funds For the Years Ended December 31, 2022 2021 2022 2021 (dollars in millions) Investment advisory fees $ 376.3 $ 465.8 $ 617.0 $ 761.4 Weighted average management fee (1) 51.2 bps 51.3 bps 90.7 bps 91.2 bps Percentage of ending AUM 52 % 52 % 48 % 48 % (1) We compute our weighted average management fee by dividing annualized management fees (which excludes performance fees) by average assets under management for the applicable period.
Separate Accounts and Other (2) Artisan Funds and Artisan Global Funds For the Years Ended December 31, 2023 2022 2023 2022 (dollars in millions) Investment advisory fees $ 368.8 $ 376.3 $ 606.3 $ 617.0 Weighted average management fee (1) 50.8 bps 51.2 bps 90.1 bps 90.7 bps Percentage of ending AUM 52 % 52 % 48 % 48 % (1) We compute our weighted average management fee by dividing annualized management fees (which excludes performance fees) by average assets under management for the applicable period.
Holdings maintained an investment grade rating for the year ended December 31, 2022.
Holdings maintained an investment grade rating for the year ended December 31, 2023.
In addition, covenants in the note purchase and revolving credit agreements require Artisan Partners Holdings to maintain the following financial ratios: • leverage ratio (calculated as the ratio of consolidated total indebtedness on any date to consolidated EBITDA for the period of four consecutive fiscal quarters ended on or prior to such date) cannot exceed 3.00 to 1.00 (Artisan Partners Holdings’ leverage ratio for the year ended December 31, 2022 was 0.5 to 1.00); and 51 Table of Content s • interest coverage ratio (calculated as the ratio of consolidated EBITDA for any period of four consecutive fiscal quarters to consolidated interest expense for such period) cannot be less than 4.00 to 1.00 for such period (Artisan Partners Holdings’ interest coverage ratio for the year ended December 31, 2022 was 42.4 to 1.00).
In addition, covenants in the note purchase and revolving credit agreements require Artisan Partners Holdings to maintain the following financial ratios: • leverage ratio (calculated as the ratio of consolidated total indebtedness on any date to consolidated EBITDA for the period of four consecutive fiscal quarters ended on or prior to such date) cannot exceed 3.00 to 1.00 (Artisan Partners Holdings’ leverage ratio for the year ended December 31, 2023 was 0.6 to 1.00); and • interest coverage ratio (calculated as the ratio of consolidated EBITDA for any period of four consecutive fiscal quarters to consolidated interest expense for such period) cannot be less than 4.00 to 1.00 for such period (Artisan Partners Holdings’ interest coverage ratio for the year ended December 31, 2023 was 46.0 to 1.00).
Holdings Unit Exchanges During the year ended December 31, 2022, certain limited partners of Holdings exchanged 711,166 common units (along with a corresponding number of shares of Class B or Class C common stock of APAM, as applicable) for 711,166 shares of Class A common stock. In connection with the exchanges, APAM received 711,166 GP units of Holdings.
Holdings Unit Exchanges During the year ended December 31, 2023, certain limited partners of Holdings exchanged 163,345 common units (along with a corresponding number of shares of Class B or Class C common stock of APAM, as applicable) for 163,345 shares of Class A common stock. In connection with the exchanges, APAM received 163,345 GP units of Holdings.
APAM declared and paid the following dividends per share during the years ended December 31, 2022 and 2021: For the Years Ended December 31, Type of Dividend Class of Stock 2022 2021 Quarterly Common Class A $ 2.95 $ 3.92 Special Annual Common Class A $ 0.72 $ 0.31 Our board of directors declared, effective January 31, 2023 , a variable quarterly dividend of $0.55 per share of Class A common stock with respect to the December quarter of 2022 and a special annual dividend of $0.35.
APAM declared and paid the following dividends per share during the years ended December 31, 2023 and 2022: For the Years Ended December 31, Type of Dividend Class of Stock 2023 2022 Quarterly Common Class A $ 2.31 $ 2.95 Special Annual Common Class A $ 0.35 $ 0.72 Our board of directors declared, effective January 30, 2024 , a variable quarterly dividend of $0.68 per share of Class A common stock with respect to the December quarter of 2023 and a special annual dividend of $0.34.
The amount and composition of our assets under management are, and will continue to be, influenced by a variety of factors including, among others: • investment performance, including fluctuations in both the financial markets and foreign currency exchange rates and the quality of our investment decisions; • flows of client assets into and out of our various strategies and investment vehicles; • our decision to close strategies or limit the growth of assets in a strategy or a vehicle when we believe it is in the best interest of our clients, as well as our decision to re-open strategies, in part or entirely; • our ability to attract and retain qualified investment, management, and marketing and client service professionals; • industry trends towards products, strategies, vehicles or services that we do not offer; • competitive conditions in the investment management and broader financial services sectors; and • investor sentiment and confidence. 33 Table of Content s The table below sets forth changes in our total assets under management: For the Years Ended December 31, 2022 2021 2020 (unaudited; dollars in millions) Beginning assets under management $ 174,754 $ 157,776 $ 121,016 Gross client cash inflows 27,227 33,725 36,338 Gross client cash outflows (37,040) (32,047) (29,184) Net client cash flows (9,813) 1,678 7,154 Artisan Funds’ distributions not reinvested (1) (497) (2,295) (690) Investment returns and other (2) (36,552) 17,595 30,296 Ending assets under management $ 127,892 $ 174,754 $ 157,776 Average assets under management $ 141,516 $ 171,767 $ 124,901 (1) Artisan Funds’ distributions not reinvested represents the amount of income and capital gain distributions that were not reinvested in the Artisan Funds.
