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Artisan Small Cap Fund highlights Guidewire as software exposure falls
The fund said it remains positive on small caps, AI infrastructure and health care, while trimming software exposure as valuations rise and competitive risks increase.
Artisan Partners’ Artisan Small Cap Fund, in its second-quarter 2026 investor letter, highlighted Guidewire Software, Inc. (NYSE: GWRE) despite ongoing concerns about AI driven growth. The fund reported strong absolute returns and modestly outperformed the Russell 2000 Growth Index in the quarter, which gained 25.7%.
In the quarter, Investor Class returned 26.0%, Advisor Class returned 26.1%, and Institutional Class returned 26.1%, according to the letter. Artisan Small Cap also pointed to a difficult backdrop for quality-focused active managers, citing market leadership that favored loss-making, highly leveraged companies.
The letter said health care was the strongest relative contributor, while energy, materials, financials and real estate also helped. It said technology, industrials and consumer discretionary detracted partly because the fund did not own oversized index contributors, and software holdings weakened even though the company fundamentals were described as improving.
Regarding Guidewire specifically, the investor letter called the firm a market leader in software for property and casualty insurers, but still described it as a detractor. On July 23, 2026, Guidewire closed at $131.38 per share, with a one-month return of 14.2% and a 52-week loss of 37.9%, while the stock’s market cap was $10.9 billion and the 52-week range ran from $102.30 to $272.60. The fund said it remains positive on small-cap opportunities, AI infrastructure and health care, while reducing software exposure and staying selective as valuations rise and competitive risks increase.
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