Virtus NFJ Small-Cap Value Fund

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Virtus NFJ Small-Cap Value Fund

Image specific to each asset class and market style grouping.
$ (as of )
Total Assets by Class
$219,261,937.47 (as of 06/02/2023)
Total Assets by Fund
$368,116,302.91 (as of 06/02/2023)
Morningstar Category
Small Value

Portfolio Overview

Investment Overview

The Fund seeks capital growth and income by investing in small-capitalization companies at the intersection of value, quality, and shareholder yield. NFJ seeks to invest in companies diversified across industries with superior competitive positions and consistent financials, employing a time-tested process that capitalizes on low market expectations and strong prospects.

Management Team

Investment Partner

NFJ Investment Group, LLC

NFJ Investment Group (NFJ) is a global value equity manager with a rich heritage and deep roots in Dallas, Texas, dating to 1989. NFJ is unwavering in its commitment to investing at the intersection of value, quality, and shareholder yield, seeking to identify companies with low market expectations and the strongest prospects for returning capital to shareholders.

Learn more about NFJ Investment Group, LLC

Investment Professionals

Magnuson, Paul

Paul A. Magnuson

Managing Director, Senior Portfolio Manager/Analyst

Industry start date: 1985
Start date as fund Portfolio Manager: 1995

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Mowrey, John

John R. Mowrey, CFA

Executive Managing Director, Chief Investment Officer, Senior Portfolio Manager/Analyst

Industry start date: 2007
Start date as fund Portfolio Manager: 2013

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Reed, Jeff

Jeff N. Reed, CFA

Managing Director, Senior Portfolio Manager/Analyst

Industry start date: 2004
Start date as fund Portfolio Manager: 2018

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Reilly, Garth

J. Garth Reilly

Managing Director, Senior Portfolio Manager/Analyst

Industry start date: 2005
Start date as fund Portfolio Manager: 2020

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Key Features

Innovative Approach to Value

The investment team uses big data and data analytics to uncover differentiated insights into valuations quickly and efficiently

Focus on Fundamentals

A disciplined, fundamental research process helps identify companies with attractive quality characteristics, shareholder yield, and consistent financials

Decades of Value Investing Experience

NFJ's boutique structure and flat organization has fostered an entrepreneurial mindset and collaborative culture since 1989

Portfolio Characteristics


(as of 03/31/2023)
Average Weighted Market Cap (billions) $4.24
Median Market Cap (billions) $3.47
Trailing P/E Ex-Negative Earnings 13.97
3-Year Earnings Growth Rate 13.79

Top Holdings (% Fund)

(as of 03/31/2023)
Kaiser Aluminum Corp
Kinross Gold Corp
Sapiens International Corp NV
Cogeco Communications Inc
KB Home
La-Z-Boy Inc
Diodes Inc
Thule Group AB
MDC Holdings Inc
Bio-Rad Laboratories Inc

Holdings are subject to change.

Sector Allocation (% Equity)

(as of 03/31/2023)
Consumer Discretionary
Information Technology
Health Care
Real Estate
Consumer Staples
Communication Services

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.


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
Std Dev

Risk Considerations

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. Local, regional, or global events such as war, terrorism, pandemic, or recession could impact the portfolio, including hampering the ability of the portfolio's manager(s) to invest its 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.
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, medium, or large-sized companies may enhance that risk.
Prospectus: For additional information on risks, please see the fund's prospectus.



Market Review

Investors embraced risk in the first quarter and propelled U.S. equities to extend their fourth quarter gains. This occurred despite the second and third largest bank failures on record and a Federal Reserve (Fed) committed to tightening monetary policy to combat lingering inflation. One of last year’s hardest-hit sectors, technology, staged a comeback as interest rates pulled back and the sector was perceived as a haven amidst the banking turmoil. Within the benchmark Russell 2000® Value Index, technology and consumer discretionary led with double-digit gains, followed by strength from the materials and industrials sectors. In contrast, financials plummeted on instability in the regional bank space, followed by weakness from the healthcare, energy, and real estate sectors.