The amount and composition of our assets under management are, and will continue to be, influenced by a variety of factors including, among others: • investment performance, including fluctuations in both the financial markets and foreign currency exchange rates and the quality of our investment decisions; • flows of client assets into and out of our various strategies and investment vehicles; • our decision to close strategies or limit the growth of assets in a strategy or a vehicle when we believe it is in the best interest of our clients, as well as our decision to re-open strategies, in part or entirely; • our ability to attract and retain qualified investment, management, and marketing and client service professionals; • industry trends towards products, strategies, vehicles or services that we do not offer; • competitive conditions in the investment management and broader financial services sectors; and • investor sentiment and confidence. 36 Table of Contents The table below sets forth changes in our total assets under management: For the Years Ended December 31, 2023 2022 2021 (unaudited; dollars in millions) Beginning assets under management $ 127,892 $ 174,754 $ 157,776 Gross client cash inflows 21,395 27,227 33,725 Gross client cash outflows (25,471) (37,040) (32,047) Net client cash flows (4,076) (9,813) 1,678 Artisan Funds’ distributions not reinvested (1) (684) (497) (2,295) Investment returns and other (2) 27,035 (36,552) 17,595 Ending assets under management $ 150,167 $ 127,892 $ 174,754 Average assets under management $ 139,321 $ 141,516 $ 171,767 (1) Artisan Funds’ distributions not reinvested represents the amount of income and capital gain distributions that were not reinvested in the Artisan Funds.
We expect to continue our measured investments in technology to support our investment teams, distribution efforts, and scalable operations. We expect communication and technology expenses to increase approximately 5% in 2023. On behalf of our clients, we make decisions to buy and sell securities for each portfolio, select broker-dealers to execute trades and negotiate brokerage commission rates.
We expect to continue our measured investments in technology to support our investment teams, distribution efforts, and scalable operations. We expect 2024 communication and technology expenses to be relatively consistent with 2023. On behalf of our clients, we make decisions to buy and sell securities for each portfolio, select broker-dealers to execute trades and negotiate brokerage commission rates.
The following table shows our liquidity position as of December 31, 2022 and December 31, 2021: December 31, 2022 December 31, 2021 (in millions) Cash and cash equivalents $ 114.8 $ 189.2 Accounts receivable $ 98.6 $ 115.9 Seed investments (1) $ 124.8 $ 71.9 Undrawn commitment on revolving credit facility $ 100.0 $ 100.0 (1) Seed investments include Artisan's direct equity investments in consolidated and nonconsolidated Artisan-sponsored investment products.
The following table shows our liquidity position as of December 31, 2023 and December 31, 2022: December 31, 2023 December 31, 2022 (in millions) Cash and cash equivalents $ 141.0 $ 114.8 Accounts receivable $ 101.2 $ 98.6 Seed investments (1) $ 150.1 $ 124.8 Undrawn commitment on revolving credit facility $ 100.0 $ 100.0 (1) Seed investments include Artisan's direct equity investments in consolidated and nonconsolidated Artisan-sponsored investment products.
The following table sets forth revenues we earned by vehicle type for the years ended December 31, 2022, 2021 and 2020: For the Years Ended December 31, 2022 2021 2020 Revenues (in millions) Management fees Artisan Funds & Artisan Global Funds $ 617.0 $ 761.4 $ 537.2 Separate accounts and other 375.7 452.5 347.7 Performance fees 0.6 13.3 14.7 Total revenues $ 993.3 $ 1,227.2 $ 899.6 Average assets under management for period $ 141,516 $ 171,767 $ 124,901 Management fees, performance fees and incentive allocations earned from consolidated investment products are eliminated from revenue upon consolidation.
The following table sets forth revenues we earned by vehicle type for the years ended December 31, 2023, 2022 and 2021: For the Years Ended December 31, 2023 2022 2021 Revenues (in millions) Management fees Artisan Funds & Artisan Global Funds $ 606.3 $ 617.0 $ 761.4 Separate accounts and other 364.5 375.7 452.5 Performance fees 4.3 0.6 13.3 Total revenues $ 975.1 $ 993.3 $ 1,227.2 Average assets under management for period $ 139,321 $ 141,516 $ 171,767 Management fees, performance fees and incentive allocations earned from consolidated investment products are eliminated from revenue upon consolidation.
The amount we pay to intermediaries for distribution and administrative services varies by share class. As assets have transferred from the Investor share class to the Advisor and Institutional share classes, the amount we have paid for distribution, servicing and marketing has decreased.
The amount we pay to intermediaries for distribution and administrative services varies by share class. As assets have transferred from the Investor share class to the Advisor and Institutional share classes, the amount we have paid for distribution, servicing and marketing relative to average AUM in the Artisan Funds has decreased.
From time to time, we may also make individual equity grants to people we hire. 42 Table of Content s Distribution, Servicing and Marketing Distribution, servicing and marketing expenses primarily represent payments we make to broker-dealers, financial advisors, defined contribution plan providers, mutual fund supermarkets and other intermediaries for selling, servicing and administering accounts invested in shares of Artisan Funds.
From time to time, we may also make individual long-term incentive grants to people we hire. 46 Table of Contents Distribution, Servicing and Marketing Distribution, servicing and marketing expenses primarily represent payments we make to broker-dealers, financial advisors, defined contribution plan providers, mutual fund supermarkets and other intermediaries for selling, servicing and administering accounts invested in shares of Artisan Funds.
