Newfleet Core Plus Bond
Newfleet Core Plus Bond
Investment Overview
The Fund seeks to generate total return from both current income and capital appreciation by investing primarily in higher-quality intermediate-term debt securities across 14 global bond sectors. A disciplined, time-tested investment process and rigorous risk management approach aim to capitalize on opportunities across undervalued areas of the fixed income markets.
Investment Partner
Newfleet Asset Management, LLC
Newfleet Asset Management leverages the knowledge and skill of a team of investment professionals with expertise in every sector of the bond market, including evolving, specialized, and out-of-favor sectors. The team employs active sector rotation and disciplined risk management to portfolio construction.
Learn more about Newfleet Asset Management, LLC
Investment Professionals

David L. Albrycht, CFA
President and Chief Investment Officer
Industry start date: 1985
Start date as fund Portfolio Manager: 2012

Stephen H. Hooker, CFA
Managing Director and Portfolio Manager
Industry start date: 1993
Start date as fund Portfolio Manager: 2017
Key Features
Broad Fixed Income Exposure
Highly diversified, duration-neutral core plus bond allocation, primarily focused on higher-quality, more liquid securities
Relative Value Focus
Top-down analysis weighs relative attractiveness of 14 global bond sectors, evaluating fundamentals, yields, spreads, and supply/demand dynamics
Extensive Fundamental Research
Security selection driven by bottom-up analysis of individual bond quality, credit risk, valuation, company management, structure, and technical elements
Characteristics4
(as of 03/31/2022)Effective Duration (years) | 5.48 |
Top Holdings (% Fund)
Security | |
---|---|
United States Treasury Note/Bond, 3.0000% 08/15/2048 | |
United States Treasury Note/Bond, 1.6250% 05/15/2031 | |
United States Treasury Note/Bond, 2.2500% 02/15/2052 | |
United States Treasury Note/Bond, 1.5000% 02/15/2030 | |
United States Treasury Note/Bond, 1.8750% 02/15/2051 | |
United States Treasury Note/Bond, 1.8750% 02/15/2032 | |
United States Treasury Note/Bond, 1.3750% 08/15/2050 | |
Broward County FL Water & Sewer Utility Revenue, 4.0000% 10/01/2047 | |
United States Treasury Note/Bond, 1.8750% 11/15/2051 | |
United States Treasury Note/Bond, 1.3750% 11/15/2031 |
Holdings are subject to change.
Sector Allocation (% Fund)
Corporate - High Quality | |
Non-Agency Residential MBS | |
Treasury | |
Asset Backed Securities | |
Bank Loans | |
Corporate - High Yield | |
Cash | |
Non-Agency Commercial MBS | |
Yankee - High Quality | |
Emerging Market - High Yield | |
Taxable Municipals | |
Municipals | |
Mortgage Backed Securities |
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
Risk Statistics3
(as of )Fund | Index | |
---|---|---|
R2 | ||
Beta | ||
Alpha | ||
Std Dev |
Risk Considerations
Marketing Materials
Virtus Newfleet Core Plus Bond Fund Fact Sheet - R6 | |
Virtus Newfleet Core Plus Bond Fund Fact Sheet - I | |
Braving the New World of Bonds | |
Morningstar - Quarterly Ratings | |
Newfleet Fixed Income Fund Capabilities |
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 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.
1Q22
Market Review
Volatility returned to global markets during the quarter. The pandemic remained in the headlines while cases flared and eased. The latest variant, Omicron, proved to be generally less severe, though certain global regions were more impacted than others. China’s “zero COVID” policy came under close scrutiny given its potential impact on supply chain disruptions that exacerbate inflation. A secondary market shock occurred as Russia invaded Ukraine. The military operation on the ground in Ukraine resulted in another supply shock, this time centered on commodities. The ultimate economic impact of this latest shock remains largely unknown. However, most forecasts indicate lower growth and higher, more prolonged inflation.
The Federal Reserve (Fed) and other major central banks shifted to a more sharply hawkish tone in response to elevated inflation metrics. As expected, the Federal Open Market Committee (FOMC) completed its asset purchase program and raised its policy rate for the first time since 2018, with more rate increases likely to come. It also signaled that the Fed is likely to begin reducing its $8.9 trillion-dollar balance sheet as soon as its next meeting in May. Markets have priced in significant Fed monetary tightening over the rest of the year. As a result, the U.S. Treasury curve shifted higher and flattened, which inflicted losses on fixed income assets. The 5-year Treasury yield jumped up 160 basis points (bps), the 10-year Treasury yield went up by 83 bps, and the 30-year Treasury yield moved 55 bps higher.
