In the final quarter of 2025, the Artisan Mid-Cap Fund experienced a minor downturn in its absolute returns, but impressively surpassed the Russell Midcap\u00ae Growth Index. This positive disparity was largely attributed to exceptional stock-picking strategies across key sectors, including communication services, financials, and healthcare, which effectively counterbalanced the underperformance seen in information technology and consumer discretionary segments. The fund actively seeks enterprises that exhibit robust market characteristics, are navigating an accelerating profit trajectory, and are trading below their estimated private market valuations.
Despite reporting a modest negative return in the fourth quarter of 2025, the Artisan Mid-Cap Fund demonstrated remarkable resilience and strategic acumen, outperforming its benchmark, the Russell Midcap\u00ae Growth Index. This period, characterized by persistent market volatility and shifting investor sentiment, underscored the importance of diligent portfolio management. The fund's success stemmed primarily from its astute stock selections. For instance, carefully chosen investments within the communication services sector contributed significantly, capitalizing on ongoing technological advancements and evolving consumer behaviors. Similarly, strategic placements in the financial industry proved beneficial, navigating a complex economic landscape to deliver strong returns. The healthcare sector also played a pivotal role, with targeted investments yielding substantial gains that helped offset more challenging performances in other areas.
Conversely, the information technology sector, typically a growth driver, and the consumer discretionary segment faced headwinds during this quarter, resulting in some drag on the overall portfolio. However, the strength derived from the outperforming sectors was sufficient to ensure the fund’s overall benchmark outperformance. A notable aspect of Artisan Partners' investment philosophy is its continuous evaluation and adjustment of holdings. During this quarter, the fund strategically augmented its positions in companies such as ServiceTitan, a leader in field service management software, and MongoDB, a prominent NoSQL database provider. These additions reflect a commitment to investing in innovative companies with strong growth potential. Furthermore, an increased stake in Waters Corporation, a specialized analytical instrument and software company, highlights the fund's belief in the long-term value of enterprises with robust intellectual property and critical market niches.
The investment strategy employed by Artisan Partners is predicated on identifying businesses that possess distinct franchise attributes, indicating sustainable competitive advantages. These companies are typically those benefiting from an accelerating profit cycle, suggesting strong underlying business momentum and growth prospects. A critical component of this strategy involves acquiring these companies when their market valuation is at a discount to Artisan Partners' internal assessment of their private market value. This disciplined approach aims to capture value by investing in high-quality businesses at attractive prices, thereby enhancing long-term returns for investors. The fund’s ability to consistently apply this rigorous methodology, even amidst market fluctuations, is central to its sustained performance.
In conclusion, the Artisan Mid-Cap Fund's performance in the fourth quarter of 2025, while experiencing a slight negative shift in absolute terms, showcased its strategic strength through diligent stock selection. This focused approach enabled the fund to exceed the performance of the Russell Midcap\u00ae Growth Index, particularly through strong gains in communication, financial, and healthcare stocks. The fund's strategy of identifying businesses with competitive advantages, favorable profit trends, and attractive valuations proved effective in navigating a dynamic market environment.