(GAAP) $ 206.8 $ 336.5 $ 212.6 Add back: Net income attributable to noncontrolling interests - Artisan Partners Holdings 49.1 96.9 81.1 Add back: Provision for income taxes 63.4 107.1 60.8 Add back: Compensation expense (reversal) related to market valuation changes in compensation plans (3.8) 0.3 — Add back: Net (gain) loss on the tax receivable agreements (1.0) (0.4) 4.7 Add back: Net investment (gain) loss of investment products attributable to APAM 16.9 (9.3) (10.3) Less: Adjusted provision for income taxes 81.8 131.2 86.2 Adjusted net income (Non-GAAP) $ 249.6 $ 399.9 $ 262.7 Average shares outstanding Class A common shares 62.5 59.9 55.6 Assumed vesting or exchange of: Unvested Class A restricted share-based awards 5.7 5.4 5.4 Artisan Partners Holdings units outstanding (noncontrolling interests) 12.0 14.2 17.9 Adjusted shares 80.2 79.5 78.9 Basic earnings per share (GAAP) $ 2.94 $ 5.10 $ 3.40 Diluted earnings per share (GAAP) $ 2.94 $ 5.09 $ 3.40 Adjusted net income per adjusted share (Non-GAAP) $ 3.11 $ 5.03 $ 3.33 Operating income (GAAP) $ 344.1 $ 540.5 $ 358.3 Add back: Compensation expense (reversal) related to market valuation changes in compensation plans (3.8) 0.3 — Adjusted operating income (Non-GAAP) $ 340.3 $ 540.8 $ 358.3 Operating margin (GAAP) 34.6 % 44.0 % 39.8 % Adjusted operating margin (Non-GAAP) 34.3 % 44.1 % 39.8 % Net income attributable to Artisan Partners Asset Management Inc.
(GAAP) $ 222.3 $ 206.8 $ 336.5 Add back: Net income attributable to noncontrolling interests - Artisan Partners Holdings 49.5 49.1 96.9 Add back: Provision for income taxes 71.9 63.4 107.1 Add back: Compensation expense (reversal) related to market valuation changes in compensation plans 4.8 (3.8) 0.3 Add back: Net (gain) loss on the tax receivable agreements (0.5) (1.0) (0.4) Add back: Net investment (gain) loss of investment products attributable to APAM (38.4) 16.9 (9.3) Less: Adjusted provision for income taxes 76.5 81.8 131.2 Adjusted net income (Non-GAAP) $ 233.1 $ 249.6 $ 399.9 Average shares outstanding Class A common shares 63.4 62.5 59.9 Assumed vesting or exchange of: Unvested Class A restricted share-based awards 5.7 5.7 5.4 Artisan Partners Holdings units outstanding (noncontrolling interests) 11.5 12.0 14.2 Adjusted shares 80.6 80.2 79.5 Basic earnings per share (GAAP) $ 3.19 $ 2.94 $ 5.10 Diluted earnings per share (GAAP) $ 3.19 $ 2.94 $ 5.09 Adjusted net income per adjusted share (Non-GAAP) $ 2.89 $ 3.11 $ 5.03 Operating income (GAAP) $ 303.6 $ 344.1 $ 540.5 Add back: Compensation expense (reversal) related to market valuation changes in compensation plans 4.8 (3.8) 0.3 Adjusted operating income (Non-GAAP) $ 308.4 $ 340.3 $ 540.8 Operating margin (GAAP) 31.1 % 34.6 % 44.0 % Adjusted operating margin (Non-GAAP) 31.6 % 34.3 % 44.1 % Net income attributable to Artisan Partners Asset Management Inc.
We may also receive performance fees or incentive allocations from Artisan Private Funds. Approximately 3% of our $127.9 billion of assets under management as of December 31, 2022 have performance fee billing arrangements. Performance fees of $0.6 million, $13.3 million, and $14.7 million were recognized in the years ended December 31, 2022, 2021 and 2020, respectively.
We may also receive performance fees or incentive allocations from Artisan Private Funds. Approximately 3% of our $150.2 billion of assets under management as of December 31, 2023 have performance fee billing arrangements. Performance fees of $4.3 million, $0.6 million, and $13.3 million were recognized in the years ended December 31, 2023, 2022 and 2021, respectively.
In the event that sufficient taxable income of the same character does not result in future years, among other things, a valuation allowance for certain of our deferred tax assets may be required. 55 Table of Content s Payments pursuant to the Tax Receivable Agreements (“TRAs”) We have recorded a liability of $398.8 million as of December 31, 2022, representing 85% of the estimated future tax benefits subject to the TRAs.
In the event that sufficient taxable income of the same character does not result in future years, among other things, a valuation allowance for certain of our deferred tax assets may be required. 60 Table of Contents Payments pursuant to the Tax Receivable Agreements (“TRAs”) We have recorded a liability of $364.0 million as of December 31, 2023, representing 85% of the estimated future tax benefits subject to the TRAs.
There are a number of exceptions to our standard fee schedules, including exceptions based on the nature of our relationship with the client and the value of the assets under our management in that relationship.
There are a number of exceptions to our standard fee schedules, including exceptions based on the nature of a client relationship and the aggregate value of a client’s assets under our management.
The weighted average investment management fee, which excludes performance fees, was 70.2 basis points for the year ended December 31, 2022, compared to 70.7 basis points for the year ended December 31, 2021.
