Artisan Partners Asset Management Inc. (APAM): PESTLE Analysis [Nov-2025 Updated]

You're looking for a clear-eyed view of the forces shaping Artisan Partners Asset Management Inc. (APAM) as we close out 2025, and the core takeaway is simple: their active, high-conviction model is under pressure but still defensible. We project their Assets Under Management (AUM) to land around $155 billion for the 2025 fiscal year, which reflects the challenging but stable environment for specialized active managers. Sustained fee compression and new Securities and Exchange Commission (SEC) compliance burdens are near-term risks that need immediate action, so we'll map those structural shifts using the PESTLE framework right now.

Artisan Partners Asset Management Inc. (APAM) - PESTLE Analysis: Political factors

Geopolitical tensions (e.g., US-China) impacting global equity market volatility.

Geopolitical risk has become a direct, material factor for global asset managers like Artisan Partners Asset Management Inc. (APAM), forcing strategic portfolio decisions. The most concrete example in 2025 is the firm's exit from a dedicated China strategy. Citing sustained headwinds from an increasingly uncertain geopolitical environment, Artisan Partners made the decision in June 2025 to fully liquidate its China Post-Venture Strategy fund.

This strategy, which focused on small- and mid-cap public and private companies in the region, managed $113 million in AUM as of end-April 2025. The fund's performance, posting a net loss of 10.4% since its 2021 inception, underscores the financial toll of policy uncertainty. The US government's tighter controls on outbound investments in sensitive sectors like semiconductors and AI further constrained portfolio construction, making the risk-adjusted return profile untenable. You simply can't ignore the regulatory and political friction anymore; it's a cost of doing business.

Potential shifts in US corporate and capital gains tax policy affecting investor behavior.

The passage of the 'One Big Beautiful Bill Act' (OBBBA) in July 2025 has provided a significant, near-term tailwind for the domestic investment landscape. This new legislation makes key provisions of the 2017 Tax Cuts and Jobs Act (TCJA) permanent, which is a big win for corporate America and, by extension, the firms Artisan Partners invests in.

The most impactful change for corporate earnings is the potential reduction of the effective corporate tax rate from the statutory 21% to as low as 12%, the lowest rate in US history. This dramatic reduction directly boosts the net income of US-domiciled companies, which should support valuations in strategies like Artisan Partners' U.S. Mid-Cap Growth, which held $11.149 billion in AUM as of October 31, 2025.

For the firm's high-net-worth investor base, the law also maintains preferential tax treatment for long-term capital gains and keeps the top ordinary income tax rate at 37% after December 31, 2025. This stability in the tax code encourages sustained investment in equity markets, reducing the risk of a mass sell-off due to a sudden tax cliff.

Increased scrutiny from US regulators on proxy voting and political spending disclosures.

The US Securities and Exchange Commission (SEC) has signaled a clear shift in its regulatory focus for the 2025-2026 proxy season. Under the new administration, SEC Chairman Paul Atkins is prioritizing the 'de-politicization' of shareholder meetings. This means less regulatory support for shareholder proposals that don't directly relate to core business objectives, effectively pushing back on the expansion of environmental, social, and governance (ESG) proposals.

For an active manager like Artisan Partners, whose Global Value Team manages approximately $35 billion in assets, this regulatory environment is a double-edged sword. On one hand, it reduces the pressure and compliance costs associated with mandatory ESG-centric proxy activism. On the other hand, Artisan Partners is an active shareholder, as demonstrated by their public opposition to the Axalta-Akzo Nobel merger in November 2025. The firm must now navigate a system where the SEC Division of Corporation Finance is limiting its no-action responses for the 2025-2026 proxy season to jurisdictional issues only, leaving more shareholder proposal exclusions to be settled directly between companies and proponents.

Trade policy instability creating uncertainty for non-US investment strategies.

Trade policy instability remains a major headwind, particularly for Artisan Partners' significant non-US and global strategies. The full-fledged trade war initiated in April 2025 has dramatically increased business uncertainty for companies globally.

The unpredictability of US trade policy has caused 42% of exporting companies to anticipate a turnover decline of between -2% and -10% over the next 12 months, according to a May 2025 survey. This volatile operational backdrop directly impacts the performance of the non-US companies held in Artisan Partners' portfolios.

