Virtus Investment Partners, Inc. · NYSE:VRTS
Virtus Investment Partners — Pres Euclid Intl Equity Inst 3071
27 slides from Virtus Investment Partners's investor presentation, Aug 12, 2015
Slide 1: International Equity Strategy
International Equity Strategy PRESENTED TO: Investment Consultants and Manager Research Summer 2015
Slide 2: Organizational Overview
ORGANIZATIONAL OVERVIEW Euclid Advisors ► Euclid Advisors is a New York City-based investment management boutique with a dedicated international equity team ► We are an affiliate of Virtus Investment Partners ► We have the benefit of being supported by the broader resources of Virtus while retaining
Slide 3: Investment Philosophy
INVESTMENT PHILOSOPHY We believe International developed markets offer compelling return and diversification potential. Differentials in market valuations, security choices, yields, and economic cycles versus the US, argue for meaningful non-US allocations. We seek to take advantage of global ineffi
Slide 4: Firm Overview
FIRM OVERVIEW Euclid International Team Frederick A. Brimberg John L. Creswell Senior Managing Director Senior Managing Director International Portfolio Manager Business & Portfolio Management Investment Business Operations & Research Compliance Development Administration & Trading & Client Service
Slide 5: Strategy Overview
STRATEGY OVERVIEW ► High conviction portfolio of International stocks ► Process is driven by bottom-up fundamental research and informed by macro views ► Style is opportunistic within a quality & value framework ► Invests primarily in 30-40 mid- to large-cap stocks ► Benchmark is the MSCI EAFE ® Ind
Slide 6: Overview of Investment Process
OVERVIEW OF INVESTMENT PROCESS 1. Idea Generation Quantitative Screens Sector Analysis Street Research Professional Network 4. Portfolio Monitoring 2. Fundamental Research 30-40 names continuously Global-macro work Valuation supports and monitored for rebalance or sale Financial Strength informs our
Slide 7: Bottom-Up Research
BOTTOM-UP RESEARCH Four essential factors drive stock selection ► Valuation – Forward looking – Backward looking ► Financial Strength – Income statement – Cash flow – Balance sheet ► Franchise Quality ► Management Ability & Alignment RESEARCH PAGE 7
Slide 8: Valuation
VALUATION First factor in bottom-up research 1. Forward Looking Perspective: Cash Flow Return on Invested Capital (CFROI) Accounting Adjustment Comparability of Returns Assess Value We make a shift from accrual Once companies are put on an We can then determine accounting to a cash-flow even playing
Slide 9: Financial Strength
FINANCIAL STRENGTH Second factor in bottom-up research ► Income Statement – Sales growth: price, volumes, prefer organic growth – Margins: SGA/sales, operating, pretax, net – Quality: sales vs. margins, expense vs. capitalize ► Balance Sheet – Net debt/equity – Interest coverage – Asset efficiency ►
Slide 10: Franchise Quality
FRANCHISE QUALITY Third factor in bottom-up research ► Competitive Advantages ► Barriers to Entry ► Pricing and Margins ► Sustainability of Business Model ► Economic Value Creation RESEARCH None of the examples used in this presentation constitute a buy or sell recommendation. PAGE 10
Slide 11: Analysis of Management Alignment
ANALYSIS OF MANAGEMENT ALIGNMENT Fourth factor in bottom-up research ► Management Track Record – Capital stewardship – Do they use Economic Value Creation metrics? – Credibility of implementing strategy ► Management Incentives – Alignment of management and shareholders – Are the incentives measurabl
Slide 12: Global Macro Research Approach
GLOBAL MACRO RESEARCH APPROACH Pragmatism dictates that we understand our environment ► Global and Regional – Monetary policy – Political uncertainty Sector – Government legislation – Geopolitical tensions ► Country Selection – Direction of interest rates Country – Economic growth – Rule of Law – Po
Slide 13: Fundamental Informed by Macro Views
FUNDAMENTAL INFORMED BY MACRO VIEWS How we bring bottom-up and top-down together During periods of structural instability, secular shifts, or uncompensated risk we give our top-down views more weight volatility “ W e are stock-pickers first and foremost but experience has taught us that there are ti
Slide 14: Sell Discipline