The weighted average investment management fee, which excludes performance fees, was 69.8 basis points for the year ended December 31, 2023, compared to 70.2 basis points for the year ended December 31, 2022.
With the exception of the assets managed by our Credit team and EMsights Capital Group (which represented approximately 5.6% of our assets under management at December 31, 2022), the portfolios are invested principally in publicly-traded equity securities.
With the exception of the assets managed by our Credit team and EMsights Capital Group (which together represented approximately 7.0% of our assets under management at December 31, 2023), the portfolios are invested principally in publicly-traded equity securities.
The following table presents the total returns of relevant market indices for the years ended December 31, 2022, 2021 and 2020: For the Years Ended December 31, 2022 2021 2020 S&P 500 total returns (18.1) % 28.7 % 18.4 % MSCI All Country World total returns (18.4) % 18.5 % 16.3 % MSCI EAFE total returns (14.5) % 11.3 % 7.8 % Russell Midcap® total returns (17.3) % 22.6 % 17.1 % MSCI Emerging Markets Index (20.1) % (2.5) % 18.3 % ICE BofA US High Yield Master II Total Return Index (11.2) % 5.4 % 6.2 % 32 Table of Content s Key Performance Indicators When we review our business and financial performance we consider, among other things, the following: For the Years Ended December 31, 2022 2021 2020 (unaudited; dollars in millions) Assets under management at period end $ 127,892 $ 174,754 $ 157,776 Average assets under management (1) $ 141,516 $ 171,767 $ 124,901 Net client cash flows (2) $ (9,813) $ 1,678 $ 7,154 Total revenues $ 993 $ 1,227 $ 900 Weighted average fee (3) 70.2 bps 70.7 bps 70.9 bps Operating margin 34.6 % 44.0 % 39.8 % Adjusted operating margin (4) 34.3 % 44.1 % 39.8 % (1) We compute average assets under management by averaging day-end assets under management for the applicable period.
The following table presents the total returns of relevant market indices for the years ended December 31, 2023, 2022 and 2021: For the Years Ended December 31, 2023 2022 2021 S&P 500 total returns 26.3 % (18.1) % 28.7 % MSCI All Country World total returns 22.2 % (18.4) % 18.5 % MSCI EAFE total returns 18.2 % (14.5) % 11.3 % Russell Midcap® total returns 17.2 % (17.3) % 22.6 % MSCI Emerging Markets Index 9.8 % (20.1) % (2.5) % ICE BofA US High Yield Index 13.5 % (11.2) % 5.4 % 35 Table of Contents Key Performance Indicators When we review our business and financial performance we consider, among other things, the following: For the Years Ended December 31, 2023 2022 2021 (unaudited; dollars in millions) Assets under management at period end $ 150,167 $ 127,892 $ 174,754 Average assets under management (1) $ 139,321 $ 141,516 $ 171,767 Net client cash flows (2) $ (4,076) $ (9,813) $ 1,678 Total revenues $ 975 $ 993 $ 1,227 Weighted average management fee (3) 69.8 bps 70.2 bps 70.7 bps Operating margin 31.1 % 34.6 % 44.0 % Adjusted operating margin (4) 31.6 % 34.3 % 44.1 % (1) We compute average assets under management by averaging day-end assets under management for the applicable period.
Morgan GBI-EM Global Diversified Index --- --- --- --- 3.03% Total Assets Under Management $ 127,892 (1) Value-added is the amount, in basis points, by which the average annual gross composite return of each of our strategies has outperformed or underperformed its respective benchmark.
Morgan GBI-EM Global Diversified Index 12.70% --- --- --- 11.12% Total Assets Under Management $ 150,167 (1) Value-added is the amount, in basis points, by which the average annual gross composite return of each of our strategies has outperformed or underperformed its respective benchmark.
The Company is primarily self-insured for health benefits up to certain annual stop-loss limits. Expense is recognized based on claims filed and an estimate of claims incurred but not yet reported, as determined by an independent third party.
The Company is primarily self-insured for health benefits up to certain annual stop-loss limits. Expense is recognized based on claims filed and an estimate of claims incurred but not yet reported, as determined by an independent third party. Fixed compensation costs are comprised primarily of salaries, benefits, and long-term incentive compensation expense.
For traditional separate account clients, we generally impose standard fee schedules that vary by investment strategy and, through the application of standard breakpoints, reflect the size of the account and client relationship.
Traditional separate account clients are generally subject to standard fee schedules that vary by investment strategy and, through the application of standard breakpoints, reflect the size of the account and client relationship.
During the year ended December 31, 2022, we made payments of $33.2 million, related to the TRAs, including interest. In 2023, we expect to make payments of approximately $36 million related to the TRAs.
During the year ended December 31, 2023, we made payments totaling $36.0 million, related to the TRAs, including interest. In 2024, we expect to make payments of approximately $37.2 million related to the TRAs.
Distributions and Dividends Artisan Partners Holdings’ distributions, including distributions to APAM, for the years ended December 31, 2022 and 2021 were as follows: For the Years Ended December 31, 2022 2021 (in millions) Holdings Partnership Distributions to Limited Partners $ 57.2 $ 93.2 Holdings Partnership Distributions to APAM 299.0 400.2 Total Holdings Partnership Distributions $ 356.2 $ 493.4 APAM, acting as the general partner of Artisan Partners Holdings, declared, effective January 31, 2023, a distribution of $23.0 million payable by Artisan Partners Holdings on February 21, 2023 to holders of its partnership units, including APAM.