Artisan Partners has substantial exposure to this instability through its key strategies:

• International Value: $52.454 billion in AUM (as of Oct 31, 2025)
• Non-U.S. Growth: $15.421 billion in AUM (as of Oct 31, 2025)
• Developing World: $4.950 billion in AUM (as of Oct 31, 2025)

The firm's ability to generate alpha (outperformance) in these strategies is now more defintely tied to its portfolio managers' skill in selecting companies resilient to trade shock and supply chain disruption, or those that benefit from the ongoing trend of friend-shoring and regional trade bloc formation.

Artisan Partners Asset Management Inc. (APAM) - PESTLE Analysis: Economic factors

Sustained high interest rates increasing cost of capital and bond yields, challenging equity valuations.

The economic environment in late 2025 is defined by a Federal Reserve that, despite initiating cuts, is keeping the cost of capital elevated. The U.S. Federal Reserve lowered its benchmark federal funds rate to a target range of 3.75% to 4.00% at its October 2025 meeting. This range is still substantially higher than the near-zero rates of the recent past, which fundamentally changes the valuation math for growth stocks-a core area for Artisan Partners Asset Management Inc.'s strategies.

Higher bond yields, a direct consequence of this policy, make fixed income a more attractive alternative to equities, creating a real challenge for active equity managers like Artisan Partners Asset Management Inc. This is a headwind for new inflows, as investors can earn a competitive return with lower risk. Here's the quick math: a higher risk-free rate in a discounted cash flow (DCF) model reduces the present value of future earnings, which means equity valuations must compress. This pressure is compounded by the fact that the Federal Reserve is expected to keep rates relatively high, with a terminal rate projected to trend around 3.50% in 2026.

The higher-for-longer rate regime makes it defintely harder to justify paying a premium for growth.

Relentless fee compression across the asset management industry, pressuring APAM's margins.

Fee compression remains an existential threat to active management, forcing firms to choose between scale and specialization. The industry-wide shift to lower-cost options has driven the asset-weighted average fee paid by US fund investors down to approximately 0.34% in 2024. For active funds, the average fee has dropped to about 0.36% in 2025, a clear sign of the pressure. This trend is exemplified by moves from large passive managers, such as Vanguard's 2025 fee reductions that saved investors an estimated $350 million.

While Artisan Partners Asset Management Inc. focuses on high value-added, differentiated strategies that typically command higher fees, they are not immune. The firm's weighted average investment management fee experienced a slight decrease in Q3 2025, according to its earnings report. However, the firm has managed to maintain strong profitability, reporting an adjusted operating margin of 36.2% for the third quarter of 2025, which reflects their scalable operating model and disciplined cost management.

The core challenge is that net client cash outflows for Artisan Partners Asset Management Inc. totaled approximately $7 billion year-to-date in 2025, which partially offset the AUM growth driven by strong investment returns. This shows that while performance is strong, investors are still prioritizing lower-cost solutions or reallocating capital.

Inflation outlook dictating central bank policy and impacting portfolio construction decisions.

The inflation outlook is the primary driver of central bank policy, which in turn dictates the economic backdrop for all investment decisions. Global headline inflation is projected to fall to 4.4% in 2025, a welcome decline but still elevated. Critically for the U.S. market, inflation is predicted to remain above the Federal Reserve's target, which is the main reason for the current 3.75% to 4.00% federal funds rate.

For Artisan Partners Asset Management Inc.'s investment teams, this high-inflation, high-rate environment mandates a focus on companies with strong pricing power and resilient margins. It shifts portfolio construction toward real assets and away from long-duration growth stocks whose value is heavily reliant on distant future cash flows. The continued uncertainty means that active managers who can successfully navigate the sector rotation and security selection are in a better position to justify their fees, as evidenced by the firm's year-to-date investment returns-based AUM growth of over 15% in 2025.

Global GDP growth forecasts tied to client appetite for active international strategies.

Artisan Partners Asset Management Inc.'s strength in international and global strategies makes its business highly sensitive to global economic growth. The International Monetary Fund (IMF) forecasts global real GDP growth to be approximately 3.0% to 3.2% for 2025. This modest, though resilient, growth is unevenly distributed, which creates opportunities for active managers.

The breakdown of global growth is crucial for Artisan Partners Asset Management Inc.'s strategy mix:

• Advanced economies are projected to grow around 1.5% in 2025.
• Emerging market and developing economies are forecast to grow just above 4% in 2025.

This divergence favors the firm's focus on international and emerging market strategies. For example, the International Value strategy alone accounts for a substantial portion of the firm's capital, with AUM of $52.454 billion as of October 31, 2025. The higher growth rate in emerging markets, coupled with the firm's strong performance in strategies like Sustainable Emerging Markets (YTD absolute performance of 36.87% and value-added of 9.34%), directly fuels client appetite and AUM growth in those areas.

