HSIC - Artisan Global Value Fund Q1 2024 Commentary

2024-04-25 06:30:00 ET

Summary

• Artisan Partners is an independent investment management firm focused on providing high value-added, active investment strategies to sophisticated clients globally.
• The MSCI World Index’s 10-year compound annual return is 9%; this quarter it gained 9%.
• Our top-performing stocks in the quarter were Meta, Heidelberg Materials and Progressive Insurance.
• Our three worst-performing stocks were Philips, Reckitt Benckiser and UBS.

Market Overview

Global markets notched a full year of gains in a quarter. The MSCI World Index's 10-year compound annual return is 9%; this quarter it gained 9%. Not bad considering last year's 25% gain.

Returns were broadly distributed globally. Most international markets were strong in local currency terms but less so in US dollars as the greenback continued to gain due to strong relative economic performance (more on that later). The MSCI EAFE Index, for example, rose by 10% in local currency but "only" 6% in dollars. Japan was the best performing major market, both in local currency and in dollars. In yen, the Nikkei 225 Index ( NKY:IND ) rose 22%, but it gained 13% in dollars. The yen is at its lowest level versus the dollar since 1990. This is not surprising. Japan is an export-oriented economy, and the government prefers a cheap yen to maintain competitiveness. The entire developed world raised interest rates, but Japan continues the negative real rate experiment with only a modest increase to a barely positive nominal interest rate. And Japan's relatively terrible economic performance of the past three decades shows no sign of ending. None of this argues for a strong currency. That said, even after currency headwinds, the Japanese stock market did better than the S&P 500® Index's 11% gain. China continued to lag notably. The second-largest economy in the world is struggling with a real estate/debt crisis, a weak post-COVID recovery and geopolitical tensions that are meaningfully reducing foreign investment. The Chinese market declined 2% in the quarter....

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