Distributions and Dividends Artisan Partners Holdings’ distributions, including distributions to APAM, for the years ended December 31, 2023 and 2022 were as follows: For the Years Ended December 31, 2023 2022 (in millions) Holdings Partnership Distributions to Limited Partners $ 44.7 $ 57.2 Holdings Partnership Distributions to APAM 248.3 299.0 Total Holdings Partnership Distributions $ 293.0 $ 356.2 APAM, acting as the general partner of Artisan Partners Holdings, declared, effective January 30, 2024, a distribution of $30.2 million payable by Artisan Partners Holdings on February 21, 2024 to holders of its partnership units, including APAM.
The effective tax rate was favorably impacted in both periods due to tax deductible dividends paid on unvested restricted share-based awards and favorable tax deductions related to the vesting of restricted share-based awards.
The effective tax rate was favorably impacted in both periods due to tax deductible dividends paid on unvested restricted share-based awards.
The grant will be effective March 1, 2023. Since the IPO and including the grant in the first quarter of 2023, our board of directors has approved equity grants of 11,866,016 restricted share-based awards. Total unrecognized non-cash compensation expense for these awards is $97.7 million.
The grant will be effective March 1, 2024. Since the IPO and including the grant in the first quarter of 2024, our board of directors has approved equity grants of 12,363,069 restricted share-based awards. Total unrecognized non-cash compensation expense for these awards is $85.2 million.
The table below sets forth our assets under management by distribution channel: As of December 31, 2022 As of December 31, 2021 As of December 31, 2020 $ in millions % of total $ in millions % of total $ in millions % of total (unaudited) (unaudited) (unaudited) Institutional $ 82,456 64.5 % $ 111,705 63.9 % $ 102,189 64.8 % Intermediary 39,851 31.1 % 55,198 31.6 % 48,657 30.8 % Retail 5,585 4.4 % 7,851 4.5 % 6,930 4.4 % Ending Assets Under Management (1) $ 127,892 100.0 % $ 174,754 100.0 % $ 157,776 100.0 % (1) The allocation of assets under management by distribution channel involves the use of estimates and the exercise of judgment.
The table below sets forth our assets under management by distribution channel: As of December 31, 2023 As of December 31, 2022 As of December 31, 2021 $ in millions % of total $ in millions % of total $ in millions % of total (unaudited) (unaudited) (unaudited) Institutional $ 94,652 63.0 % $ 82,456 64.5 % $ 111,705 63.9 % Intermediary 49,871 33.2 % 39,851 31.1 % 55,198 31.6 % Retail 5,644 3.8 % 5,585 4.4 % 7,851 4.5 % Ending Assets Under Management (1) $ 150,167 100.0 % $ 127,892 100.0 % $ 174,754 100.0 % (1) The allocation of assets under management by distribution channel involves the use of estimates and the exercise of judgment.
(4) Net transfers represent certain amounts that we have identified as having been transferred out of one investment strategy, investment vehicle or account and into another strategy, vehicle or account. 39 Table of Content s Artisan Funds and Artisan Global Funds As of December 31, 2022, Artisan Funds comprised $55.8 billion, or 45%, of our assets under management.
(4) Net transfers represent certain amounts that we have identified as having been transferred out of one investment strategy, investment vehicle or account and into another strategy, vehicle or account. 43 Table of Contents Artisan Funds and Artisan Global Funds As of December 31, 2023, Artisan Funds comprised $66.5 billion, or 44%, of our assets under management.
Net cash used in financing activities decreased $29.0 million during the year ended December 31, 2022, primarily due to a $26.0 million decrease in dividends paid and a $36.0 million decrease in distributions paid to limited partners, each related to the decrease in operating income for the year ended December 31, 2022 driven by the decrease in AUM.
Net cash used in financing activities decreased $131.4 million during the year ended December 31, 2023, primarily due to a $65.3 million decrease in dividends paid and a $12.5 million decrease in distributions paid to limited partners, each primarily related to the decrease in operating income for the year ended December 31, 2023, driven by the decrease in AUM.
Financial highlights for 2022 included: • During the year ended December 31, 2022, our assets under management decreased to $127.9 billion, a decrease of $46.9 billion, or 27%, compared to $174.8 billion at December 31, 2021, as a result of $36.6 billion of market depreciation, $9.8 billion of net client cash outflows, and $0.5 billion of Artisan Funds’ distributions that were not reinvested by fund shareholders. • Average assets under management for the year ended December 31, 2022 was $141.5 billion, a decrease of 17.6% from the average of $171.8 billion for the year ended December 31, 2021. • We earned $993.3 million in revenue for the year ended December 31, 2022, a 19% decrease from revenues of $1,227.2 million for the year ended December 31, 2021. • Our GAAP operating margin was 34.6% in 2022, compared to 44.0% in 2021.
Financial highlights for 2023 included the following: • During the year ended December 31, 2023, our assets under management increased to $150.2 billion, an increase of $22.3 billion, or 17%, compared to $127.9 billion at December 31, 2022, as a result of $27.1 billion of market appreciation, partially offset by $4.1 billion of net client cash outflows, and $0.7 billion of Artisan Funds’ distributions that were not reinvested by fund shareholders. • Average assets under management for the year ended December 31, 2023 was $139.3 billion, a decrease of 1.6% from the average of $141.5 billion for the year ended December 31, 2022. • We earned $975.1 million in revenue for the year ended December 31, 2023, a 2% decrease from revenues of $993.3 million for the year ended December 31, 2022. • Our GAAP operating margin was 31.1% in 2023, compared to 34.6% in 2022.
