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AllianzGI Focused Growth

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Ticker
PGWAX
CUSIP
92837N824
POP
$ (as of )
Inception
10/26/1990
Total Assets by Class
$559,004,208.19 (as of 05/20/2022)
Total Assets by Fund
$948,377,075.68 (as of 05/20/2022)
Morningstar Category
Large Growth

Portfolio Overview

Investment Overview

The Fund seeks long-term capital appreciation through a concentrated growth portfolio that primarily invests in U.S. companies with market capitalizations of at least $1 billion. The investment team looks for high-quality companies trading at reasonable valuations that exhibit potential for sustainable growth, earnings surprises, attractive cash flows, and significant long-term returns.

Management Team

Investment Partner

Allianz Global Investors U.S. LLC

At Allianz Global Investors, active is the most important word in our vocabulary. Active is how we create and share value with clients. We believe in solving, not selling, and in adding value beyond pure economic gain. We invest for the long term, employing our innovative investment expertise and global resources. Our goal is to ensure a superior experience for our clients, wherever they are based and whatever their investment needs.

Active is: Allianz Global Investors


Learn more about Allianz Global Investors U.S. LLC

Investment Professionals

Edelman, Ray

Raphael L. Edelman

Managing Director, Senior Portfolio Manager, CIO Large Cap Select & Core Growth Equities

Industry start date: 1984
Start date as fund Portfolio Manager: 2016

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Kimberlee Millar

Kimberlee Millar, CFA

Director, Portfolio Manager/Analyst

Industry start date: 1998
Start date as fund Portfolio Manager: 2021

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Key Features

Fundamental, Bottom-Up Process

Targets attractive, long-term growth potential balanced with disciplined risk management by focusing on companies with durable competitive advantages and multiple drivers of growth

High-Conviction Portfolio

Focused on the portfolio team's strongest investment opportunities, typically holding 25-45 companies

Global Collaboration

Benefits from a robust, worldwide investment platform with investment teams in the U.S., Europe, and Asia, each conducting regular meetings with corporate management at key companies

Portfolio Characteristics

Characteristics4

(as of 03/31/2022)
Average Weighted Market Cap (billions) $1,056.73
Median Market Cap (billions) $82.27
Trailing P/E Ex-Negative Earnings 32.65
Price-to-Cash Flow 29.31
Price-to-Book Value 17.32
3-Year EPS Growth Rate 25.57

Top Holdings (% Fund)

(as of 03/31/2022)
Security
Apple Inc.
13.00
 13.00%
Microsoft Corporation
10.95
 10.95%
Alphabet Inc. Class A
7.03
 7.03%
Amazon.com, Inc.
6.90
 6.90%
Tesla Inc
6.31
 6.31%
NVIDIA Corporation
5.07
 5.07%
Mastercard Incorporated Class A
4.49
 4.49%
Meta Platforms Inc. Class A
3.57
 3.57%
Morgan Stanley
2.63
 2.63%
Eli Lilly and Company
2.60
 2.60%

Holdings are subject to change.

Sector Allocation (% Equity)

(as of 03/31/2022)
Information Technology
41.79
 41.79%
Consumer Discretionary
21.75
 21.75%
Communication Services
13.75
 13.75%
Health Care
12.74
 12.74%
Industrials
6.11
 6.11%
Financials
2.65
 2.65%
Consumer Staples
1.21
 1.21%

Performance & Risk

Growth of $10,000 Investment

From to
This chart assumes an initial investment of $10,000 made on for Class ddd shares including any applicable sales charges. Performance assumes reinvestment of dividends and capital gain distributions.

Performance

As of
As of

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

Risk Statistics3

(as of )
Fund Index
R2
Beta
Alpha
Std Dev

Risk Considerations

Market Volatility: The value of the securities in the portfolio may go up or down in response to the prospects of individual companies and/or general economic conditions. Price changes may be short- or long-term. 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's manager(s) to invest the portfolio's assets as intended.
Issuer Risk: The portfolio will be affected by factors specific to the issuers of securities and other instruments in which the portfolio invests, including actual or perceived changes in the financial condition or business prospects of such issuers.
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.
Focused Investments: To the extent the portfolio focuses its investments on a limited number of issuers, sectors, industries or geographic regions, it may be subject to increased risk and volatility.
Prospectus: For additional information on risks, please see the fund's prospectus.