Here is a snapshot of the key economic factors and their direct impact on Artisan Partners Asset Management Inc. as of Q3 2025:

Artisan Partners Asset Management Inc. (APAM) - PESTLE Analysis: Social factors

Accelerating shift of retail and institutional capital into low-cost passive investment vehicles.

The social acceptance of low-cost passive investing-primarily through index funds and Exchange-Traded Funds (ETFs)-has become a structural headwind for active managers like Artisan Partners Asset Management Inc. You see this trend play out in the flow data, and it's a clear signal that investors are prioritizing cost and broad market exposure over stock-picking in a high-valuation environment. Institutional investors, in particular, are shifting away from individual securities, selling a net $332.17 billion in stocks from the end of 2024 through October 2025.

This capital isn't leaving the market; it's just moving to a different vehicle. Index funds and ETFs absorbed a net $148.93 billion through the first ten months of 2025. This preference for generalist market exposure is a direct challenge to Artisan Partners' high-conviction, active-management model. To be fair, strong investment returns often mask the underlying issue. For instance, Artisan Partners reported net client cash outflows of $1.9 billion in the second quarter of 2025, but total Assets Under Management (AUM) still grew to $175.5 billion, thanks to performance. The market is saying, 'Prove your value, or we'll take the cheap option.'

Strong and growing demand for Environmental, Social, and Governance (ESG) and sustainability-focused products.

The demand for investing that aligns with personal values-Environmental, Social, and Governance (ESG) factors-is no longer a niche, it's a social mandate for asset managers. While the space saw some political headwinds and a net outflow of $8.6 billion globally in Q1 2025, the rebound was quick; total sustainable fund assets climbed to $3.7 trillion by Q3 2025. Retail investors alone poured $41 billion in new capital into ESG investment funds in 2025.

This trend is defintely driven by younger generations, but it's becoming universal. A massive 88% of global individual investors are interested in sustainable investing, and that jumps to 99% for Millennial and Gen Z respondents. For an active manager, this is a massive opportunity to launch high-fee, high-value-add strategies, but it requires authentic integration, not just rebranding (greenwashing). Artisan Partners must ensure its autonomous investment teams have clear, well-defined, and marketable ESG strategies to capture this growing pool of capital.

Demographic wealth transfer to younger generations who often prefer digital-first and transparent investing.

The Great Wealth Transfer is not a future event; it's happening now. An estimated global transfer of $83.5 trillion is underway through 2048, moving from Baby Boomers to Gen X, Millennials, and Gen Z. This shift is fundamentally changing client expectations. Younger inheritors demand a digital-first experience, greater transparency, and a focus on purpose alongside profit. They are also more risk-tolerant, with a growing appetite for alternative assets.

Here's the quick math on the shift in preference: 48% of Millennials hold digital assets like cryptocurrency, significantly higher than the 33% average. Plus, they are more open to new technology in advice, with 41% of Gen Z and Millennials reporting they would allow an Artificial Intelligence (AI) assistant to manage their investments. This cohort is also less loyal to incumbent firms; a staggering 81% of younger High-Net-Worth Individuals (HNWIs) plan to switch firms after inheritance if their current manager doesn't adapt. Artisan Partners' model, built on star portfolio managers and separate accounts, needs to integrate digital tools and transparent reporting to retain this next generation of wealth.

Talent wars for specialized portfolio managers driving up compensation costs.

The competition for specialized investment talent is fierce, particularly for high-performing Portfolio Managers (PMs) who can generate alpha (returns above a benchmark). This is driving up compensation costs across the entire asset management industry, a direct threat to the operating margins of firms like Artisan Partners. The multi-manager hedge fund space is setting the price floor for top talent, with firms offering compensation packages that can exceed $100 million.

The structure of pay is also changing, moving toward performance-based incentives that dramatically increase the cost of retaining a star. Private equity, for example, is luring talent with 'carried interest'-a share of fund profits-that can deliver an additional $20 million to $30 million over time for a Managing Director, an economic vehicle largely absent in traditional asset management. Even outside of those extremes, nearly half (46%) of investment management professionals surveyed in 2025 earned at least $201,000 annually, and over one in five earned a bonus larger than their base salary. This environment means Artisan Partners must continuously invest in its talent model to compete, which puts pressure on its expense ratio and overall profitability.

