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Duff & Phelps Global Infrastructure

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Ticker
PGUAX
CUSIP
92828R826
POP
$ (as of )
Inception
12/30/2004
Total Assets by Class
$33,636,657.33 (as of 05/20/2022)
Total Assets by Fund
$90,788,742.56 (as of 05/20/2022)
Morningstar Category
Infrastructure

Portfolio Overview

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.

Management Team

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

Connie Luecke, CFA

Senior Managing Director, Senior Portfolio Manager

Industry start date: 1983
Start date as fund Portfolio Manager: 2004

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Steven Wittwer

Steven Wittwer, CFA

Executive Managing Director, Senior Portfolio Manager

Industry start date: 1997
Start date as fund Portfolio Manager: 2018

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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

Portfolio Characteristics

Top Holdings (% Fund)

(as of 03/31/2022)
Security
American Tower Corp
5.03
 5.03%
NextEra Energy Inc
4.61
 4.61%
Dominion Energy Inc
4.44
 4.44%
Transurban Group
4.25
 4.25%
Aena SME SA
4.20
 4.20%
Sempra Energy
4.02
 4.02%
Crown Castle International Corp
3.90
 3.90%
Cheniere Energy Inc
3.31
 3.31%
Public Service Enterprise Group Inc
3.29
 3.29%
Enbridge Inc
3.28
 3.28%

Holdings are subject to change.

Characteristics4

(as of 03/31/2022)
Average Weighted Market Cap (billions) $53.32
Median Market Cap (billions) $33.40
Trailing P/E Ex-Negative Earnings 29.11
Price-to-Cash Flow 16.22
Price-to-Book Value 3.01
3-Year EPS Growth Rate 0.54

Sector Allocation (% Equity)

(as of 03/31/2022)
Multi-Utilities
21.43
 21.43%
Electric Utilities
18.39
 18.39%
Oil & Gas Storage & Transportation
16.62
 16.62%
Railroads
10.36
 10.36%
Specialized REITs
9.06
 9.06%
Airport Services
8.74
 8.74%
Highways & Railtracks
6.05
 6.05%
Construction & Engineering
3.67
 3.67%
Integrated Telecommunication Services
2.78
 2.78%
Gas Utilities
1.81
 1.81%
Water Utilities
1.08
 1.08%

Top Countries (% Invested Assets)

(as of 03/31/2022)

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

Yields / Distributions1

(as of )
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

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.
Industry/Sector Concentration: A portfolio 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 portfolio.
Foreign Investing: Investing in foreign securities subjects the portfolio to additional risks such as increased volatility; currency fluctuations; less liquidity; less publicly available information about the foreign investment; and political, regulatory, economic, and market risk.
Income: Income received from the portfolio may vary widely over the short- and long-term and/or be less than anticipated if the proceeds from maturing securities in the portfolio are reinvested in lower-yielding securities.
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.
Prospectus: For additional information on risks, please see the fund's prospectus.

Commentary

1Q22

Market review

The Omicron variant was quickly pushed aside as investors focused on elevated inflation, higher interest rates, and Russia’s military invasion of Ukraine. After several weeks of advance warning, the U.S. Federal Reserve began raising rates in mid-March to curb inflation. Bond yields spiked in response while growth-oriented sectors such as technology declined. Global listed infrastructure stocks (as measured by the FTSE Developed Core Infrastructure 50/50 Index (net)) displayed their defensive characteristics with a 3.66% gain in the quarter, significantly outpacing the broader market.

The energy infrastructure sector was the best performer in the quarter, driven higher by a sharp increase in energy prices. The utility sector rose modestly for the quarter though there was significant dispersion among individual companies. The Russia-Ukraine conflict and corresponding spike in energy prices caused investors to focus on the European Union’s reliance on Russian oil and gas. Transportation stocks posted moderate gains for the quarter as European airports initially performed strongly as the Omicron variant faded and investors began to anticipate a strong summer travel season. However, some of those gains were given back later in the quarter over concerns surrounding the invasion of Ukraine and higher fuel prices. Communications was the worst-performing sector in the quarter. While fundamental business conditions for wireless towers remain quite positive, higher interest rates and a rotation from growth to value took a toll on tower stocks in the period.

Portfolio review

Overall, sector allocation was positive with some offset due to negative stock selection. Sector allocation benefited from an overweight position in midstream energy, partially offset by the negative effect of an overweight position in communications.