Commentary

1Q22

Market Review

In the first quarter, U.S. equities suffered their worst quarterly declines since 2020. Initially, stocks sold off on fears that the U.S. Federal Reserve (Fed) would need to be more aggressive in raising rates. Russia’s invasion of Ukraine also caused considerable volatility and further weakness. By mid-March, the S&P 500® Index had fallen into a technical correction, while the tech-heavy Nasdaq Composite Index was on the brink of entering a bear market (defined as declines of 10% and 20%, respectively, from recent highs), before a late-month rally helped both indices pare some losses.

Inflation continued to accelerate, with consumer prices rising 7.9% year over year in February—the highest rate since January 1982—while core inflation reached 6.4%. Despite the strong employment data, the University of Michigan’s consumer sentiment index dropped to 59.4 in March, the lowest reading since August 2011, as surging inflation impacted real wages. Financial markets started to price in several hikes in the federal funds rate after Fed chairman Jerome Powell suggested that there was “quite a bit of room” to tighten monetary policy without harming the labor market. In March, the Fed raised rates by 25 basis points to a range of 0.25% to 0.5%, marking its first rate increase since 2018. Policymakers also forecasted six further rate increases in 2022 and another three in 2023. Mr. Powell hinted that the U.S. central bank would be prepared to act more aggressively if needed to keep a lid on prices and pushed back against concerns that monetary tightening may cause a recession.

In this environment, value stocks outpaced growth stocks by a considerable margin over the quarter, as fears of higher interest rates hit popular technology companies. Communication services companies, such as Netflix and Meta Platforms, declined on worries of slowing subscriber growth, while falling real wages hit the consumer discretionary sector. In contrast, energy stocks rallied along with oil and natural gas prices.

Performance

The Virtus AllianzGI Focused Growth Fund returned ‑10.61% (Class INST) in the first quarter, while the Russell 1000® Growth Index returned ‑9.04%. Stock selection in the consumer discretionary and industrials sectors contributed to performance. Conversely, stock selection in the healthcare and information technology sectors detracted from performance.

Deere & Co and CrowdStrike were among the strongest stock contributors. Shares of agricultural equipment company Deere & Co reported quarterly earnings that beat expectations driven by revenue growth and margin upside. We maintain a positive outlook for Deere as agriculture fundamentals continue to improve and drive strong demand for equipment, especially given limited dealer inventories of new and used equipment. Our position in security software vendor, CrowdStrike, benefited after the company reported better-than-expected revenue and profits in the most recent quarter amid strong momentum in new client sales and growth with current customers. We continue to believe CrowdStrike’s best-in-class endpoint security solutions are particularly relevant in the new distributed workforce context that many enterprises find themselves in today.

Meta Platforms and Natera were among the largest stock detractors. Shares of Facebook parent Meta Platforms reported disappointing quarterly results, and management provided muted guidance. The company’s fundamentals were negatively impacted by greater than anticipated challenges associated with Apple’s privacy changes (advertising identifier declarations) and increased competition in short-form video content. We believe the company is making progress in addressing its challenges associated with IDFA and new formats, and, over time, investors will see the potential in the metaverse. Genetic testing company Natera was also a top detractor, as shares were negatively impacted by a short seller’s report. The company refuted the allegations in the report, and analysts reiterated their positive views on the stock. While we believe the allegations in the report are overblown, it will nevertheless weigh on the stock as there is a risk of government investigations. Given the uncertain near-term outlook, we exited the position and redeployed the proceeds to higher-conviction holdings.

Outlook

Equity markets have started the year with greater uncertainty and a rise in volatility. The transition to a post-COVID economy has been complicated by a sharp rise in inflation and the military conflict between Russia and Ukraine. Additionally, the market now expects the Fed to increase interest rates by at least 200 basis points in 2022. While we expect solid U.S. GDP and earnings growth in 2022, the unfolding invasion of Ukraine and the continued disruption in the global supply chain has called into question the strength of this growth. The longer the conflict and the severe economic sanctions by the west continue, the greater the possibility for weaker economic growth, especially in the Europe. Many growth companies are currently seeing strong revenue growth, yet higher input and labor costs are beginning to translate to flat or lower margins. With multiple crosscurrents in the global economy, we are cautiously optimistic that the equity market will eventually stabilize as we continue to closely monitor fundamental execution for our portfolio holdings.

