Virtus Duff & Phelps Global Infrastructure Fund
Virtus Duff & Phelps Global Infrastructure Fund
Investment Overview
The Fund seeks attractive capital appreciation and current income by investing globally in owners/operators of essential services companies involved in the communications, utility, transportation, and energy industries. The highly experienced portfolio team applies a disciplined, bottom-up investment process that strives to deliver superior risk-adjusted returns.
Global Infrastructure Investing: Our Approach
Investment Partner
Duff & Phelps Investment Management Co.
Duff & Phelps Investment Management pursues specialized investment strategies with exceptional depth of resources and expertise. Since its earliest beginnings, providing research and analysis of income producing securities to Depression-era investors, the firm's attention has been set on identifying attractive opportunities through active management and fundamental research, while managing the associated risks. Today, building on a distinguished legacy, Duff & Phelps has earned a reputation as a leader in investing in Global Listed Infrastructure, Global Listed Real Estate, Clean Energy, and Diversified Real Assets.
Quality. Reliability. Specialization. Since 1932.
Learn more about Duff & Phelps Investment Management Co.
Investment Professionals
Connie Luecke, CFA
Senior Managing Director, Senior Portfolio Manager
Industry start date: 1983
Start date as fund Portfolio Manager: 2004
Steven Wittwer, CFA
Executive Managing Director, Senior Portfolio Manager
Industry start date: 1997
Start date as fund Portfolio Manager: 2018
Key Features
Attractive Income and Growth Potential
Pursues the relatively high, predictable dividends and solid capital appreciation opportunities that infrastructure companies can offer
Strong Protective Attributes
Focuses on essential services companies that historically have performed well regardless of economic conditions, with long-term contracts or regulatory agreements that provide a potential inflation hedge
Lower Relative Risk Profile
High-conviction portfolio of 40-60 securities emphasizes quality, developed market owner/operators with high-visibility revenues, above-average dividend payouts, and steady cash flow and earnings growth
Top Holdings (% Fund)
| Security | |
|---|---|
| Transurban Group | |
| NextEra Energy Inc | |
| American Tower Corp | |
| Cheniere Energy Inc | |
| Aena SME SA | |
| Sempra Energy | |
| Crown Castle Inc | |
| National Grid PLC | |
| Dominion Energy Inc | |
| CenterPoint Energy Inc |
Holdings are subject to change.
Characteristics4
(as of 03/31/2023)| Average Weighted Market Cap (billions) | $44.32 |
| Median Market Cap (billions) | $29.26 |
| Trailing P/E Ex-Negative Earnings | 24.55 |
| Price-to-Cash Flow | 12.06 |
| Price-to-Book Value | 2.53 |
| 3-Year Earnings Growth Rate | -0.27 |
Industry Allocation (% Equity)
| Electric Utilities | |
| Multi-Utilities | |
| Oil & Gas Storage & Transportation | |
| Highways & Railtracks | |
| Telecom Tower REITs | |
| Airport Services | |
| Rail Transportation | |
| Gas Utilities | |
| Construction & Engineering | |
| Integrated Telecommunication Services | |
| Water Utilities |
Top Countries (% Invested Assets)
(as of 03/31/2023)Growth of $10,000 Investment
From toPerformance
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
Yields / Distributions1
| 30-day SEC Yield | |
| 30-day SEC Yield (unsubsidized) | |
| Distribution Rate (at NAV) | |
| Income Distributions Current Month | |
| Income Distributions YTD |
Risk Statistics3
(as of )| Fund | Index | |
|---|---|---|
| R2 | ||
| Beta | ||
| Alpha | ||
| Std Dev |
Risk Considerations
Marketing Materials
| Virtus DPIM Global Infrastructure Fund Fact Sheet - R6 | |
| Virtus Duff & Phelps Global Infrastructure Fund Fact Sheet - I | |
| Virtus Duff & Phelps Global Infrastructure Fund Fact Sheet - A | |
| Spotlight On: Virtus Duff & Phelps Global Infrastructure Fund | |
| Morningstar - Quarterly Ratings |
Financial Materials
Holdings
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 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 sum of each security's weight within the fund (or index) multiplied by the security's market capitalization; 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.
1Q23
Market Developments
Markets rallied once again on revived expectations of a pause in interest rate increases and reassurances regarding the strength of the global banking system. Global developed markets (as measured by the MSCI World Index (net)) rose 7.73% on a total return basis. Global listed infrastructure stocks (as measured by the FTSE Developed Core Infrastructure 50/50 Index (net)) rose 1.27% in the quarter, trailing the broader market.