Fund Performance

The Virtus NFJ Small-Cap Value Fund returned 4.45% (Class I) in the quarter, compared to the Russell 2000® Value Index, which returned -0.66%. Positive stock selection and sector allocations drove outperformance results over the period. 

Wolverine World Wide and Universal Display were the largest contributors to performance over the quarter.

  • Footwear and apparel retailer Wolverine World Wide announced the sale of the license rights for Keds and Hush Puppies as part of strategic efforts to simplify the brand portfolio and reduce costs. The transaction is expected to be accretive measures, and management continues to explore ways to expand operating margins and reduce debt.
  • Universal Display, a leader in Organic LED (OLED) display technology, reported better-than-expected Q4 results and announced that a key customer, Samsung, signed a licensing renewal agreement. Management also hiked the quarterly dividend by 17%.
  • MarketAxess Holdings, Fox Factory, and TopBuild were also the largest contributors.

PacWest Bancorp and Hudson Pacific Properties were among the largest detractors from performance over the quarter.

  • Like many other U.S. regional banks, PacWest Bancorp traded downward on contagion fears. We exited the position on risk management concerns.
  • Shares of Hudson Pacific Properties traded downward, and quarterly results for the office REIT were mixed. We exited the position in favor of more attractive investment opportunities.
  • Bank of Marin, Sandy Spring Bancorp, and Columbia Banking System were also among the largest detractors.

Portfolio Changes

In addition to the trades mentioned above, the investment team initiated a position in Bio-Rad Laboratories after identifying a favorable entry point. The company has niche market leadership in diagnostic quality controls, antigens, and digital polymerase chain reaction (PCR) molecular testing, and management repurchased $134M in shares from January 2022 to January 2023.

The team also identified an attractive entry point in Pan American Silver prior to the mining company’s completion of its Yamana Gold acquisition, which is expected to be accretive and to improve the quality of Pan American’s mining portfolio.


The U.S. economy continues to tiptoe to the edge of a recession, with the latest economic data showing signs of cracks in the labor market. That said, unemployment remains near historical lows, and consumers still have a solid cash cushion. The key focus for investors is the divergence between what the Fed says and what investors believe the Fed will ultimately do, and where rates finish the year.

Forecasts show the fed funds rate holding at around 5% through the end of 2023. However, the futures market has priced in capitulation, with the Fed cutting rates by at least 50 basis points this year. Should the futures market prove correct, such a reversal appears largely priced into markets. However, should Fed Chair Powell hold rates firm through year-end, stocks could react unfavorably, implying more downside than upside risk at present levels.

Currently, U.S. stocks are not particularly cheap, with the S&P 500® Index trading at more than 18 times forward earnings. However, consecutive years in the red are rare for U.S. equities, and while much of 2023’s gains may already be in the books, further gains could be augmented by attractive and growing dividend yields. We believe NFJ portfolios, which seek to invest in stocks with attractive dividends and dividend growth, are well positioned for this type of environment.

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 NFJ Small-Cap Value Fund Fact Sheet - R6
Virtus NFJ Small-Cap Value Fund Fact Sheet - A
Virtus NFJ Small-Cap Value Fund Fact Sheet - INST
Virtus NFJ Mutual Fund Presentation
As Value Stages a Comeback, Emphasize Quality

Financial Materials

Virtus Investment Trust Statutory Prospectus
Virtus NFJ Small-Cap Value Fund Summary Prospectus
Virtus Investment Trust SAI
Virtus Investment Trust Annual Report
Virtus Investment Trust Semiannual Report


Virtus NFJ Small-Cap Value Fund Monthly Holdings
Virtus NFJ Small-Cap Value Fund Top Holdings
Virtus NFJ Small-Cap Value Fund Holdings Fiscal Q1
Virtus NFJ Small-Cap Value Fund Holdings Fiscal Q3

Section 19(a) Notices

Section 19(a) Notice for Ex-Date December 21, 2022

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.