Artemis US Extended Alpha

Artemis US Extended Alpha is a long/short strategy (it can make more from falling share prices as well as rising share prices) which aims to grow capital over a five-year period, regardless of market conditions. The fund operates as a 130/30 strategy – this means investing up to 130 per cent of starting capital in long positions (which the team believe will outperform) and balancing this out by shorting up to 30 per cent of the portfolio (companies they feel will fall in value).

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Our Opinion
Fund Managers
Key Facts
Fund Performance
Risk
Company Description
Investment process
ESG

Our Opinion

This is a very differentiated fund to its peers in the US, which makes it interesting to us given it is such a proliferated market. The 130/30 approach can bring significant rewards if managed correctly and we feel the team has both the experience and infrastructure to cover such a large market and produce consistently strong returns. We also like the fact that James and Will focus on ‘long’ and ‘short’ positions respectively, with Adrian ultimately making the final allocation decision.

Fund Managers

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Fund Managers

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William Warren, Co-Manager William has co-managed Artemis’ US Long/Short strategy since its launch in 2014, currently working alongside Adrian Brass and James Dudgeon. He joined Artemis in 2014 from Columbia Threadneedle, where he was deputy manager of the Threadneedle US Extended Alpha and US Absolute Alpha funds since 2008. William began his career in 1997 as an analyst at JP Morgan in New York and moved to Lehman Brothers in 2000 as an associate, covering the software industry.

Adrian Brass, Lead Manager Adrian manages Artemis’ ‘US Extended Alpha’ long/short strategy with co-managers James Dudgeon and William Warren. Before joining Artemis in 2022, he was the lead manager of Majedie Asset Management's US Equity fund and co-managed its Global Equity and Global Focus funds. Adrian also spent six years at Fidelity, managing US equity funds like the America fund. He holds a bachelor’s degree in economics and politics from the University of Bristol and is a CFA charterholder.

James Dudgeon, Co-Manager James co-manages Artemis' "US Extended Alpha" long/short strategy with Adrian Brass and William Warren. He graduated with a degree in economics and modern history from the University of St Andrews and is a CFA charterholder. James began his career at Fidelity in 2010 as a research analyst covering European and US sectors. In 2015, he moved to Majedie Asset Management, where he worked on its US equity fund and became a co-manager in 2021. James joined Artemis in 2022.

William Warren, Co-Manager William has co-managed Artemis’ US Long/Short strategy since its launch in 2014, currently working alongside Adrian Brass and James Dudgeon. He joined Artemis in 2014 from Columbia Threadneedle, where he was deputy manager of the Threadneedle US Extended Alpha and US Absolute Alpha funds since 2008. William began his career in 1997 as an analyst at JP Morgan in New York and moved to Lehman Brothers in 2000 as an associate, covering the software industry.

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Adrian Brass, Lead Manager Adrian manages Artemis’ ‘US Extended Alpha’ long/short strategy with co-managers James Dudgeon and William Warren. Before joining Artemis in 2022, he was the lead manager of Majedie Asset Management's US Equity fund and co-managed its Global Equity and Global Focus funds. Adrian also spent six years at Fidelity, managing US equity funds like the America fund. He holds a bachelor’s degree in economics and politics from the University of Bristol and is a CFA charterholder.

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James Dudgeon, Co-Manager James co-manages Artemis' "US Extended Alpha" long/short strategy with Adrian Brass and William Warren. He graduated with a degree in economics and modern history from the University of St Andrews and is a CFA charterholder. James began his career at Fidelity in 2010 as a research analyst covering European and US sectors. In 2015, he moved to Majedie Asset Management, where he worked on its US equity fund and became a co-manager in 2021. James joined Artemis in 2022.

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Key Facts

Asset type Equity

Annual Income (Historic) -

Sector North America

Gearing-

Fund Size-

Fund Manager Start Date 19 September 2014

Ongoing Charges Figure (OCF) -

Payment Date(s) Mar

Annual Management Charge (AMC) -

Fund Performance

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Risk

The fund uses shorting which can work against the fund if a company starts to perform well. At the stock level, the team undertakes rigorous testing of the up and downside target settings and use ‘guardrails’ to incorporate leverage, size, liquidity, and cyclicality into fund positions. At the fund level, the team ensures top-down sector, style and theme exposures are monitored and managed; while shorts are also used to hedge long position risk (for example paring a long position in a company, by shorting another in the same sector).

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Risk: 7

Company Description

UK-based Artemis was founded in 1997 as a limited liability partnership. Affiliated Managers Group (AMG) and the management team at Artemis own 100% of the equity of the business. This is a financial partnership; AMG takes a share of the revenues produced by Artemis but does not get involved in the day-to-day running of the business. A recipient of the Elite Provider for Equities rating in 2015, 2016, 2017, 2018 and 2020, Artemis has retained its manager-centric, innovative, and supportive culture, which has helped it to attract and retain talented investors.