At the security level, the largest positive contributors were Cheniere Energy and Sempra Energy. Cheniere operates liquefied natural gas (LNG) facilities and pipelines in Louisiana and Texas. Sempra Energy operates regulated utilities in California and Texas and produces LNG as well. As Europe looks to wean itself from Russian natural gas, U.S.-sourced LNG represents a natural alternative and is expected to see strong demand.  

The largest negative contributors were NextEra Energy and American Tower. NextEra Energy, an electric utility and leading provider of renewable energy in North America, traded lower in the quarter as investors shifted from growth into value. In addition, the abrupt retirement of NextEra Energy’s CEO hurt the company’s stock. While the investment case remains intact, the stock’s valuation premium is diminished by the departure of this strong and charismatic leader. American Tower, which owns, operates, and develops wireless communication and broadcast towers throughout the globe, traded lower in the quarter in part due to investors’ concerns around the impact of rising interest rates.

Investment outlook

We believe global infrastructure companies are well positioned in an uncertain macro environment due to the essential nature of their businesses. With respect to inflation, we would highlight that infrastructure companies possess measures of revenue and cash flow protection via inflation-linked contracts and regulatory resets.

Within the communications sector, we continue to be bullish on wireless tower companies. In the U.S., we expect a reacceleration of growth to accommodate wireless usage and deploy new spectrum. In Europe, the independent tower model is accelerating, as more telecommunications carriers are considering selling off their tower portfolios. We expect further M&A in 2022 as the European market follows a roadmap used in the U.S. more than a decade ago.

We maintain an underweight position in the utility sector relative to the benchmark but have a positive bias toward utilities with a focus on the clean-energy transition. Decarbonization of the economy creates a win-win for utilities as they improve their environmental profile while also increasing their earnings. The transition to renewable energy provides a visible ramp of growth that extends for more than a decade. Political initiatives reinforce our positive thesis. Investments from the Next Generation EU recovery funds will hit their stride in 2022 and are focused on the energy transition.

We expect transportation to rebound as COVID-19 restrictions are lifted, but the pace of recovery has been varied within the sector. North American railroads have seen freight volumes nearly recover to pre-pandemic levels. Volume growth should improve over the course of the year, as we expect global supply chain congestion to moderate, supporting more fluid movement of freight volumes. Traffic trends for toll roads have shown improvement and, in some cases, are even surpassing pre-pandemic levels. While there are concerns about the effect of higher gasoline prices on traffic volumes, past periods of elevated prices have had modest short-term impact on toll roads.

Within the transportation sector, airports continue to be the most impacted by the pandemic. Government-imposed travel restrictions related to COVID-19 have slowed the recovery of passenger air travel, particularly business travel. In addition, the Russian invasion of Ukraine has increased the uncertainty surrounding air travel, particularly in Europe.

We have an overweight in midstream energy, a sector that has experienced a sharp rebound as economies around the globe reopen. End market demand has been robust, boosting volume growth, which was also helped by favorable weather conditions in many parts of the world. The supply side is now showing signs of tightness, with the Russian invasion of Ukraine adding to concerns.

Based on our current views of macroeconomic trends, industry drivers, and geopolitical risks, we believe our strategy is appropriately positioned. Our objective is to invest in companies with experienced management teams and predictable business models that are positioned for success beyond the crisis period.

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 DPIM Global Infrastructure Fund Fact Sheet - R6
Virtus Duff & Phelps Global Infrastructure Fund Fact Sheet - I
Morningstar - Quarterly Ratings
Rebalancing Revisited: Are Your Allocations Out of Whack?

Distributions

Mutual Fund Distributions

Financial Materials

Virtus Opportunities Trust Statutory Prospectus
Virtus Duff & Phelps Global Infrastructure Fund Summary Prospectus
Virtus Opportunities Trust Prospectus XBRL 485B 01 27 2022
Virtus Opportunities Trust SAI
Virtus Opportunities Trust Annual Report
Virtus Opportunities Trust Semiannual Report

Holdings

Virtus Duff & Phelps Global Infrastructure Fund Monthly Holdings
Virtus Duff & Phelps Global Infrastructure Fund Top Holdings
Virtus Duff & Phelps Global Infrastructure Fund Holdings Fiscal Q1
Virtus Duff & Phelps Global Infrastructure Fund Holdings Fiscal 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 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.