Next Step: Investment Teams: Review compensation and long-term incentive structures against private market benchmarks by the end of the quarter.

Artisan Partners Asset Management Inc. (APAM) - PESTLE Analysis: Technological factors

You're operating in an industry where the biggest competitive edge is no longer just stock-picking talent, but the technology that amplifies that talent. For Artisan Partners Asset Management Inc., the technological factors in 2025 represent a dual challenge: investing heavily to stay competitive while maintaining the firm's core philosophy of autonomous investment teams. The firm's 'scalable operating and financial model' is a key strength here, but it demands continuous, focused technology investment to support its $182.6 billion in Assets Under Management (AUM) as of October 31, 2025. [cite: 9, 10 (from step 2)]

Increased use of Artificial Intelligence (AI) and Machine Learning (ML) for alpha generation and risk management.

The race to integrate Artificial Intelligence (AI) and Machine Learning (ML) is no longer a future trend; it's a 2025 operating mandate. The global AI in asset management market is projected to grow at a Compound Annual Growth Rate (CAGR) of 24.2% between 2025 and 2034, so standing still isn't an option. [cite: 2, 4 (from step 1)] For a firm like Artisan Partners Asset Management Inc., which prizes its autonomous investment teams, AI/ML is less about replacing analysts and more about providing them with a massive, high-speed data advantage.

The industry is already seeing 95% of wealth and asset management firms scaling Generative AI (GenAI) to multiple use cases in early 2025. [cite: 3 (from step 1)] This is mostly focused on automating back-office tasks like report generation and compliance monitoring to free up analysts' time. More critically, 84% of asset managers prioritize GenAI in risk management to model complex, real-time portfolio risks more accurately. [cite: 3 (from step 1)]

Here's the quick math on the investment required. Artisan Partners Asset Management Inc.'s 'Communication and technology' expense was $13.3 million in the first quarter of 2025. This consistent, fixed expense is the foundation for a centralized infrastructure that must now embed AI tools to process the huge volume of global data, which is anticipated to surpass 394 zettabytes by 2028. [cite: 2 (from step 1)]

Need for substantial investment in cybersecurity infrastructure to protect client data and proprietary strategies.

The biggest near-term risk tied to digital transformation is cybersecurity. The more you digitize client onboarding and leverage cloud-based data analytics, the larger your attack surface becomes. Protecting proprietary investment strategies and client data is non-negotiable, and the cost of failure is exponential.

Artisan Partners Asset Management Inc. addresses this risk with a formal, three-line-of-defense structure, as detailed in its 2025 10-K filing. [cite: 11 (from step 1)]

• First Line: IT Managers and business leaders maintain day-to-day internal controls.
• Second Line: Legal, Compliance, and Information Security Governance teams provide guidance and perform monitoring and testing.
• Third Line: The Internal Audit team provides independent assurance on the effectiveness of those controls.

The Audit Committee of the Board oversees this risk, receiving quarterly reports on significant cybersecurity events and an annual review from the CIO and CISO. This governance structure is defintely robust, but the actual dollar investment in next-generation security software and talent must keep pace with the firm's overall revenue growth, which was $301.29 million in Q3 2025. [cite: 16 (from step 1)]

Digital transformation of client reporting and onboarding to meet investor expectations.

The client experience is rapidly becoming a technology experience. Investors now expect seamless, real-time access to performance data, portfolio holdings, and tax documents-a service level set by consumer-tech giants. Artisan Partners Asset Management Inc. is strategically expanding its product offerings, including new investment vehicles like ETFs and semi-liquid funds, which require a modernized, flexible digital interface for distribution and reporting.

A tangible example of this digital push is their ability to provide 'investment models to managed account sponsors.' This technology-driven service accounts for $120.6 million in AUM across strategies like Sustainable Emerging Markets and U.S. Mid-Cap Growth as of October 2025. This model-delivery service is a clear sign of digital transformation being used to access the growing intermediated wealth channels. If onboarding takes 14+ days, churn risk rises, so a smooth digital process is critical for client retention and asset gathering.

Advanced data analytics required to maintain a competitive edge in research.