Spread sectors underperformed U.S. Treasuries, and volatility in the fixed income markets increased both due to a more hawkish Fed policy and the Russian invasion of Ukraine. With the spike in U.S. Treasury yields, less interest-rate-sensitive sectors such as high yield bank loans and other shorter-duration asset classes, including asset-backed securities, generally outperformed on a total return basis. Despite the quarter’s volatility, we see value being restored across most of the fixed income sectors in which we invest. Economic growth is expected to remain above-trend, corporate earnings are expected to keep growing, unemployment remains low, and the consumer and housing markets remain well supported. Near-term recession is not our base case. It’s our expectation that supply chains will heal over time and the Fed will be successful in restoring price stability.
As the markets digest global developments, we continue to believe active sector and issuer selection is critical to take advantage of market volatility as it arises. Our approach to fixed income—the approach we’ve implemented for close to three decades—enables us to scan the bond market for the most attractive investment opportunities and is ideally suited for the current environment.
How the Fund Performed
The Fund returned -4.80% in the first quarter versus the Bloomberg U.S. Aggregate Bond Index return of -5.93%.
Allocation to high yield bank loans had a positive impact on performance during the quarter. Loans held in relatively well as demand, while slowed, remains strong for floating rate assets due to inflation, increasing hawkish rhetoric from the Fed, and rising U.S. Treasury yields. The Fund’s underweight to and positive issue selection within the corporate high-quality sector was beneficial to performance. With rates and spreads moving higher, the sector was among the bottom performers. Allocation to and issue selection within asset-backed securities (ABS) had a positive impact on performance as the sector benefited from both demand for shorter duration assets, and strength from the U.S. consumer. Securitized product continued to soften from a credit spread perspective, primarily driven by inflation and global macro concerns. However, we remain positive on the U.S. consumer, which is supported by a strong fundamental backdrop, and our portfolios emphasize an overweight to the sector. The Fund’s allocation to non-agency RMBS over agency mortgage-backed securities (MBS) had a positive impact on performance. We continue to see the tailwinds of limited supply within housing, and unlike agency MBS, non-agency RMBS offers direct exposure to real estate and mortgage credit. An underweight to U.S Treasuries detracted from performance, as did the timing of the Fund’s municipal bond crossover trade.
Current Fund Strategy
Reduced exposure to corporate high yield and bank loans. Increased exposure to municipal bonds, ABS, and corporate high-quality bonds. In addition to changes to the Fund’s sector allocation during the quarter, we continue to look for the best relative value, which includes optimizing positions within sectors.
Emerging markets (EM) debt and non-U.S exposure.: The Fund’s overall EM exposure was slightly higher this quarter and remains at historical lows. We began 2022 with volatility in the rates market as central banks faced inflation pressures. To make matters worse, we plunged into geopolitical uncertainty as Russia invaded Ukraine in February, further exacerbating those pressures. Our Fund sustained minimal direct impact from this event, as we had already exited Russia exposure in mid-2021 due to rich valuations. As volatility settled, we selectively added to country exposures with compelling valuations that are less directly impacted by the event. We continue to prefer hard currency debt over local market instruments, but again see some potential opportunities arising as the Fed begins to lift rates. Investment grade (IG) corporates: Our exposure to the asset class is near a five-year low, which positioned us to take advantage of some of the recent spread weakness. We are positioned in the sector with an overweight to the BBB segment of the market, favor financials over industrials, and took advantage of elevated concessions in the new issue market during the quarter. Corporate High Yield: We’ve become less positive on the asset class given that spreads are relatively tight despite an expected aggressive tightening from the Fed and the potential fallout from the Russia/Ukraine war. We reduced exposures to industries challenged by competitive environments and rising input costs. We added names that will benefit from post-COVID reopening dynamics and rising commodity prices, which we expect will persist. Securitized: The massive move in U.S. Treasury rates over the last month of the quarter has reset pricing for all securitized products, enabling us to purchase new assets at wider spreads and higher yields. We continue to focus on the U.S. consumer and the housing sector, maintaining a significant overweight on ABS and non-agency RMBS. This is supported by strong fundamentals in both sectors: this past quarter, unemployment continued to trend lower (3.6%), and job openings remain high. On the housing side, we continue to see the tailwinds of limited supply.
Outlook
Our multi-sector relative value approach enables us to take advantage of opportunities when events that trigger volatility, such as inflation worries or the Russian invasion of Ukraine, affect valuations. In the current environment, we believe some of the best total return and yield opportunities can be found in spread sectors, where credit selection and positioning are key. Specific sectors that demonstrate the best relative value for us include: