
Emerging Markets Resources & Solutions
Investors without an allocation to emerging markets may be missing out on a strong—and growing—segment of the global economy. Virtus offers a diverse range of dedicated emerging markets solutions.
Virtus Emerging Markets Opportunities Fund
The Fund seeks capital appreciation through a systematic, bottom-up investing approach to emerging market equities that focuses on uncovering attractive investment opportunities while striving to mitigate downside risk. The all-cap core portfolio is built with high conviction at the stock level, focusing on securities that exhibit higher growth forecasts, lower valuations, and reduced volatility versus the benchmark.
Effective June 10, 2022, this Fund's name has changed.
Effective July 25, 2022, this Fund's manager has changed.
The Virtus Systematic team of Virtus Investment Advisers, Inc. specializes in differentiated investment solutions, strategies, and outcomes across asset classes, regions, and securities.
Chief Investment Officer, Senior Managing Director, Portfolio Manager
Industry start date: 2003
Start date as fund Portfolio Manager: 2007
Managing Director, Lead Portfolio Manager
Industry start date: 2002
Start date as fund Portfolio Manager: 2010
A behavioral finance approach, rooted in investors' often-inefficient reaction to new information, helps identify companies poised to benefit from changes not yet fully reflected in the market
Daily analysis of 3,000+ securities from a proprietary multi-factor model has resulted in a clear investment view on each stock and a high active share
Proactive risk controls are embedded throughout the investment process to help lower volatility exposure versus the benchmark while a statistically based risk model helps uncover hidden sources of market risk
Average Weighted Market Cap (billions) | $58.45 |
Median Market Cap (billions) | $9.66 |
Trailing P/E Ex-Negative Earnings | 8.31 |
Price-to-Cash Flow | 10.24 |
Price-to-Book Value | 2.55 |
3-Year Earnings Growth Rate | 25.66 |
Security | |
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Taiwan Semiconductor Manufacturing Co Ltd | |
Tencent Holdings Ltd | |
Grupo Financiero Banorte SAB de CV | |
PetroChina Co Ltd | |
Axis Bank Ltd | |
ICICI Bank Ltd | |
ITC Ltd | |
Bank Mandiri Persero Tbk PT | |
Yum China Holdings Inc | |
Archer-Daniels-Midland Co |
Holdings are subject to change.
Financials | |
Information Technology | |
Consumer Discretionary | |
Industrials | |
Consumer Staples | |
Energy | |
Communication Services | |
Utilities | |
Real Estate | |
Materials | |
Health Care |
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.
Fund | Index | |
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R2 | ||
Beta | ||
Alpha | ||
Std Dev |
Virtus Emerging Markets Opportunities Fund Fact Sheet - A | |
Virtus Emerging Markets Opportunities Fund Fact Sheet - R6 | |
Virtus Emerging Markets Opportunities Fund Fact Sheet - INST | |
Virtus Emerging Markets Equity Funds | |
Fantastic, Amazing...5 Stars - Utilizing Natural Language Processing to Bolster Active Management | |
The Next Generation Alpha Model: Seeding Intelligence with the Ground Truth | |
The Next Generation Alpha Model: Illuminating CEO and CFO Behavior Using NLP | |
The Next Generation Alpha Model: Introducing Natural Language Processing |
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 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.
4Q22
Market Review
Emerging markets equities rebounded in the fourth quarter, as investors cheered a weaker U.S. dollar and growing expectations that the Federal Reserve (Fed) could start to slow its aggressive interest rate tightening, mitigating fears that it might push the U.S. into severe recession. Markets were further buoyed by China’s surprise U-turn decision to loosen its strict zero-COVID policy, which has constrained the country’s economy since the start of the pandemic. The MSCI Emerging Markets Index rose 9.70% during the quarter—its only quarterly gain for the year.
Lower-quality, higher-volatility securities that had generally lagged the broader market for most of 2022 largely outperformed. All of the index’s sectors rose in the period, with the largest gains in communication services (+13.77%), healthcare (+13.10%), and industrials (+12.37%), and the smallest in consumer staples (+6.51%), utilities (+4.57%), and energy (+4.16%). Turkey was the index’s top performing country, which rose an impressive 62.86%, followed by Poland (+47.75%), Hungary (+36.33%), and Greece (+29.14%). The only countries to deliver negative returns in the period were Qatar (-15.29%), Saudi Arabia (-7.44%), Indonesia (-3.57%), and the United Arab Emirates (-1.51%).
Portfolio Overview
The Virtus Emerging Markets Opportunities Fund rose 6.05% (Class INST) in the quarter versus the MSCI Emerging Markets Index’s gain of 9.70%. Stock selection in information technology, consumer discretionary, and consumer staples detracted from performance. Stock selection in financials, energy, and industrials contributed the most to performance.
Contributors
Koc Holdings and Gerdau were among the strongest stock contributors.
Detractors
Daqo New Energy and ENN Natural Gas were among the largest stock detractors.
Outlook
Our current outlook for emerging markets equities hinges largely on two variables. The first is the speed of continued U.S. monetary tightening. If the Fed maintains its aggressive pace, emerging markets will likely face more pressure. The second is China’s economy. COVID seems to be spreading quickly in the country; however, as seen in past surges in other countries, the faster this works through the population, the quicker the Chinese economy should be able to rebound. Still, it will likely take some time for the Chinese economy to demonstrate a significant growth pickup as it normalizes, given its size.
There are several other favorable tailwinds to consider as well. We expect that the U.S. dollar will depreciate, which is usually a positive for emerging markets. Global supply chains should also continue stabilizing. The opening of China’s border is good news for surrounding countries, including Thailand, South Korea, the Philippines, and Indonesia. Additionally, Europe and the U.S. appear to face a high chance of recession. Collectively, these factors point to a potentially strong year for emerging markets relative to developed markets.
Against this outlook, we continue to apply a systematic, behavioral finance research process to uncover investment potential, while maintaining a disciplined focus on mitigating downside risk. We construct the Fund on a bottom-up basis with high conviction at the stock level. We also apply a dual-risk budget that targets a tracking error of 4% to 5% and lower forecast risk than the benchmark, striving to help protect capital during inevitable down-market periods. While this higher-quality, lower-volatility approach can lead to periods of underperformance in riskier, momentum-driven markets, we believe it leads to stronger outperformance and greater return consistency over the long term.