Virtus Investment Partners, Inc. · NYSE:VRTS
Virtus Investment Partners — Earnings Presentation (March 2024)
24 slides from Virtus Investment Partners's earnings presentation, Mar 31, 2024
Slide 1: Virtus KAR Small-Mid Cap Core Fund
VIRTUS KAR SMALL-MID CAP CORE FUND March 31, 2024
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, medium, or large-sized companies may enhance that risk. Technology Because the portfolio
Slide 3: Virtus Investment Partners Key Facts
VIRTUS INVESTMENT PARTNERS MULTI-ASSET MANAGER KEY FACTS $179.3 Billion in AUM 2 2 35 2 Funds Rated 4 or 5 Stars1 Past performance is not indicative of future results. As of 3/31/24. 1Based on INST class or I shares. Please see page 20 for additional Morningstar disclosure. Strong ratings are not in
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: $65.3 billion*
Slide 5: KAR Small-Mid Cap Core Team
KAR SMALL-MID CAP CORE TEAM Research KAR Start Portfolio Manager/Analyst Responsibility Sector Coverage Start Date Date Health Care Jon Christensen, CFA Portfolio Manager and Senior Research Analyst 1995 2001 Industrials Materials Julie Kutasov Portfolio Manager and Senior Research Analyst Industria
Slide 6: Why Mid Cap?
WHY MID CAP? AN UNDERUTILIZED SPACE $3.1 T Russell 3000® Index 3,000 largest U.S. stocks 10% of U.S. Equity 98% of the U.S. equity Mutual Fund Assets* market cap 10% LARGEST $3.1 T 7% $89.0 B Russell Midcap® 83% Index 22% of the U.S. Equity Market Small Mid Large $348 MM SMALLEST $12 MM < $12 MM Sou
Slide 7: Why Small-Mid Cap?
WHY SMALL-MID CAP? Strong absolute returns and stronger risk-adjusted returns than large caps TOTAL RETURN (ANNUALIZED) SHARPE RATIO 20 years ended 3/31/24 20 years ended 3/31/24 10.15% 0.57% 9.13% 0.40% Russell 2500™ Index S&P 500® Index Russell 2500™ Index S&P 500® Index Past performance is not in
Slide 8: 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 9: Kayne Anderson Rudnick Sources of Quality
KAYNE ANDERSON RUDNICK SOURCES OF QUALITY EXAMPLES OF HIGH-QUALITY BUSINESS MODELS Low Cost Advantage Design In High Customer Route Density Switching Costs Source: Kayne Anderson Rudnick The trademarks shown are the property of their respective owners. Percent of Virtus KAR Small-Mid Cap Core Fund a
Slide 10: High-Quality Universe Development
HIGH-QUALITY UNIVERSE DEVELOPMENT KAYNE ANDERSON RUDNICK SOURCES ITS INVESTMENT UNIVERSE IN A NUMBER OF WAYS Quantitative Screens: Other Resources for Names are: – High return on capital – Research on existing portfolio over a full economic cycle holdings Small-Mid Cap – Meetings with companies – Lo
Slide 11: Intensive Fundamental Research
INTENSIVE FUNDAMENTAL RESEARCH KAR 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. o
Slide 12: Investment Process: ESG Principles
INVESTMENT PROCESS ESG PRINCIPLES Policy KAR believes that responsible investment practices which incorporate the consideration of environmental, social, and governance (ESG) topics add sustainable value for its investors and are consistent with its fiduciary duty. Philosophy KARs investment strateg
Slide 13: Investment Process: ESG Principles
INVESTMENT PROCESS ESG PRINCIPLES KAR uses a proprietary ESG ratings framework to generate ESG scores for businesses in its portfolios as well as portfolio scores. ESG research is conducted by each member of the investment team Five key issues identified that KAR believes are the most material a
Slide 14: Portfolio Construction
PORTFOLIO CONSTRUCTION Investment Guidelines Sell Discipline Position Weights Extended Valuation Significant premium to intrinsic value 25-35 holdings Expected annual return insufficient Maximum initial position size is 5% (at cost) Maximum position size is 10% (at market) Portfolio Upgrad
Slide 15: Risk Management and Portfolio Monitoring
RISK MANAGEMENT AND PORTFOLIO MONITORING Risk Management Portfolio Monitoring Investment Philosophy CIO/PM Meetings Focus on “high-quality” companies Chief Investment Officer and the Portfolio Managers Company’s “business risk” is primary risk control factor meet to review, discuss, and explai
Slide 16: High-Quality Characteristics
HIGH-QUALITY CHARACTERISTICS NET MARGIN* ROA* 11.44% 11.29% 9.27% 8.86% 5.95% 2.77% Percentile Rank in Category (%) 48 12 ROE* ROIC* 21.98% 16.89% 12.67% 11.78% 9.86% 5.35% Percentile Rank in Category (%) 16 19 ■ Virtus KAR Small-Mid Cap Core Fund (VKSIX) ■ Russell 2500TM Index ■ Combined Morningsta
Slide 17: Portfolio Characteristics
PORTFOLIO CHARACTERISTICS Virtus KAR Small-Mid Russell Cap Core 2500TM Quality Fund Index Description*** Return on Equity—Past 5 Years 24.3% 13.6% In a market of average businesses, KAR seeks to own protected proprietary businesses that generate Total Debt/EBITDA* 1.6 x 2.1 x exceptional returns on
Slide 18: Sector Allocations
SECTOR ALLOCATIONS Virtus KAR Small-Mid Cap Core Fund Russell 2500™ Index 30.0% 20.8% 21.5% 19.2% 16.0% 14.1% 13.1% 13.2% 11.8% 11.0% 6.4% 5.5% 5.1% 3.2% 2.2% 2.1% 2.6% 2.3% 0.0% 0.0% 0.0% 0.0% Industrials Information Consumer Financials Health Care Consumer Materials Real Estate Energy Utilities Co
Slide 19: Top Holdings
TOP HOLDINGS Top Ten Holdings Sector % of Portfolio Bentley Systems Inc. Information Technology 4.5 Pool Corp. Consumer Discretionary 4.3 Lennox International Inc. Industrials 4.3 The Cooper Cos. Inc. Health Care 4.2 W R Berkley Corp. Financials 3.8 Nordson Corp. Industrials 3.8 Charles River Labora
Slide 20: Performance Review
PERFORMANCE REVIEW AS OF MARCH 31, 2024 (%) MORNINGSTAR RATINGSTM VKSIX Index Mid-Cap I Share Growth 22.96 21.43 Time Period # of Stars # of Funds Overall ★★★★★ 520 3 Year ★★★★ 520 14.22 12.67 5 Year ★★★★★ 489 9.9 8.47 Morningstar ratings are based on risk-adjusted returns. 7.44 6.92 7.44 6.92 Stron
Slide 21: Virtus KAR Equity Funds
VIRTUS KAR 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 the firm invest
Slide 22: Definitions
DEFINITIONS QUALITY MARKET CHARACTERISTICS Return on Equity - Past 5 Years—relates how well the company is using the $ Weighted Average Market Cap - 3 Year Average – the sum of each security’s weight within money invested in it so that it can bring a return to its investors. A high portfolio ROE the
Slide 23: Index Definitions
INDEX DEFINITIONS The Russell 2000® Value Index is a market capitalization-weighted index of value- The Russell 1000® Growth Index is a market capitalization-weighted index of growth- oriented stocks of the smallest 2,000 companies in the Russell Universe, which oriented stocks of the 1,000 largest
Slide 24: About Virtus
Virtus (NYSE: 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 philos
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