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Investment Opportunity

The fund emphasizes low correlating asset classes in order to help reduce volatility and increase return potential. Applying an innovative, institutional-level approach to investing, the fund invests in a diversified portfolio of alternative asset classes including Managed Futures, Global Real Estate, Global Infrastructure, Commodities, Natural Resources, Currencies and Floating Rate Securities.

Fund Risks

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.

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.

Industry/Sector Concentration: A fund that focuses its investments in a particular industry or sector will be more sensitive to conditions that affect that industry or sector than a non-concentrated fund.

Derivatives: Investments in derivatives such as futures, options, forwards, and swaps may increase volatility or cause a loss greater than the principal investment.

Allocation: The fund's exposure to different asset classes may not be optimal for market conditions at a given time. Asset allocation does not guarantee a profit or protect against a loss in declining markets.

Foreign Investing: Investing internationally involves additional risks such as currency, political, accounting, economic, and market risk.

Real Estate: The fund may be negatively affected by factors specific to the real estate market, including interest rates, leverage, property, and management.

Fund of Funds: Because the fund can invest in other funds, it indirectly bears its proportionate share of the operating expenses and management fees of the underlying fund(s).

Affiliated Funds: The fund's adviser can select affiliated and/or unaffiliated funds, which may create a conflict of interest.

Prospectus: For additional information on risks, please see the fund's prospectus.

Key Stats (as of 4/28/2017)

Inception: 11/30/2005
Ticker: PDPAX
CUSIP: 92828R875
Fund No: 1641
Net Assets by Fund: $51,700,429
Net Assets by Class: $12,387,527

Management Team

Warun Kumar
Warun Kumar Virtus Investment Advisers, Inc.

Industry start date: 1993

Start date with Fund: 2016

Virtus Investment Advisers, Inc.

Virtus Investment Advisers, Inc. (VIA) serves as investment adviser to Virtus mutual funds and closed-end funds. In this capacity, VIA is primarily responsible for implementing an investment strategy for each fund, and selecting either affiliated or unaffiliated subadvisers to implement an investment management program for each of the funds.

Morningstar Ratings

Overall Rating

As of 3/31/2017 the Fund was rated 2 stars out of 243 funds, 2 stars out of 148 funds and 2 stars out of 39 funds within the Multialternative category for the 3-, 5- and 10 year periods, respectively.

Strong ratings are not indicative of positive fund performance.

Average Annual Total Returns

Monthly Performance (%) (as of 4/28/2017)
  3 Mon. YTD 1YR 3YR 5YR 10YR Since Inception
NAV -0.46 0.37 4.57 -1.19 1.20 0.63 2.11
POP -6.18 -5.40 -1.45 -3.12 0.01 0.03 1.59
Quarterly Performance (%) (as of 3/31/2017)
  3 Mon. YTD 1YR 3YR 5YR 10YR Since Inception
NAV 0.83 0.83 8.06 -0.34 1.41 0.85 2.17
POP -4.96 -4.96 1.84 -2.29 0.22 0.25 1.64
Index 6.07 6.07 17.17 10.37 13.30 7.51 NA
Index 2 -0.21 -0.21 6.46 -0.93 1.48 1.23 NA

Performance data quoted represents past results. Past performance is no guarantee of future results and current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, so your shares, when redeemed, may be worth more or less than their original cost.

Sales Charge and Expenses

POP (Public Offering Price) performance reflects the deduction of the maximum sales charge of 5.75%. A contingent deferred sales charge of 1% may be imposed on certain redemptions within 18 months on purchases on which a finder’s fee has been paid.

The fund class gross expense ratio is 1.65% and reflects the direct and indirect expenses paid by the Fund.

The gross expense ratio minus the indirect expenses incurred by the underlying funds in which the Fund invests is 0.73%.

Index: S&P 500® Index
The S&P 500® Index is a free-float market capitalization-weighted index of 500 of the largest U.S. companies. The index is calculated on a total return basis with dividends reinvested. The index is unmanaged, its returns do not reflect any fees, expenses, or sales charges, and is not available for direct investment.

Index 2: Alternatives Diversifier Composite
The Alternatives Diversifier Composite consists of Diversified Trends Index (15%)*, FTSE EPRA NAREIT Developed Rental Index-net (20%)**, MSCI World Infrastructure Sector Capped Index (15%)*** , S&P North American Natural Resources Sector Index (10%), Deutsche Bank Liquid Commodity Index (15%), Deutsche Bank G10 Currency Harvest Index (15%)**** and Credit Suisse Leveraged Loan Index (10%). The indexes are unmanaged, their returns do not reflect any fees, expenses, or sales charges, and they are not available for direct investment. *Prior to 3/1/12 was the HFRX Equity Market Neutral Index (20%). **Prior to 6/1/15 was the UBS Global Investors Index (20%). ***Prior to 9/1/08 was a mix of the MSCI US Utilities Index (65%), MSCI World Telecom Services Index (20%) and MSCI World ex US Utilities Index (15%). ****Prior to 3/1/12 was Deutsche Bank G10 Currency Harvest Index (10%).

Risk Statistics3 (as of 3/31/2017)

  Fund Index
R2 0.46 1.00
Beta 0.49 1.00
Alpha -5.28 0.00
Std Dev 7.41 10.26
Index: S&P 500® Index

Daily Price (as of 4/28/2017)

NAV Change ($)
10.82 -0.03
POP Change ($)
11.48 -0.03

Top Holdings (% Fund)
(as of 3/31/2017)

iShares North American Natural Resources ETF 18.20
Virtus Global Infrastructure Fund - Class I 16.11
PowerShares DB Commodity Index Tracking Fund 14.11
PowerShares DB G10 Currency Harvest Fund 9.83
Virtus International Real Estate Securities Fund Class I 9.62
Virtus Global Real Estate Securities Fd Cl I 9.09
Virtus Senior Floating Rate Fund Class I 8.44
Virtus Real Estate Securities Fund Class I 6.68
VanEck Vectors Agribusiness ETF 3.74
VanEck Vectors Coal ETF 3.21

Morningstar Ratings

Overall Rating

As of 3/31/2017 the Fund was rated 2 stars out of 243 funds, 2 stars out of 148 funds and 2 stars out of 39 funds within the Multialternative category for the 3-, 5- and 10 year periods, respectively.

Strong ratings are not indicative of positive fund performance.