Virtus Investment Partners, Inc. · NYSE:VRTS
Virtus Investment Partners — Pres GFUSSCF UCITS 3147
33 slides from Virtus Investment Partners's investor presentation, Jul 31, 2015
Slide 1: Virtus GF U.S. Small Cap Focus Fund
Virtus GF U.S. Small Cap Focus Fund July 31, 2015
Slide 2: Table of Contents
Table of Contents I. Virtus Investment Partners II. Kayne Anderson Rudnick Investment Management III. Virtus GF U.S. Small Cap Focus Fund IV. Appendix NOT FOR SALE IN THE U.S. OR TO U.S. PERSONS 2
Slide 3: Important Information
Important Information This Document does not constitute an offer or solicitation to invest in the Funds. The Funds are a sub-fund of Virtus Global Funds plc (the “Company”), a public limited company with variable capital incorporated in Ireland and authorized and regulated by the Central Bank of Ire
Slide 4: Virtus Investment Partners
Virtus Investment Partners Virtus Investment Advisers, Inc. is the Investment Manager and Promoter to Virtus Global Funds, plc. Virtus Global Funds plc is registered in Ireland as an open-end investment company with variable capital, established as an umbrella fund with segregated liability between
Slide 5: Firm Overview
Firm Overview Independent publicly traded asset management company managing $52.4 billion for individuals and institutions through: − Virtus Mutual Funds − Closed-End Funds − Variable Insurance Funds − Separately Managed Accounts − Institutional Accounts − Collective Investment Trusts − Offshore F
Slide 6: Virtus Investment Partners
Virtus Investment Partners Virtus offers an array of distinctive capabilities from our investment partners. * * * * * * * * * * *Virtus Investment Partners retains an ownership interest in the firm. 6 NOT FOR SALE IN THE U.S. OR TO U.S. PERSONS
Slide 7: Kayne Anderson Rudnick Investment Management, LLC
Kayne Anderson Rudnick Investment Management, LLC NOT FOR SALE IN THE U.S. OR TO U.S. PERSONS 7
Slide 8: Firm Overview
Firm Overview Introduction: Organization originally established to manage founder capital Location: Los Angeles, CA, U.S.A. Boutique firm specializing in small cap equity strategies with Year Founded: 1984 over three decades of experience AUM (Billion)*: $9.9 billion in total assets A discipli
Slide 9: Small Cap Focus Investment Team
Small Cap Focus Investment Team Years of Research Years with Portfolio Manager/Analysts Responsibility Experience KAR Douglas S. Foreman, CFA Chief Investment Officer 29 4 Portfolio Manager & Senior Research Analyst Todd Beiley, CFA 16 13 Sector Coverage: Financials and Producer Durables Senior Rese
Slide 10: Disciplined Investment Approach
Disciplined Investment Approach Investment We believe that purchasing high-quality businesses with Philosophy competitive protections at attractive valuations will achieve excess returns over a complete market cycle Investment To achieve a return meaningfully above that of the Objectives Russell 200
Slide 11: Investment Methodology
Investment Methodology Investment Utilize our firm’s extensive knowledge of high-quality Methodology companies to construct a portfolio of the best opportunities Pay only an attractive price Have a long-term orientation Focus the portfolio in 15-35 positions No style or sector weight considerations
Slide 12: Our View of Quality
Our View of Quality Qualitative Quantitative A business in which we have high Sustainable high return on confidence may earn more in 7-10 incremental capital years than it does today - Effective competitive barriers: Low debt • Brand franchise Abundant discretionary • High customer switching
Slide 13: Our View of Value
Our View of Value Qualitative Quantitative Opportunities often created by: We consider: - Market over-weighting of - Economic earning power in transitory business challenges relation to market and - Little investor recognition due enterprise value to small size of company - Normalized discretion
Slide 14: Development of High-Quality Universe
Development of High-Quality Universe Small Cap Universe High return on capital over a full economic cycle Quantitative Long and resilient earnings history Screens KAR Universe— High return on net operating assets We source our Minimal debt investment universe in a Research on existing portfolio hold
Slide 15: Intensive Fundamental Research
Intensive Fundamental Research Qualitative Analysis Financial Analysis Understand link between Purpose: Determine if competitive advantage business character and Purpose: Evaluate source, level, and exists and evaluate its strength. financial character sustainability of economic profitability. Rev
Slide 16: Portfolio Construction
Portfolio Construction Business Valuation Quality We seek the best balance between quality and valuation Normalized earnings to Durability PLUS enterprise value yield Turnover typically <100% “Normal” position size ~4%-10% Typically <10% cash Normalized No portfolio leverage free cash flow P
Slide 17: Sell Discipline
Sell Discipline Extended Valuation Significant premium to intrinsic value Expected annual return insufficient Portfolio Upgrade Better business, better price Acquisition Activity Our holding acquired Our holding acquires a company diminishing its business or value Negative Company or Pos
Slide 18: Risk Management & Portfolio Monitoring
Risk Management & Portfolio Monitoring Lower Business Risk Portfolio businesses have durable competitive protections: Russell 2000® KAR Index vs. 5-Year Average ROE 21.2% 10.4% 10-Year Earning Variance 24.5% 90.6% Lower Financial Risk Portfolio businesses have minimal debt: Russell 2000® KAR vs.
