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Mutual Fund Specialty

Global Allocation

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Ticker
PALAX
CUSIP
92838V767
POP
$ (as of )
Inception
09/30/1998
Total Assets by Class
$40,195,299.40 (as of 06/27/2022)
Total Assets by Fund
$235,416,773.55 (as of 06/27/2022)
Morningstar Category
Global Allocation

Portfolio Overview

Investment Overview

The Fund is a globally diversified core allocation holding with a focus on socially responsible investing. The portfolio seeks to provide exposure to multiple sustainable investing strategies and enhanced risk-adjusted returns, by leveraging the breadth of Allianz Global Investors' sustainable research and multi-asset investment platforms.

Effective June 10, 2022, this Fund's name has changed.

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

Bergman, Heather

Heather Bergman, Ph.D.

Director, Portfolio Manager

Industry start date: 2005
Start date as fund Portfolio Manager: 2017

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Marsala, Claudio

Claudio Marsala

Director, Head of Multi Asset US

Industry start date: 2001
Start date as fund Portfolio Manager: 2017

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Pietranico, Paul

Paul Pietranico, CFA

Director, Head of Active Allocation Strategies

Industry start date: 1995
Start date as fund Portfolio Manager: 2009

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Pappo, Carl

Carl W. Pappo, Jr., CFA

Managing Director, CIO US Fixed Income

Industry start date: 1993
Start date as fund Portfolio Manager: 2019

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Rohit Ramesh

Rohit Ramesh

Director, Senior Portfolio Manager

Industry start date: 2007
Start date as fund Portfolio Manager: 2021

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Key Features

Core, Diversified Investment Solution

The Fund can serve as a core, globally diversified holding to anchor an investment portfolio and provide access to a broad range of asset classes and geographies

Sustainable Investing Focus

Pursues better long-term outcomes for both investors and society through a focus on sustainably oriented exposures, offering investors a turnkey solution to achieving a balanced portfolio while supporting sustainable investment practices

Extensive Multi-Asset Expertise

Managed by Allianz Global Investors' Global Multi Asset team, one of the world's largest providers of multi-asset solutions, with 80+ investment professionals managing $150 billion+ in assets for institutional and retail clients around the globe

Portfolio Characteristics

Top Holdings (% Fund)

(as of 03/31/2022)
Security
Virtus AllianzGI Global Sustainability Fund Institutional Class
34.63
 34.63%
Government Of The United States Of America 0.125% 30-nov-2022
3.11
 3.11%
iShares ESG Aware MSCI USA ETF
2.78
 2.78%
Gnma Ii 30yr Pool#ck8204 3.000% 20-feb-2052
1.86
 1.86%
Gnma Ii 30yr Pool#bv0838 2.500% 20-aug-2050
1.74
 1.74%
iShares ESG Aware MSCI EAFE ETF
1.50
 1.50%
Government Of The United States Of America 1.5% 29-feb-2024
1.48
 1.48%
Government Of The United States Of America 1.875% 15-nov-2051
1.11
 1.11%
UNITED STATES SMALL BUSINESS ADMINISTRATION
1.01
 1.01%
Government Of The United States Of America 2.375% 15-feb-2042
0.93
 0.93%

Holdings are subject to change.

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

Allocation: The risk that the portfolio's exposure to equities and fixed income securities, or to different asset classes, may vary from the intended allocation or may not be optimal for market conditions at a given time.
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.
Sustainable Investing: Because the portfolio focuses on investments in companies that the Manager believes exhibit strong environmental, social, and corporate governance records, the portfolio's universe of investments may be smaller than that of other portfolios and broad equity benchmark indices.
Underlying Fund Risk: The portfolio will be indirectly affected by factors, risks and performance specific to any other portfolio in which it invests.
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.
Debt Instruments: Debt instruments are subject to greater levels of credit and liquidity risk, may be speculative and may decline in value due to changes in interest rates or an issuer's or counterparty's deterioration or default.
Interest Rate: The values of debt instruments may rise or fall in response to changes in interest rates, and this risk may be enhanced for securities with longer maturities.
Derivatives: Derivatives may include, among other things, futures, options, forwards and swap agreements and may be used in order to hedge portfolio risks, create leverage, or attempt to increase returns. Investments in derivatives may result in increased volatility and the portfolio may incur a loss greater than its principal investment.
Prospectus: For additional information on risks, please see the fund's prospectus.

