Artisan International Explorer Fund Q4 2024 Commentary

2025-02-27 13:53:00 ET

Summary

• Germany and Italy are facing the risk of another recession as their manufacturing sectors contract significantly.
• We are acutely aware of the headlines on policies that may be implemented by the new US administration later this month.
• We initiated two new positions in the quarter, U-Blox and Sabre.
• We outperformed our benchmark by ~400bps this quarter and by ~250bps for the full year.

Euphoria, Naming Games and Playing Ostrich

With the S&P 500® Index (SPX)(SP500) around 6,000, its Shiller adjusted P/E sits north of 37, a level only reached during the dot.com bubble (ignoring the COVID-impacted blip), even higher than the peak in the roaring twenties. Just this data point may lead some to conclude that the current macro environment is great or about to become great.

However, both prior periods (1929 and 1999) are not good company as an indication of subsequent equity market performance. Granted, index composition is different this time around, but it is never a strict apples-to-apples comparison. We now have more tech platforms and virtual monopolies skewing the index composition and performance, while in the past, the index was more broad-based. The press is touting another stellar year of performance of the S&P 500® Index in 2024; however, the big gap in performance between the market cap-weighted (24.8%) and equal-weighted (12.9%) indices comprising the same 500 companies highlights selective euphoria....

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