Virtus Investment Partners, Inc. · NYSE:VRTS
Virtus Investment Partners — Earnings Presentation (June 2021)
21 slides from Virtus Investment Partners's earnings presentation, Jun 30, 2021
Slide 1: Virtus KAR Small-Cap Core Fund
VIRTUS KAR SMALL-CAP CORE FUND June 30, 2021
Slide 2: Important Risk Considerations
IMPORTANT RISK CONSIDERATIONS Equity Securities The market price of equity securities may be adversely affected by financial market, industry, or issuer-specific events. Focus on a particular style or on small or medium-sized companies may enhance that risk. Limited Number of Because the portfolio h
Slide 3: Virtus Investment Partners: Multi-Boutique, Multi-Strategy Model
VIRTUS INVESTMENT PARTNERS MULTI-BOUTIQUE, MULTI-STRATEGY MODEL Key Facts: Virtus affiliates4 Select external subadvisers $178.6 Billion in AUM1 AFFILIATE 9 SHARED SUPPORT Affiliates OPERATIONS AND IT HUMAN RESOURCES FUND SERVICES + 7 Select LEGAL AND COMPLIANCE Subadvisers FINANCE PRODUCT MANAGEMEN
Slide 4: Kayne Anderson Rudnick Profile
KAYNE ANDERSON RUDNICK PROFILE At a Glance ◼ Originally established to manage founder capital ◼ Year Founded: 1984 ◼ Over three decades of experience ◼ Headquarters: ◼ A differentiated “business analyst” investment approach focusing on Los Angeles, CA high-quality businesses ◼ AUM: $61.2 billion* ◼
Slide 5: Small-Cap Core Team
SMALL-CAP CORE TEAM Research Years Portfolio Manager/Analyst Responsibility Sector Coverage Experience with KAR Douglas S. Foreman, CFA Chief Investment Officer 35 Years 10 Years Todd Beiley, CFA Portfolio Manager and Senior Research Analyst Energy 22 Years 19 Years Communication Services Jon Christ
Slide 6: Kayne Anderson Rudnick Tenets of Quality
KAYNE ANDERSON RUDNICK TENETS OF QUALITY QUALITATIVE BUSINESS ASSESSMENT Competitive Protection Owner-Oriented Management ◼ Brand/Reputation ◼ Cultivates Competitive Advantage ◼ Network Effect ◼ Rational Capital Allocation ◼ Scale/Cost Advantage ◼ Considers Stakeholder Interests ◼ Benchmarking Stand
Slide 7: Kayne Anderson Rudnick Sources of Quality
KAYNE ANDERSON RUDNICK SOURCES OF QUALITY EXAMPLES OF HIGH-QUALITY BUSINESS MODELS Network Effect Cost Advantage High Customer Brand Equity Switching Costs Source: Kayne Anderson Rudnick The trademarks shown are the property of their respective owners. Percent of Virtus KAR Small-Cap Core Fund as of
Slide 8: High-Quality Universe Development
HIGH-QUALITY UNIVERSE DEVELOPMENT KAYNE ANDERSON RUDNICK SOURCES ITS INVESTMENT UNIVERSE IN A NUMBER OF WAYS SMALL CAP UNIVERSE Quantitative Screens Other Resources ◼ High return on capital over a full ◼ Research on existing portfolio holdings economic cycle ◼ Meetings with companies ◼ Long and resi
Slide 9: Intensive Fundamental Research
INTENSIVE FUNDAMENTAL RESEARCH Research Analysts and Portfolio Managers Work Together to Develop In-depth Business Knowledge Qualitative Analysis Financial Analysis Purpose: Determine if competitive advantage Purpose: Evaluate source, level, and sustainability exists and evaluate its strength. of ec
Slide 10: Portfolio Construction
PORTFOLIO CONSTRUCTION Investment Guidelines Sell Discipline Position Weights Extended Valuation ◼ 20-40 holdings ◼ Significant premium to intrinsic value ◼ Maximum Initial position is 5% (at cost) ◼ Expected annual return insufficient ◼ Maximum position size is 10% (at market) Portfolio Upgrade Sec
Slide 11: Risk Management and Portfolio Monitoring