Commentary

1Q22

Market Review

Over the prior quarter, drivers of cross-asset market movements can be traced largely to accelerating inflation concerns and central banks striking a hawkish tone. These fears were further compounded when Russian forces invaded Ukraine on February 24th, driving a steep rally in commodity prices. By mid-March, global stocks were firmly in correction territory, before a late-month rally helped to reduce these losses to -5.4% (MSCI ACWI) for the full quarter’s performance.

Global bonds also slumped as reflected by the Bloomberg U.S. Aggregate Bond Index’s -5.9% slide. Headline rates of inflation surged to multi-decade highs, while inflation expectations were further boosted by the invasion of Russian forces in Ukraine. Developed-market central banks responded, as reflected by the U.S. Federal Reserve raising rates for the first time since 2018 and forecasting six further rate rises in 2022 plus a further three in 2023. In March, the 10-year U.S. Treasury yield briefly broke through 2.5% for the first time in almost three years before closing the quarter at just above 2.3%, an increase of more than 80 basis points (bps) over the three months. Short term rates rose further, leading the 2-year Treasury yield to exceed that of the 10-year by the period’s end. 

Performance 

The Fund ended the quarter behind its referenced 60/40 benchmark (60% MSCI ACWI Net Return USD, 40% Barclays Capital US Aggregate Bond Index), by -1.19% (-6.74% vs. -5.55%). For reference, the blended benchmark’s components, global equities (MSCI ACWI Net Return USD) and US Fixed Income (Bloomberg U.S. Aggregate Bond Index), returned -5.36% and -5.93%, respectively over the quarter.

Portfolio Changes Over the Period

The portfolio maintained its sustainably oriented exposures across core equity and fixed income segments over the period. In the diversifying portion of the portfolio, exposures in the Trend Overlay were adjusted, with the largest change taking place in the fixed income segment. Here overall duration was modestly short at the beginning of the period but was increasingly shortened through mid-February (at about -9) and remained negative through quarter end.  

Contributors 

A top contributor to results was exposure in the equity portion of the portfolio to low volatility equities through the Best Style Minimum Volatility ESG strategy. The strategy’s focus on stocks with lower volatility benefited overall results as the approach declined less than traditional cap-weighted strategies. The Fund also benefited from defensive positioning in its fixed income exposures, where an underweight to duration (measure of sensitivity to changes in interest rates), helped limit the impact of rising interest rates over the period. In the diversifying trend overlay, also expressed defensive fixed income positioning along with long U.S. Dollar exposure, typically considered a safe-haven currency.

Detractors 

The top detractor to results over the quarter can be traced to the sustainably oriented equity holdings in the portfolio, most notably the Virtus AllianzGI Global Sustainability Fund, which ultimately trailed the MSCI ACWI for the three-month period. The underperformance came mainly from both stock selection, especially within the Information Technology, Industrials and Consumer Staples sectors. While sector allocation was modestly positive, an overweight in Information Technology also hurt performance. The ESG oriented ETFs also modestly underperformed the ACWI benchmark (by about 1%), similarly detracting from overall performance. 

Outlook 

Against the current macroeconomic backdrop, characterized by elevated and rising inflation, perpetuated by geopolitical unrest and persistent supply chain dislocations against the ever-present threat of rising Covid rates, our view on equities varies by region but is ultimately “neutrally cautious” overall. Commodities and the US dollar remain favored exposures. We are generally vigilant on fixed income, particularly longer maturities, where room remains for inflation expectations to lift yields further.

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 Global Allocation Fund Fact Sheet - INST
Virtus Global Allocation Fund Fact Sheet - R6

Distributions

Mutual Fund Distributions

Financial Materials

Virtus Strategy Trust Statutory Prospectus
Virtus Global Allocation Fund Summary Prospectus
Virtus Strategy Trust SAI
Virtus Strategy Trust Annual Report
Virtus Strategy Trust Semiannual Report

Holdings

AllianzGI Global Allocation Holdings Monthly
Virtus AllianzGI Global Allocation Fund Top Holdings
Virtus AllianzGI Global Allocation Fund Holdings Fiscal Q1
Virtus AllianzGI Global Allocation 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 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.