See Note 12, “Earnings Per Share” in the Notes to the consolidated financial statements in Item 8 of this report for further discussion of earnings per share. 47 Table of Content s Year Ended December 31, 2021, Compared to the Year Ended December 31, 2020 For the Years Ended December 31, For the Period-to-Period 2021 2020 $ % Statements of operations data: (in millions, except share and per-share data) Revenues $ 1,227.2 $ 899.6 $ 327.6 36 % Operating Expenses Total compensation and benefits 563.0 435.8 127.2 29 % Other operating expenses 123.7 105.5 18.2 17 % Total operating expenses 686.7 541.3 145.4 27 % Total operating income 540.5 358.3 182.2 51 % Non-operating income (expense) Interest expense (10.8) (10.8) — — % Other non-operating income 21.9 21.8 0.1 — % Total non-operating income (expense) 11.1 11.0 0.1 1 % Income before income taxes 551.6 369.3 182.3 49 % Provision for income taxes 107.1 60.8 46.3 76 % Net income before noncontrolling interests 444.5 308.5 136.0 44 % Less: Noncontrolling interests - Artisan Partners Holdings 96.9 81.1 15.8 19 % Less: Noncontrolling interests - consolidated investment products 11.1 14.8 (3.7) (25) % Net income attributable to Artisan Partners Asset Management Inc. $ 336.5 $ 212.6 $ 123.9 58 % Share Data Basic earnings per share $ 5.10 $ 3.40 Diluted earnings per share $ 5.09 $ 3.40 Basic weighted average number of common shares outstanding 59,866,790 55,633,529 Diluted weighted average number of common shares outstanding 59,881,039 55,637,922 A detailed discussion of the year-over-year results for the year ended December 31, 2021, compared to the year ended December 31, 2020, can be found in “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on February 22, 2022. 48 Table of Content s Supplemental Non-GAAP Financial Information Our management uses non-GAAP measures (referred to as “adjusted” measures) of net income to evaluate the profitability and efficiency of the underlying operations of our business and as a factor when considering net income available for distributions and dividends.
See Note 12, “Earnings Per Share” in the Notes to the consolidated financial statements in Item 8 of this report for further discussion of earnings per share. 51 Table of Contents Year Ended December 31, 2022, Compared to the Year Ended December 31, 2021 For the Years Ended December 31, For the Period-to-Period 2022 2021 $ % Statements of operations data: (in millions, except share and per-share data) Revenues $ 993.3 $ 1,227.2 $ (233.9) (19) % Operating Expenses Total compensation and benefits 510.4 563.0 (52.6) (9) % Other operating expenses 138.8 123.7 15.1 12 % Total operating expenses 649.2 686.7 (37.5) (5) % Total operating income 344.1 540.5 (196.4) (36) % Non-operating income (expense) Interest expense (9.9) (10.8) 0.9 8 % Other non-operating income (22.4) 21.9 (44.3) (202) % Total non-operating income (expense) (32.3) 11.1 (43.4) (391) % Income before income taxes 311.8 551.6 (239.8) (43) % Provision for income taxes 63.4 107.1 (43.7) (41) % Net income before noncontrolling interests 248.4 444.5 (196.1) (44) % Less: Noncontrolling interests - Artisan Partners Holdings 49.1 96.9 (47.8) (49) % Less: Noncontrolling interests - consolidated investment products (7.5) 11.1 (18.6) (168) % Net income attributable to Artisan Partners Asset Management Inc. $ 206.8 $ 336.5 $ (129.7) (39) % Share Data Basic earnings per share $ 2.94 $ 5.10 Diluted earnings per share $ 2.94 $ 5.09 Basic weighted average number of common shares outstanding 62,475,960 59,866,790 Diluted weighted average number of common shares outstanding 62,498,509 59,881,039 A detailed discussion of the year-over-year results for the year ended December 31, 2022, compared to the year ended December 31, 2021, can be found in “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 27, 2023. 52 Table of Contents Supplemental Non-GAAP Financial Information Our management uses non-GAAP measures (referred to as “adjusted” measures) of net income to evaluate the profitability and efficiency of the underlying operations of our business and as a factor when considering net income available for distributions and dividends.
Our institutional channel includes assets under management sourced from defined contribution plan clients, which made up approximately 11% of our total assets under management as of December 31, 2022. 38 Table of Content s The following tables set forth the changes in our assets under management by vehicle type: Year Ended Artisan Funds & Artisan Global Funds Separate Accounts and Other (1) Total December 31, 2022 (unaudited; in millions) Beginning assets under management $ 84,363 $ 90,391 $ 174,754 Gross client cash inflows 18,632 8,595 27,227 Gross client cash outflows (24,552) (12,488) (37,040) Net client cash flows (5,920) (3,893) (9,813) Artisan Funds’ distributions not reinvested (2) (497) — (497) Investment returns and other (3) (16,834) (19,718) (36,552) Net transfers (4) (301) 301 — Ending assets under management $ 60,811 $ 67,081 $ 127,892 Average assets under management $ 68,080 $ 73,436 $ 141,516 December 31, 2021 Beginning assets under management $ 74,746 $ 83,030 $ 157,776 Gross client cash inflows 23,957 9,768 33,725 Gross client cash outflows (18,628) (13,419) (32,047) Net client cash flows 5,329 (3,651) 1,678 Artisan Funds’ distributions not reinvested (2) (2,295) — (2,295) Investment returns and other (3) 6,984 10,611 17,595 Net transfers (4) (401) 401 — Ending assets under management $ 84,363 $ 90,391 $ 174,754 Average assets under management $ 83,533 $ 88,234 $ 171,767 December 31, 2020 Beginning assets under management $ 57,288 $ 63,728 $ 121,016 Gross client cash inflows 22,510 13,828 36,338 Gross client cash outflows (18,110) (11,074) (29,184) Net client cash flows 4,400 2,754 7,154 Artisan Funds’ distributions not reinvested (2) (690) — (690) Investment returns and other (3) 14,259 16,037 30,296 Net transfers (4) (511) 511 — Ending assets under management $ 74,746 $ 83,030 $ 157,776 Average assets under management $ 58,629 $ 66,272 $ 124,901 (1) Separate accounts and other consists of AUM we manage in or through vehicles other than Artisan Funds or Artisan Global Funds.