RISK MANAGEMENT AND PORTFOLIO MONITORING Risk Management Portfolio Monitoring Investment Philosophy Risk and Compliance Committee ◼ Focus on “high-quality” companies ◼ Meets quarterly to independently evaluate portfolio risk ◼ Company’s “business risk” is primary risk control factor exposures with f
Slide 12: High-Quality Characteristics
HIGH-QUALITY CHARACTERISTICS NET MARGIN* ROA* 17.60% 14.06% 5.72% 1.25% 4.68% -2.41% Percentile Rank in Category (%) 1 1 ROE* ROIC* 26.07% 23.36% 2.61% 5.79% 2.05% -5.37% Percentile Rank in Category (%) 1 1 ■ Virtus KAR Small-Cap Core Fund (PKSFX) ■ Russell 2000® Index ■ Combined Morningstar Small B
Slide 13: Characteristics
CHARACTERISTICS 10 YEARS Standard Sharpe Upside Downside Alpha Beta Deviation % Ratio Capture Ratio Capture Ratio 18.88 18.92 1.00 100.00 100.00 6.40 0.96 95.69 95.57 1.05 83.03 14.31 0.68 57.84 0.62 0.59 0.00 -0.08 Percentile Rank in Category (%) 2 2 2 1 94 2 ■ Virtus KAR Small-Cap Core Fund (PKSFX
Slide 14: Portfolio Characteristics
PORTFOLIO CHARACTERISTICS Virtus KAR Russell Small-Cap 2000® Quality Core Fund Index Description** Return on Equity—Past 5 Years 21.9% 7.5% In a market of average businesses, we seek to own protected proprietary businesses that have generated Total Debt/EBITDA 1.0 x 6.4 x exceptional returns on shar
Slide 15: Sector Allocations
SECTOR ALLOCATIONS Virtus KAR Small-Cap Core Fund (PKSFX) Russell 2000® Index 43.6% 21.2% 21.1% 14.3% 14.9% 13.6% 11.2% 11.9% 9.0% 6.9% 5.1% 4.9% 3.7% 4.3% 3.8% 3.2% 2.2% 2.4% 1.5% 1.4% 0.0% 0.0% Industrials Financials Information Communication Health Consumer Consumer Energy Materials Real Estate U
Slide 16: Top Holdings
TOP HOLDINGS Top Ten Holdings Sector % of Portfolio FTI Consulting Inc. Industrials 5.7 EMCOR Group Inc Industrials 5.3 Rightmove PLC Communication Services 5.2 Teledyne Technologies Inc. Industrials 4.9 Primerica Inc. Financials 4.8 Manhattan Associates Inc. Information Technology 4.8 Acushnet Hold
Slide 17: Performance Review
PERFORMANCE REVIEW JUNE 30, 2021 (%) MORNINGSTAR RATINGSTM PKSFX Index Mid-Cap 62.03 I Share Growth Time Period # of Stars # of Funds Overall ★★★★ 546 3 Year ★★★ 546 38.78 5 Year ★★★★ 489 10 Year ★★★★★ 379 Morningstar ratings are based on risk-adjusted returns as of June 30, 2021. 22.24 Strong ratin
Slide 18: Virtus KAR High-Quality Equity Funds
VIRTUS KAR HIGH-QUALITY EQUITY FUNDS Quality-Driven Strategies Across Market Caps and Borders Kayne Anderson Rudnick’s investment philosophy is rooted in quality, with a focus on wealth preservation. Decades of management experience has yielded a rigorous definition of quality, which guides where th
Slide 19: Definitions
DEFINITIONS QUALITY MARKET CHARACTERISTICS Return on Equity - Past 5 Years—relates how well the company is using the money $ Weighted Average Market Cap - 3 Year Average—is the average of the market invested in it so that it can bring a return to its investors. A high portfolio ROE indicates capital
Slide 20: Index Definitions
INDEX DEFINITIONS The Russell 2000® Value Index is a market capitalization-weighted index of value- The MSCI ACWI ex U.S. Small Cap Index (net) is a free float-adjusted market oriented stocks of the smallest 2,000 companies in the Russell Universe, which capitalization-weighted index that measures s
Slide 21: About Virtus
Virtus (NASDAQ: VRTS) is a distinctive partnership of boutique investment managers, singularly committed to the long-term success of individual and institutional investors. ◼ We are not constrained by a single investment approach; rather, we provide access to independent, specialized investment phil
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