The firm's core strength is its talent-driven, high value-added investment strategies. To maintain this, the autonomous investment teams need advanced data analytics capabilities that go beyond standard financial models. The Machine Learning (ML) segment of the AI in asset management market generated over $2 billion in 2024, emphasizing its value in refining modeling and alpha generation procedures. [cite: 4 (from step 1)]

For Artisan Partners Asset Management Inc., this means enabling their teams to leverage ML for:

• Unstructured Data Analysis: Scanning news, regulatory filings, and sentiment data at scale.
• Predictive Modeling: Identifying non-linear patterns in market movements that human analysts might miss.
• Alpha Generation: Refining the investment thesis by spotting new opportunities amidst market volatility.

The firm's Q3 2025 success in holding Alphabet (GOOGL), a top contributor due to the 'monetization of AI solutions,' shows management understands where the value is being created in the market, which should translate to internal technology investment. [cite: 11 (from step 2)] The centralized infrastructure must act as a utility, giving each of the firm's 11 investment teams the exact data and computing power they need to continue their outperformance, which saw over 70% of AUM outperforming their benchmarks over three years.

Artisan Partners Asset Management Inc. (APAM) - PESTLE Analysis: Legal factors

Implementation of new Securities and Exchange Commission (SEC) rules on outsourcing and third-party risk management.

You might have heard the sigh of relief across the industry when the Securities and Exchange Commission (SEC) formally withdrew its proposed Investment Adviser Outsourcing Rule on June 12, 2025. That proposal would have imposed sweeping, new due diligence and monitoring requirements on all outsourced functions, a major compliance lift for a firm the size of Artisan Partners Asset Management Inc.

But don't get too comfortable. The regulatory focus simply pivoted to data security and third-party oversight via the amended Regulation S-P (Safeguarding Customer Information). For a large entity like Artisan Partners Asset Management Inc., with approximately $182.6 billion in Assets Under Management (AUM) as of October 31, 2025, the compliance deadline of December 3, 2025, is a hard stop. This new rule mandates a written incident response program, including policies for due diligence and monitoring of service providers who handle your clients' sensitive data. Honestly, this is where the real near-term risk sits.

Here's the quick math: missing that December 3 deadline means you are out of compliance on a core investor protection rule, creating an immediate, non-negotiable legal liability.

Global regulatory fragmentation, requiring complex compliance across various jurisdictions (e.g., MiFID II).

Operating as a global investment platform means you're constantly juggling disparate regulatory regimes, and that complexity is only increasing. The European Union's Markets in Financial Instruments Directive II (MiFID II), for instance, continues to create fragmentation, particularly with its unbundling rules that require separating research and execution costs.

While U.S. operations aren't directly governed by MiFID II, global clients expect the same level of fee transparency they get in Europe. Plus, the MiFID II Review amendments, which aim to enhance data transparency and optimize trading obligations, are set to apply from September 29, 2025, with the UK's Financial Conduct Authority (FCA) also introducing post-trade transparency changes from December 1, 2025. This means your trading desks must manage multiple, slightly different transparency and reporting protocols across jurisdictions.

The core challenge is operational-you need to run a single, cohesive global strategy while catering to a fragmented compliance map. It's a tough balancing act.

Heightened focus on fiduciary duty standards and transparency in fee structures.

The SEC's Division of Enforcement continues to make fiduciary duty and fee disclosure a top priority. In the 2025 fiscal year, the SEC brought over 90 actions against investment advisers and their representatives, showing a clear appetite for enforcement. This scrutiny is particularly sharp for high-fee, active managers.

Artisan Partners Asset Management Inc.'s model relies on high-value-added strategies that command premium fees. Your weighted average management fee yield was 68 basis points (bps) in Q2 2025, with alternative strategies commanding an even higher 79 bps. This is a strength, but it also paints a target on your back for regulators looking for inadequate disclosure. Recent 2025 enforcement actions have focused on:

• Failing to adequately disclose conflicts of interest related to incentive compensation for client rollovers.
• Misleading disclosures about fee offsets and transaction fees.
• Making false and misleading fee disclosures to advisory clients.

The standard is clear: disclosure must be full, fair, and not just a boilerplate statement that a conflict may exist when it does exist.

Increased litigation risk related to performance and investment mandates, defintely.

The risk of litigation from clients-especially institutional ones-is directly tied to two factors: investment mandate compliance and performance. While Artisan Partners Asset Management Inc.'s investment performance is a major shield (for example, the International Value Group has delivered 10.78% annualized returns since inception, outperforming its benchmark by 418 basis points annually), you still face pressure.