SELL DISCIPLINE ► Fundamentals or Original Thesis Change ► Stock Fully Valued ► Stock Not Acting as Expected ► Macro Theme Not Supportive ► A Better Idea Is Available RESEARCH None of the examples used in this presentation constitute a buy or sell recommendation. PAGE 14
Slide 15: Portfolio Guidelines and Risk Controls
PORTFOLIO GUIDELINES AND RISK CONTROLS Positions ► Typically 30-40 holdings ► Maximum weight of individual holding is 6% ► Invest in companies with market cap over $3 billion ► Cash usually less than 5% ► Expected annual turnover 30-50% Sectors and Geography ► A cap of 35% of the total portfolio in
Slide 16: Portfolio Characteristics
PORTFOLIO CHARACTERISTICS REPRESENTATIVE ACCOUNT AS OF 06/30/15 Portfolio Characteristics Regional Exposure – % of Portfolio M S CI E AF E ® M S CI E AF E ® P o r t f o li o I n d e x (n e t) P o r tfo li o I n d e x (n e t) Nu m b e r o f Ho l d i n g s 33 911 E u ro p e e x- UK 33.0% 45.1% W e i g
Slide 17: Performance
PERFORMANCE Annualized returns as of 6/30/15 12% 9% 6% 3% 0% -3% -6% QTD 1 YR 3 YRS 5 YRS 7 YRS Since Inception Intl. Equity Gross 2.70% -0.95% 10.88% 11.75% 5.64% 9.71% Intl. Equity Net* 2.47% -1.84% 9.89% 10.76% 4.69% 8.73% MSCI EAFE® Index (net) 0.62% -4.23% 11.97% 9.54% 1.97% 3.87% Inception: 1/
Slide 18: Performance
PERFORMANCE Annual returns 45% 30% 15% 0% -15% -30% -45% 2006 2007 2008 2009 2010 2011 2012 2013 2014 Intl. Equity Gross 29.47% 23.26% -27.84% 36.83% 11.89% -2.49% 16.49% 15.55% -4.66% Intl. Equity Net* 28.33% 22.17% -28.50% 35.64% 10.89% -3.37% 15.46% 14.52% -5.51% MSCI EAFE® Index (net) 26.34% 11.
Slide 19: Why Euclid International?
WHY EUCLID INTERNATIONAL? 1. Opportunistic style with low absolute volatility of returns 2. Dynamic macro approach supports fundamental stock selection 3. Experienced team and flat structure allows focus on process and performance 4. Outperformed median peer group returns in 22 of 26 rolling three y
Slide 20: Team Professionals
TEAM PROFESSIONALS Frederick A. Brimberg, Senior Managing Director and International Portfolio Manager Frederick Brimberg is a senior managing director and international equity portfolio manager at Euclid Advisors, an investment management affiliate of Virtus Investment Partners. Mr. Brimberg’s care
Slide 21: Team Professionals
TEAM PROFESSIONALS Anthony D’Amore, Senior Equity Trader Anthony D’Amore is a senior equity trader with Euclid Advisors LLC, an investment management affiliate of Virtus Investment Partners. Mr. D’Amore has more than 20 years of equity trading experience, with deep expertise in trading international
Slide 22: Team Professionals
TEAM PROFESSIONALS Rowena L. Harbour, Operations and Performance Manager Rowena Harbour is an Operations and Performance Manager at Euclid Advisors, an investment management affiliate of Virtus Investment Partners. Ms. Harbour has broad experience in asset management operations, performance reportin
Slide 23: Notes and Disclosures
NOTES AND DISCLOSURES It should not be assumed that securities identified were or will be profitable. Portfolio holdings information is based on a representative account and do not represent all of the securities held in client portfolios. The securities identified may no longer be held in client po
Slide 24: Performance Disclosure Euclid International ADR Equity Composite
PERFORMANCE DISCLOSURE EUCLID INTERNATIONAL ADR EQUITY COMPOSITE Euclid Advisors LLC claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. Euclid Advisors LLC has been independently verified for th
Slide 25: Performance Disclosure Euclid International ADR Equity Composite
PERFORMANCE DISCLOSURE EUCLID INTERNATIONAL ADR EQUITY COMPOSITE MSCI Composite Percent of EAFE 3 Year Benchmark Total Total Bundled Gross Net Index Standard 3 Year Firm Composite Fee Annual Annual Annual Deviation Standard Assets Assets Accounts at Accounts in Return Return Return Gross Deviation C
Slide 26: Investment Vehicles & Fees
INVESTMENT VEHICLES & FEES Separately Managed Accounts Account AUM Fee First $10 million .90% Next $10 million .75% Next $30 million .65% Over $50 million .55% Minimum account size for ADR only $2 million Minimum account size for ORD $20 million Please note that this strategy is also available in ot
Slide 27: Contact
1540 BROADWAY, SUITE 1630, NEW YORK, NY 10036 contact@euclidadv.com www.euclidadv.com 3071 EUCLID (6-15) © 2015 Virtus Investment Partners, Inc.