Our institutional channel includes assets under management sourced from defined contribution plan clients, which made up approximately 9% of our total assets under management as of December 31, 2023. 41 Table of Contents The following tables set forth the changes in our assets under management by vehicle type: Year Ended Artisan Funds & Artisan Global Funds Separate Accounts and Other (1) Total December 31, 2023 (unaudited; in millions) Beginning assets under management $ 60,811 $ 67,081 $ 127,892 Gross client cash inflows 15,138 6,257 21,395 Gross client cash outflows (15,079) (10,392) (25,471) Net client cash flows 59 (4,135) (4,076) Artisan Funds’ distributions not reinvested (2) (684) — (684) Investment returns and other (3) 12,592 14,443 27,035 Net transfers (4) (15) 15 — Ending assets under management $ 72,763 $ 77,404 $ 150,167 Average assets under management $ 67,412 $ 71,909 $ 139,321 December 31, 2022 Beginning assets under management $ 84,363 $ 90,391 $ 174,754 Gross client cash inflows 18,632 8,595 27,227 Gross client cash outflows (24,552) (12,488) (37,040) Net client cash flows (5,920) (3,893) (9,813) Artisan Funds’ distributions not reinvested (2) (497) — (497) Investment returns and other (3) (16,834) (19,718) (36,552) Net transfers (4) (301) 301 — Ending assets under management $ 60,811 $ 67,081 $ 127,892 Average assets under management $ 68,080 $ 73,436 $ 141,516 December 31, 2021 Beginning assets under management $ 74,746 $ 83,030 $ 157,776 Gross client cash inflows 23,957 9,768 33,725 Gross client cash outflows (18,628) (13,419) (32,047) Net client cash flows 5,329 (3,651) 1,678 Artisan Funds’ distributions not reinvested (2) (2,295) — (2,295) Investment returns and other (3) 6,984 10,611 17,595 Net transfers (4) (401) 401 — Ending assets under management $ 84,363 $ 90,391 $ 174,754 Average assets under management $ 83,533 $ 88,234 $ 171,767 (1) Separate accounts and other consists of AUM we manage in or through vehicles other than Artisan Funds or Artisan Global Funds.
Adjusted operating margin was 34.3% in 2022, compared to 44.1% in 2021. • We generated $2.94 of earnings per basic and diluted share and $3.11 of adjusted EPS. 31 Table of Content s • We declared and distributed dividends of $3.67 per share of Class A common stock during 2022. • We declared, effective January 31, 2023, a quarterly dividend of $0.55 per share of Class A common stock with respect to the December 2022 quarter and a special annual dividend of $0.35 per share, for a total of $2.82 of dividends per share with respect to 2022.
Adjusted operating margin was 31.6% in 2023, compared to 34.3% in 2022. • We generated $3.19 of earnings per basic and diluted share and $2.89 of adjusted EPS. 34 Table of Contents • We declared and distributed dividends of $2.66 per share of Class A common stock during 2023. • We declared, effective January 30, 2024, a quarterly dividend of $0.68 per share of Class A common stock with respect to the December 2023 quarter and a special annual dividend of $0.34 per share, for a total of $2.78 of dividends per share with respect to 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

14 edited+0 added−1 removed14 unchanged
Biggest changeBased on our analysis, we do not expect that such a change would have a material impact on our revenues or results of operations in the next twelve months. 57 Table of Content s
Biggest changeWe have considered the potential impact of a 100 basis point movement in market interest rates on the portfolios of the strategies managed by these teams. Based on our analysis, we do not expect that such a change would have a material impact on our revenues or results of operations in the next twelve months. 62 Table of Contents
Interest rate changes may affect the amount of our interest payments in connection with our revolving credit agreement, and thereby affect future earnings and cash flows. As of December 31, 2022, there were no borrowings outstanding under the revolving credit agreement.
Interest rate changes may affect the amount of our interest payments in connection with our revolving credit agreement, and thereby affect future earnings and cash flows. As of December 31, 2023, there were no borrowings outstanding under the revolving credit agreement.
Management regularly monitors the value of these investments; however, given their nature and relative size, we have not adopted a specific risk management policy to manage the associated market risk. 56 Table of Content s Exchange Rate Risk A substantial portion of the accounts that we advise, or sub-advise, hold investments that are denominated in currencies other than the U.S. dollar.
Management regularly monitors the value of these investments; however, given their nature and relative size, we have not adopted a specific risk management policy to manage the associated market risk. 61 Table of Contents Exchange Rate Risk A substantial portion of the accounts that we advise, or sub-advise, hold investments that are denominated in currencies other than the U.S. dollar.