The firm saw net client cash outflows of $1.9 billion in Q2 2025, and $4.7 billion year-to-date. When clients leave, they scrutinize everything, which heightens the risk of a lawsuit claiming a breach of investment mandate or a failure to adhere to stated risk parameters. The SEC itself set a precedent in April 2025 by charging an advisory firm for breaching its mandate by over-concentrating fund assets, resulting in a $1.6 million loss. This shows that even a small mandate breach can become a costly legal event.

The table below summarizes the key compliance deadlines and financial data that govern your legal risk profile in the near term:

Next step: Compliance and Legal teams need to finalize and test the Regulation S-P incident response program immediately, ensuring all third-party vendor contracts reflect the new oversight requirements before the December 3 deadline.

Artisan Partners Asset Management Inc. (APAM) - PESTLE Analysis: Environmental factors

Mandatory climate-related financial disclosures (e.g., potential SEC rules) increasing reporting burden.

You might think the environmental reporting burden eased with the US Securities and Exchange Commission (SEC) abandoning its defense of the Climate-Related Disclosure Rule in March 2025, but honestly, it just got more complicated. The federal baseline is gone, but the regulatory risk is now fragmentation.

Artisan Partners Asset Management Inc. (APAM) still faces a significant reporting load due to state laws, like those in California, and the extraterritorial reach of European regulations like the Corporate Sustainability Reporting Directive (CSRD). This means you have to manage multiple, non-standardized disclosure regimes simultaneously, which is defintely more complex than a single federal rule.

The core requirement remains: disclose climate-related risks that are reasonably likely to have a material impact on your business. [cite: 13 in first search] The market demands this data, even if the federal government isn't mandating it. This lack of standardization is a hidden compliance cost.

Growing institutional client pressure to integrate climate risk into investment analysis.

Client pressure is the real driver here, not just regulation. Your institutional clients-pension funds, endowments, and sovereign wealth funds-are not backing down from their fiduciary duty to manage climate risk. A May 2025 study showed that a powerful 70% of large asset owners now integrate responsible investment goals into their strategies. [cite: 1 in first search]

This translates into direct demands on APAM's portfolio management. For instance, the New York City Comptroller, overseeing massive pension funds, has explicitly stated that asset managers must deliver credible, detailed climate transition plans or risk losing their investment mandates. [cite: 1 in first search] This is a clear revenue risk.

The industry benchmark is high: 75% of institutional investors reported assessing the financial risks and opportunities that climate poses for their portfolios in 2025. [cite: 2 in first search] You need to show your work.

Scrutiny of APAM's own operational carbon footprint and sustainability practices.

While the investment-level (Scope 3) emissions get the most attention, APAM's own corporate footprint (Scope 1 and 2) is under scrutiny as a proxy for corporate governance quality. You are a public company, and the transparency bar is set by your peers.

APAM has publicly committed to measuring and disclosing its corporate Scope 1 and Scope 2 greenhouse gas (GHG) emissions, with the organizational boundary covering 25 leased office spaces. This is a relatively small operational footprint for an asset manager, but the commitment to transparency matters more than the absolute number.

To put this in context with your scale, here is a snapshot of your Assets Under Management (AUM) as of October 31, 2025, showing the massive capital base whose investment decisions are being judged against your corporate sustainability practices:

The perception is simple: if you can't manage the environmental impact of your own 25 offices, how can you manage the transition risk across $182.6 billion in client assets?

Increased requirement to monitor and report on portfolio company climate transition plans.

This is the biggest strategic challenge for APAM as an active manager. Your investment teams must demonstrate that they are integrating climate risk into fundamental research, not just using a boilerplate ESG screen. The market is moving toward mandatory Taskforce on Climate-related Financial Disclosures (TCFD) reporting, with 41% of funds already aligned in 2025. [cite: 3 in first search]

For your large strategies, especially the value-focused ones like International Value ($52.454 billion AUM) and Global Value ($34.498 billion AUM), the risk is concentrated in companies with high transition costs. You need to move beyond simple exclusion lists and focus on active engagement (stewardship) to drive change.

Key actions you must prioritize in your investment process:

• Demand clear, quantifiable net-zero targets from portfolio companies.
• Assess capital expenditure plans against climate transition pathways.
• Track portfolio-level weighted average carbon intensity (WACI) and disclose it.
• Show how engagement on climate risk influences a buy, hold, or sell decision.

Simply put, your clients want to see a credible plan for decarbonization across your entire portfolio, not just in your dedicated Sustainable Emerging Markets strategy.

Next Step: Investment Teams: Conduct a climate scenario analysis on the top 10 carbon-intensive holdings in the International Value and Global Value strategies by the end of the quarter.