Slide 19: Virtus GF U.S. Small Cap Focus Fund
Virtus GF U.S. Small Cap Focus Fund NOT FOR SALE IN THE U.S. OR TO U.S. PERSONS 19
Slide 20: Portfolio Characteristics
Portfolio Characteristics U.S. Small Cap Russell 2000® Focus Fund Index Return on Equity—Past 5 Years 21.2% 10.4% Total Debt/EBITDA 1.0x 5.1x Earnings Variance—Past 10 Years 24.5% 90.6% Earnings Per Share Growth—Past 10 Years 11.0% 6.0% P/E Ratio—Trailing 12 Months 23.1x 33.8x Free Cash Flow Yield*
Slide 21: Portfolio Characteristics
Portfolio Characteristics Top Ten Holdings Fund (%) Sector Allocations Fund (%) Index Shutterstock, Inc. 9.82 Financial Services 22.80 25.69 Primerica, Inc. 9.71 Technology 18.91 14.20 Autohome, Inc. 9.70 Producer Durables 13.87 12.19 Chefs’ Warehouse, Inc. 8.46 Consumer Discretionary 11.74 15.38 CD
Slide 22: Fund Summary
Fund Summary VIRTUS GF U.S. SMALL CAP FOCUS FUND Sub-Investment Manager Kayne Anderson Rudnick Investment Management Investment Objective The investment objective of the Fund is to pursue long-term capital appreciation. Investment Strategy Fund will invest at least 80% of its assets in the equity
Slide 23: Performance as of July 31, 2015
Performance as of July 31, 2015 VIRTUS GF U.S. SMALL CAP FOCUS FUND Since AVERAGE ANNUAL TOTAL RETURNS 1 Month 1 Quarter YTD 1 Year Inception Virtus GF Virtus GF U.S. Small Cap Focus Fund * -5.03% -1.92% -4.23% 3.13% 1.44% (Class I ) Russell 2000® Index -1.16% 1.85% 3.54% 12.03% 4.19% *Fund inceptio
Slide 24: Important Risk Considerations
Important Risk Considerations VIRTUS GF U.S. SMALL CAP FOCUS FUND Equity Securities: The market price of equity securities may be 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
Slide 25: Appendix
Appendix NOT FOR SALE IN THE U.S. OR TO U.S. PERSONS 25
Slide 26: Biographies–U.S. Small Cap Focus Team
Biographies–U.S. Small Cap Focus Team PORTFOLIO MANAGER/SENIOR RESEARCH ANALYST CHIEF INVESTMENT OFFICER Todd Beiley, CFA Douglas S. Foreman, CFA Portfolio Manager and Senior Research Analyst with primary Chief Investment Officer and Member of the Executive Management research responsibilities for t
Slide 27: Biographies–U.S. Small Cap Focus Team
Biographies–U.S. Small Cap Focus Team SENIOR RESEARCH ANALYSTS Jon K. Christensen, CFA Julie Kutasov Senior Research Analyst with primary research responsibilities for Senior Research Analyst with primary research responsibilities for the small and mid-capitalization health care sector the small and
Slide 28: Biographies–U.S. Small Cap Focus Team
Biographies–U.S. Small Cap Focus Team RESEARCH ANALYSTS Chris Benway, CFA Chris Wright, CFA Research Analyst with primary research responsibilities Research Analyst with primary research responsibilities for the small for the small and mid-capitalization materials and and mid-capitalization consumer
Slide 29: Virtus Global Funds plc Platform
Virtus Global Funds plc Platform Company Virtus Global Funds plc Sub Funds & Virtus GF Multi-Sector Short Duration Bond—Newfleet Asset Management Sub-Investment Manager Virtus GF U.S. Small Cap Focus Fund—Kayne Anderson Rudnick Investment Manager and Promoter Virtus Investment Advisers, Inc. Leg
Slide 30: Virtus GF U.S. Small Cap Focus Fund
Virtus GF U.S. Small Cap Focus Fund A Shares C Shares R Shares I Shares Client Type Retail Retail Retail Institutional USD USD USD USD Currency EUR EUR EUR EUR GBP GBP GBP GBP Hedge Unhedged Unhedged Unhedged Unhedged Expense Limitation 2.00% 2.50% 1.25% 1.15% Management Fee 1.65% 2.15% 0.90% 0.80%
Slide 31: Contact Us
Contact Us Lijo “LJ” John, Managing Director, Offshore Distribution Virtus Investment Partners 100 Pearl Street, 9th Floor Hartford, CT 06103 T: 860.263.4971 E: [email protected] Stephen Rigali, CFA Executive Vice President Kayne Anderson Rudnick Investment Management 1800 Avenue of the Stars, Se
Slide 32: Important Information
Important Information This material was prepared without regard to the specific objectives, financial situation or needs of any particular person who may receive it. It is intended for informational purposes only and it is not intended that it be relied on to make any investment decision. It does no
Slide 33: Virtus Global Funds PLC
Virtus Global Funds PLC 3147 (8-15) © 2015 Virtus Investment Partners, Inc. NOT FOR SALE IN THE U.S. OR TO U.S. PERSONS 33