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Opportunities in High Yield: A Discussion with Seix Investment Advisors

Michael Kirkpatrick

Michael Kirkpatrick
Managing Director and Senior Portfolio Manager
Seix Investment Advisors LLC                                  

Michael Kirkpatrick, Managing Director and Senior Portfolio Manager at Seix Investment Advisors, shares his latest thoughts on the high yield (HY) market in an interview with Virtus’ Head of Distribution, Barry Mandinach.

Highlights include:
• Current opportunities in the HY market
• Portfolio diversification benefits of investing in HY and upside/downside potential versus equities
• Widening of spreads following March dislocation, and subsequent narrowing of spreads as markets improved
• Fallen angels – what are they and why investors should care
• Active vs. passive investing in HY

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IMPORTANT RISK CONSIDERATIONS
Credit & Interest: Debt securities are subject to various risks, the most prominent of which are credit and interest rate risk. The issuer of a debt security may fail to make interest and/or principal payments. Values of debt securities may rise or fall in response to changes in interest rates, and this risk may be enhanced with longer-term maturities. High Yield-High Risk Fixed Income Securities: There is a greater level of credit risk and price volatility involved with high yield securities than investment grade securities. Foreign Investing: Investing internationally involves additional risks such as currency, political, accounting, economic, and market risk. Market Volatility: Local, regional or global events such as war, acts of terrorism, the spread of infectious illness or other public health issue, recessions, or other events could have a significant impact on the portfolio and its investments, including hampering the ability of the portfolio manager(s) to invest the fund’s assets as intended. Prospectus: For additional information on risks, please see the fund’s prospectus.

Past performance is not indicative of future results.

 

Morningstar Percentile Rankings

High Yield Category

Based on Total Return (as of 6/30/20)

 

1 Year

3 Years

5 Years

10 Years

Virtus Seix High Yield Fund (I share)

6

4

18

20

Rank

25/705

18/641

70/550

60/347

 

MORNINGSTAR

The Morningstar RatingTM for funds, or “star rating,” is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product’s monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. Ratings do not take into account the effects of sales charges and loads.

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Virtus Investment Partners provides this communication as a matter of general information. The opinions stated herein are those of the author and not necessarily the opinions of Virtus, its affiliates, or its subadvisers. Portfolio managers at Virtus make investment decisions in accordance with specific client guidelines and restrictions. As a result, client accounts may differ in strategy and composition from the information presented herein. Any facts and statistics quoted are from sources believed to be reliable, but they may be incomplete or condensed and we do not guarantee their accuracy. This communication is not an offer or solicitation to purchase or sell any security, and it is not a research report. Individuals should consult with a qualified financial professional before making any investment decisions. 

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