Transportation was the best-performing sector in the first quarter. European airports experienced strong passenger growth with some airports seeing passenger volumes return to pre-pandemic levels.. North American railroads were the laggard of the sector as economic concerns weighed on volume growth expectations and train derailments brought negative headlines.
Communications stocks rose modestly during the quarter after facing a difficult 2022 due to rising interest rates, which continue to dictate short-term performance. Fundamental business conditions for wireless towers remain quite positive, given expectations of robust future demand for the U.S. and European tower companies.
Utility stocks lagged in the quarter as investors appeared to shift away from defensive stocks such as pharmaceuticals, consumer staples, and utilities. The higher interest rate environment remains a headwind for the sector in the minds of investors. European utilities rose as investor concerns about a potential energy crisis were assuaged. A warm winter across Europe resulted in lower demand for heating fuel and alleviated the spike in power prices.
The energy infrastructure sector trailed the other infrastructure sectors as weaker commodity prices and economic concerns weighed upon the group. Energy demand was lackluster as warm weather across the northern hemisphere dampened heating needs while commercial and industrial users in Europe curbed their activity to conserve resources.
Performance Review
Outperformance was due to strong stock selection across all sectors. Sector allocation partially detracted from performance due to an underweight position in transportation combined with overweight positions in communications and energy. An underweight position in the utility sector had a slightly positive influence on performance.
At the security level, the largest positive contributors were AENA SME SA and Transurban Group. Spanish airport operator AENA performed well as passenger traffic continued to recover to pre-pandemic levels on the back of a strong rebound in leisure travel. In addition, the company is poised to benefit from a new duty-free retail contract for which several interested vendors are expected to submit competitive bids. Australian toll road operator Transurban Group reported strong operating results stemming from a return to normal traffic levels on the company’s toll road properties. Management also laid out an optimistic outlook for the coming year as well as their development pipeline. This good news was underscored by a larger-than-expected dividend increase.
The largest detractors were NextEra Energy and Dominion Energy. NextEra unexpectedly announced the retirement of the CEO at their utility subsidiary Florida Power & Light (FPL). The retirement coincides with NextEra’s internal review related to media allegations regarding FPL’s involvement in campaign finance for local elections. While the internal review and state regulatory investigation found no impropriety and any potential fines are immaterial, the reputational damage at FPL will likely take time to repair.
Dominion Energy underperformed due to regulatory and political uncertainty in Virginia, which is the company’s largest service territory. New legislation enacted there could have a dilutive effect on Dominion’s earnings power in the intermediate term, but we still view Virginia as a constructive regulatory jurisdiction, as evidenced by legislative support for regulated renewable capex that should drive long-term rate base growth for the company.
Outlook
The remainder of the year will present challenges as companies adjust to higher interest rates, volatile commodity prices, and continued political uncertainties. Asset renewal, energy security, decarbonization, and data growth are driving durable, long-term investment cycles that will continue for years to come despite negative short-term economic developments.
Wireless tower activity in the U.S. should remain robust as carriers shift from the initial stages of 5G buildout and blanket coverage to focus on more targeted network densification. In Europe, we expect healthy organic activity to continue as the tower companies will likely benefit from further enhancements to mobile networks as well as inflation-linked escalators embedded in their contracts.
Utilities have benefited from the transition to renewable energy and renewal of assets, tailwinds we expect to last for years to come. Higher interest rates are a near-term challenge, but we believe this is more of a speed bump than a dead end. In fact, the Inflation Reduction Act of 2022 (IRA) provides strong financial support for the energy transition in the United States and should help offset short-term headwinds. The European Union has taken note of the incentives provided by this legislation and EU officials are discussing a European-centric version of the IRA.
Our view on the transportation sector is cautious due to mixed outlooks for the near and medium term. Toll roads have shown resiliency in various market environments due to their stable business models, including inflation-linked tolling regimes and efficient cost structures. Airports have experienced a strong recovery of passenger air travel, especially leisure travel. North American railroads enjoy strong pricing trends in an inflationary environment and are well equipped to offset rising costs. However, service levels and margins continue to lag due to the lengthy process of training newly hired personnel.
We believe the midstream sector continues to be well-positioned to weather high inflation and commodity price volatility. Midstream balance sheets are significantly stronger and dividend payouts are at sustainable levels. The sector is more insulated than it has been in prior downturns, which gives us a higher degree of comfort amid an uncertain macro backdrop.
The coming months will undoubtedly present unforeseen challenges, but we expect to find opportunities as well. Based on our current views of macroeconomic trends, industry drivers, and geopolitical risks, we believe our strategy is appropriately positioned.