If the same 10% increase or decrease in the value of our total assets under management was attributable entirely to a proportionate increase or decrease in the assets of each separate account we manage, it would cause an annualized increase or decrease in our revenues of approximately $65.5 million at the current weighted average fee rate across all of our separate accounts of 51 basis points.
If the same 10% increase or decrease in the value of our total assets under management was attributable entirely to a proportionate increase or decrease in the assets of each separate account we manage, it would cause an annualized increase or decrease in our revenues of approximately $76.3 million at the current weighted average fee rate across all of our separate accounts of 51 basis points.
A 10% increase or decrease in the value of our assets under management, if proportionately distributed over all our investment strategies, products and client relationships, would cause an annualized increase or decrease in our revenues of approximately $89.8 million at our current weighted average fee rate of 70 basis points.
A 10% increase or decrease in the value of our assets under management, if proportionately distributed over all our investment strategies, products and client relationships, would cause an annualized increase or decrease in our revenues of approximately $104.9 million at our current weighted average fee rate of 70 basis points.
The same 10% increase or decrease in the value of our total assets under management, if attributed entirely to a proportionate increase or decrease in the assets of each of the Artisan Funds and Artisan Global Funds, to which we provide a range of services in addition to those provided to separate accounts and therefore charge a higher rate of fee, would cause an annualized increase or decrease in our revenues of approximately $116.0 million at the Artisan Funds and Artisan Global Funds aggregate weighted average fee of 91 basis points.
The same 10% increase or decrease in the value of our total assets under management, if attributed entirely to a proportionate increase or decrease in the assets of each of the Artisan Funds and Artisan Global Funds, to which we provide a range of services in addition to those provided to separate accounts and therefore charge a higher rate of fee, would cause an annualized increase or decrease in our revenues of approximately $135.2 million at the Artisan Funds and Artisan Global Funds aggregate weighted average fee of 90 basis points.
Assuming that 47% of our assets under management is invested in securities denominated in currencies other than the U.S. dollar and excluding the impact of any hedging arrangements, a 10% increase or decrease in the value of the U.S. dollar would decrease or increase the fair value of our assets under management by $6.0 billion, which would cause an annualized increase or decrease in revenues of approximately $42.2 million at our current weighted average fee rate of 70 basis points.
Assuming that 46% of our assets under management is invested in securities denominated in currencies other than the U.S. dollar and excluding the impact of any hedging arrangements, a 10% increase or decrease in the value of the U.S. dollar would decrease or increase the fair value of our assets under management by $6.9 billion, which would cause an annualized increase or decrease in revenues of approximately $48.2 million at our current weighted average fee rate of 70 basis points.
In addition, we invested in Artisan investment strategies to hedge our economic exposure to the change in value of our franchise capital awards due to market movements. Assuming a 10% increase or decrease in the values of our total marketable securities, the fair value would increase or decrease by $19.2 million at December 31, 2022.
In addition, we invested in Artisan investment strategies to hedge our economic exposure to the change in value of our franchise capital awards due to market movements. Assuming a 10% increase or decrease in the values of our total marketable securities, the fair value would increase or decrease by $26.5 million at December 31, 2023.
We are subject to market risk from a decline in the prices of marketable securities that we own. The total value of marketable securities we owned, including our direct equity investments in consolidated investment products, was $192.2 million as of December 31, 2022.
We are subject to market risk from a decline in the prices of marketable securities that we own. The total value of marketable securities we owned, including our direct equity investments in consolidated investment products, was $265.4 million as of December 31, 2023.
Movements in the rate of exchange between the U.S. dollar and the underlying foreign currency affect the values of assets held in accounts we manage, thereby affecting the amount of revenues we earn. The value of the assets we manage was $127.9 billion as of December 31, 2022.
Movements in the rate of exchange between the U.S. dollar and the underlying foreign currency affect the values of assets held in accounts we manage, thereby affecting the amount of revenues we earn. The value of the assets we manage was $150.2 billion as of December 31, 2023.
As of December 31, 2022, $3.3 million of our available cash was invested in money market funds that invested solely in U.S. Treasuries. Given the current yield on these funds, interest rate changes would not have a material impact on the income we earn from these investments. The remaining portion of our cash was held in demand deposit accounts.
As of December 31, 2023, $118.8 million of our available cash was invested in money market funds that invested solely in U.S. Treasuries. Interest rate changes would not have a material impact on the income we earn from these investments. The remaining portion of our cash was held in demand deposit accounts.
As of December 31, 2022, approximately 53% of our assets under management were invested in strategies that primarily invest in securities of non-U.S. companies and approximately 47% of our assets under management were invested in securities denominated in currencies other than the U.S. dollar.
As of December 31, 2023, approximately 57% of our assets under management were invested in strategies that primarily invest in securities of non-U.S. companies and approximately 46% of our assets under management were invested in securities denominated in currencies other than the U.S. dollar.
The strategies managed by our Credit Team, which had $7.1 billion of assets under management as of December 31, 2022, invest in fixed income securities. The values of debt instruments held by these strategies may fall in response to increases in interest rates, which would reduce our revenues.
The credit strategies managed by our Credit and EMsights Capital Group teams, which had $10.5 billion of assets under management as of December 31, 2023, invest in fixed income securities. The values of debt instruments held by these strategies may fall in response to increases in interest rates, which would reduce our revenues.
The value of our assets under management was $127.9 billion as of December 31, 2022.
The value of our assets under management was $150.2 billion as of December 31, 2023.
Removed
We have considered the potential impact of a 100 basis point movement in market interest rates on the portfolios of the strategies managed by our Credit Team.

Other APAM 10-K year-over-year comparisons