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Fund Performance

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Risk

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The fund uses shorting which can work against the fund if a company starts to perform well. At the stock level, the team undertakes rigorous testing of the up and downside target settings and use ‘guardrails’ to incorporate leverage, size, liquidity, and cyclicality into fund positions. At the fund level, the team ensures top-down sector, style and theme exposures are monitored and managed; while shorts are also used to hedge long position risk (for example paring a long position in a company, by shorting another in the same sector).

Company Description

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UK-based Artemis was founded in 1997 as a limited liability partnership. Affiliated Managers Group (AMG) and the management team at Artemis own 100% of the equity of the business. This is a financial partnership; AMG takes a share of the revenues produced by Artemis but does not get involved in the day-to-day running of the business. A recipient of the Elite Provider for Equities rating in 2015, 2016, 2017, 2018 and 2020, Artemis has retained its manager-centric, innovative, and supportive culture, which has helped it to attract and retain talented investors.

Investment process

The process on the long side of the portfolio begins with the managers targeting a universe of around 1,000 stocks. The fund managers and analysts use screens and fundamental reading materials to help them find companies that meet their two specific investment criteria. The first is finding companies which have underappreciated future fundamentals (namely a catalyst for future change which has not been spotted by the wider market).

The team then looks to see if a company has an attractive upside versus downside profile – this is an analysis to determine which stocks offer an attractive risk profile under a range of scenarios which, ultimately, produces an upside/downside estimate for each stock in the portfolio. In terms of longs, the team is looking for a 3:1 on the upside (versus downside) on their estimate over three years to merit inclusion in the portfolio. For example, the team may decide that based on their analysis a stock might have a potential 60 per cent upside from its current price, versus a 20 per cent downside (3:1).

Shorting offers a powerful, extra dimension to the fund as it allows the managers to express negative views which come out of the process, allowing them to strip out unwanted risk. The shorts are selected using the exact same process, but where the fundamentals are misunderstood on the downside. These ideas are generally found when looking for the long positions. The shorts are evaluated over a 12-month time frame – this is because the longer shorts continue to perform, the more painful they are to hold.

The final portfolio holds around 40-60 long positions and 20-40 short positions. Net exposure (longs minus shorts) typically varies between 90 to 110 per cent. The portfolio is style agnostic – allowing the managers to focus purely on allocating capital where the best ideas are. The fund tends to have a bias towards mid-cap as an offshoot of the investment process.

Risk

The fund uses shorting which can work against the fund if a company starts to perform well. At the stock level, the team undertakes rigorous testing of the up and downside target settings and use ‘guardrails’ to incorporate leverage, size, liquidity, and cyclicality into fund positions. At the fund level, the team ensures top-down sector, style and theme exposures are monitored and managed; while shorts are also used to hedge long position risk (for example paring a long position in a company, by shorting another in the same sector).

ESG

ESG - Integrated
The management team works in close contact with both the stewardship and ESG teams at Artemis. The management team has spent several years integrating ESG into their research – this includes meeting with management once a quarter where the team will ask them about each factor.

The team is working towards increasing its environmental focus, including the carbon profile of each holding – with the aim of having a more attractive carbon profile for the portfolio when compared to the S&P. The likes of thermal coal, nuclear energy and controversial weapons are also excluded. The team will not exclude a company due to a controversy at the start of the research process, but it will continually be analysed and evaluated onwards from this point.

All the above does not apply to the short positions – where poor ESG credentials could see a position shorted.

Related Insights

The information, data, analyses, and opinions contained herein (1) include the proprietary information of FundCalibre, (2) may not be copied or redistributed without prior permission, (3) do not constitute investment advice offered by FundCalibre, (4) are provided solely for informational purposes and therefore are not an offer to buy or sell a fund, and (5) are not warranted to be correct, complete, or accurate. FundCalibre shall not be responsible for any trading decisions, damages, or other losses resulting from, or related to, this information, data, analyses, or opinions or their use. The Elite Fund rating is subjective in nature and reflects FundCalibre’s current expectations of future events/behaviour as they relate to a particular fund. Because such events/behaviour may turn out to be different than expected, FundCalibre does not guarantee that a fund will perform in line with its FundCalibre benchmark. Likewise, the Elite Fund rating should not be seen as any sort of guarantee or assessment of the creditworthiness of a fund nor of its underlying securities and should not be used as the sole basis for making any investment decision. FundCalibre disclaims any responsibility for trading decisions, damages or other losses resulting from any use of the Elite Fund rating. All performance data, as well as fund size, OCF, AMC, annual income (historic), share price discount or premium, is sourced directly from FE Analytics, and will change periodically.