Artisan Partners | The Investor's Field Guide—Bryan Krug-High Yield Credit Investing

Past performance does not guarantee and is not a reliable indicator of future results.

Clarifications:

(1) Since the inception of the ICE BofAML US High Yield Index on August 29, 1986, there have been six years of negative total returns.

(2) The average bond price for an Exploration and Production issuer in the Energy sector in the ICE BofAML US High Yield Index was 62pts in early 2016—a decline of 38pts from par.

(3) Energy was approximately 14% of the ICE BofAML US High Yield Index as of December 31, 2017.

(4) The average yield to worst of securities in the ICE BofAML US High Yield Index in Q2 2009 was in excess of 20%.

Bryan Krug is the lead portfolio manager for Artisan High Income Fund. This podcast represents the views of the author Patrick O’Shaughnessy and Bryan Krug as of the date of publication and the views and opinions presented are their own. Artisan Partners is not responsible for and cannot guarantee the accuracy or completeness of any statement in the discussion. This material does not constitute investment advice or a solicitation or endorsement of any specific product or service. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation. Prospective investors should consult their financial and tax adviser before making investments in order to determine whether an investment will be suitable for them.

Fixed income securities carry interest rate risk and credit risk for both the issuer and counterparty and investors may lose principal value. In general, when interest rates rise, fixed income values fall. High income securities (junk bonds) are speculative, experience greater price volatility and have a higher degree of credit and liquidity risk than bonds with a higher credit rating. The portfolio typically invests a significant portion of its assets in lower-rated high income securities (e.g., CCC). Loans carry risks including insolvency of the borrower, lending bank or other intermediary. Loans may be secured, unsecured, or not fully collateralized, trade infrequently, experience delayed settlement, and be subject to resale restrictions. Private placement and restricted securities may not be easily sold due to resale restrictions and are more difficult to value. The portfolio’s use of derivative instruments may create additional leverage and involve risks different from, or greater than, the risks associated with investing in more traditional investments. International investments involve special risks, including currency fluctuation, lower liquidity, different accounting methods and economic and political systems, and higher transaction costs. These risks typically are greater in emerging markets.

Portfolio statistics are intended to provide a general view of the entire portfolio, or Index, at a certain point in time and are calculated using information obtained from various data sources. Portfolio statistics include accrued interest unless otherwise stated and may vary from the official books and records of the Fund. Artisan Partners may exclude outliers when calculating portfolio statistics. If information is unavailable for a particular security Artisan may use data from a related security to calculate portfolio statistics. Portfolio Statistics Source: Artisan Partners/Bloomberg.

For the purpose of determining the Fund’s holdings, securities of the same issuer are aggregated to determine the weight in the Fund. The holdings mentioned above comprised the following percentages of the Fund's total net assets as of 30 Sep 2018: Charter Communications 6.3%; J Crew 2.9%; Beacon Roofing 1.9%; and Neiman Marcus 0.5%. Securities named, but not listed here are not held in the Fund as of the date of this report. Portfolio holdings are subject to change without notice and are not intended as recommendations of individual securities.

This material is provided for informational purposes without regard to your particular investment needs. This material shall not be construed as investment or tax advice on which you may rely for your investment decisions. Investors should consult their financial and tax adviser before making investments in order to determine the appropriateness of any investment product discussed herein.

Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) is an indicator of a company's financial performance which is calculated by looking at earnings before the deduction of interest expenses, taxes, depreciation and amortization. Collateralized Loan Obligation (CLO) is a security consisting of a pool of loans organized by maturity and risk. Yield Spread is the difference between yields on differing debt instruments of varying maturities, credit ratings and risk, calculated by deducting the yield of one instrument from another. Internal rate of return (IRR) is a metric used in capital budgeting to estimate the profitability of potential investments. Free Cash Flow is a measure of financial performance calculated as operating cash flow minus capital expenditures. Enterprise Value is an economic measure reflecting the market value of a business. Par represents the level a security trades at when its yield equals its coupon. Return on Invested Capital (ROIC) is a measure of how well a company generates cash flow relative to capital invested in the business Credit Quality Ratings are from S&P and/or Moody's. Ratings typically range from AAA (highest) to D (lowest) and are subject to change. The ratings apply to underlying holdings of the Portfolio and not the Portfolio itself. If securities are rated by both agencies, the higher rating was used. Securities not rated by S&P or Moody's are categorized as Unrated/Not Rated. Collateralized debt obligation (CDO) is a type of structured asset-backed security (ABS). Investment Grade indicates above-average credit quality and lower default risk and is defined as a rating of BBB or higher by Standard and Poor’s and Fitch rating services and Baa or higher by Moody’s ratings service. Duration is a measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. Master Limited Partnership (MLP) is a type of business venture that exists in the form of a publicly traded limited partnership. Yield to Worst reflects the lowest potential yield receivable for a fixed-income security absent a default.

Standard & Poor’s 500 (S&P 500) is an American stock market index based on the market capitalizations of 500 large companies having common stock listed on the NYSE or NASDAQ. ICE BofAML U.S. High Yield Index tracks the performance of below investment grade, but not in default, US dollar denominated corporate bonds publicly issued in the US domestic market, and includes issues with a credit rating of BBB or below, as rated by Moody’s and S&P. The index(es) are unmanaged; include net reinvested dividends; do not reflect fees or expenses; and are not available for direct investment.