From a portfolio perspective, we believe there will be winners and losers as business and consumer behavior changes. As we evaluate investment opportunities, we believe it is critical to be highly selective in these times to ensure that growth and balance sheet strength are sustainable. Our focus continues to be on applying rigorous fundamental research to identify companies with strong balance sheets, under-appreciated growth prospects, and attractive risk/reward characteristics.

The commentary is the opinion of the subadviser. This material has been prepared using sources of information generally believed to be reliable; however, its accuracy is not guaranteed. Opinions represented are subject to change and should not be considered investment advice or an offer of securities.

Related Literature

Marketing Materials

Virtus AllianzGI Focused Growth Fund Fact Sheet - R6
Virtus AllianzGI Focused Growth Fund Fact Sheet - INST

Financial Materials

Virtus Investment Trust Statutory Prospectus
Virtus AllianzGI Focused Growth Fund Summary Prospectus
Virtus Investment Trust SAI
Virtus Investment Trust Annual Report
Virtus Investment Trust Semiannual Report
Virtus Investment Trust Prospectus Supplement XBRL 497E 09 08 2021
Virtus Investment Trust Prospectus Supplement XBRL 497E 06 11 2021

Holdings

AllianzGI Focused Growth Holdings Monthly
Virtus AllianzGI Focused Growth Fund Top Holdings
Virtus AllianzGI Focused Growth Fund Holdings Fiscal Q1
Virtus Investment Trust Schedule F Q3

Investors should carefully consider the investment objectives, risks, charges and expenses of any Virtus Mutual Fund before investing. The prospectus and summary prospectus contains this and other information about the fund. Please contact your financial representative, call 1-800-243-4361 to obtain a current prospectus and/or summary prospectus. You should read the prospectus and/or summary prospectus carefully before you invest or send money.

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.

Average annual total return is the annual compound return for the indicated period. It reflects the change in share price and the reinvestment of all dividends and capital gains. NAV returns do not include the effect of any applicable sales charges. POP and w/CDSC returns include the effect of maximum applicable sales charges.

Returns for periods of less than one year are cumulative total returns.

1 Yields/Distributions: 30-day SEC Yield is a standardized yield calculated according to a formula set by the SEC, and is subject to change. 30-day SEC Yield (unsubsidized) is the 30-day SEC Yield without the effect of applicable expense waivers. Distribution Rate is calculated by (a) annualizing the latest income distribution for fixed income funds or funds less than 1 year old, or (b) summing all income distributions over the preceding 12 months for all other funds, and dividing by the NAV on the last business date of the period, unless otherwise indicated. The Distribution Rate may be comprised of ordinary income, net realized capital gains and returns of capital.

2 Distribution History: Distributions are represented on a cash basis and may be reclassified at year end for tax purposes. The Fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes. STCG: Short Term Capital Gain, LTCG: Long Term Capital Gain

3 Risk Statistics: R2 is a statistical measure that represents the percentage of a fund or security's movements that can be explained by movements in a benchmark index. Beta is a quantitative measure of the volatility of a given portfolio to the overall market. Alpha is a risk adjusted measure of an investment's excess return relative to a benchmark. A positive Alpha indicates that the investment produced a return greater than expected for the risk (as measured by Beta) taken. Standard Deviation measures variability of returns around the average return for an investment fund. Higher standard deviation suggests greater risk. Risk Statistics are calculated using 36 monthly returns.

4 Characteristics: For Equity Funds: Avg. Weighted Market Cap (bn): The total dollar market value of all of a company’s outstanding shares. Trailing P/E Ex-Negative Earnings: Per-share stock price divided by the latest 12-months Earnings per Share; Price/Cash Flow: Per-share stock price divided by the per-share operating cash flow; Price/Book: Per-share stock price divided by the latest 12-month per-share Book Value; 3-Year EPS Growth Rate: Average of earnings per share growth for latest 3-year period. The 3-Year EPS Growth Rate is not a forecast of the fund's performance.

4 Characteristics: For Fixed Income Funds: Effective Duration represents the interest rate sensitivity of a fixed income fund. For example, if a fund's effective duration is five years, a 1% increase in interest rates would result in a 5% decline in the fund's price. Similarly, a 1% decline in interest rates would result in a 5% gain in the fund's price.

Morningstar Disclosures:
The Morningstar Rating 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.

© Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.