Artisan Partners Asset Management reported assets under management of $95 billion as of June 30, down 2.1% from the three months earlier and down 13% year-over-year as market volatility and investors favoring passive management hurt the active-strategies money manager.
CEO Eric Colson said in an earnings release statement Monday that net outflows were $2.3 billion in the quarter, which he said was “at least partially attributable to the demand for high-capacity, low-fee products that we don’t offer.” Artisan had reported $1.3 billion in net outflows in the March 31 quarter and $305 million in the year-earlier June quarter.
Mr. Colson said market volatility following the U.K.’s vote to leave the EU also affected Artisan. He said the firm’s AUM declined to $90.1 billion from $98.7 billion during the two trading days after the Brexit vote, before rebounding to $95 billion.
“Markets remain volatile,” he said. “Faced with political and economic uncertainty, historically low interest rates and full equity valuations, asset allocators continue to move wealth into high-capacity, low-fee products, many of which are momentum-oriented and further amplify volatility. In the short term, this is an unfavorable business environment for high value-added active managers like Artisan Partners.”
Artisan reported revenue of $180.8 million in the quarter, up 3.6% from the previous three months, but down 14.5% from the year-over-year quarter.
Net income attributable to Artisan Partners Asset Management Inc. in the June 30 quarter was $18.3 million, a 12.2% increase from the March 31 quarter but down 23.1% from the year-earlier quarter.
Artisan reported an operating margin of 32.6% in the quarter, slightly up from 31.5% in the quarter ended March 31, but down from the 37% operating margin it achieved in the quarter ended June 30, 2015.
Artisan stock fell to its lowest point of the year at the close of trading Monday, $28.08, down 23.6% from the beginning of the year.
In the earnings statement, Mr. Colson said Artisan remains committed to its active strategies.
“If we compete on scale and fees, we risk jeopardizing long-term performance and our ability to attract and retain investment talent,” he said. “Over the long term, we expect that the assets we seek will follow performance and talent, even if current industry trends favor indexing and scale.”