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
$207,959,483.60 (as of 11/27/2023)
Total Assets by Fund
$344,997,952.04 (as of 11/27/2023)
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

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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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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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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Reed, Jeff

Jeff N. Reed, CFA, FDP

Managing Director, Senior Portfolio Manager/Analyst

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

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Kris Marca 400 x 400

Kris P. Marca, CFA

Director, Portfolio Manager/Research Analyst

Industry start date: 2003
Start date as fund Portfolio Manager: 2023

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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 09/29/2023)
Average Weighted Market Cap (billions) $4.49
Median Market Cap (billions) $3.65
Trailing P/E Ex-Negative Earnings 15.14
3-Year Earnings Growth Rate 13.42

Top Holdings (% Fund)

(as of 09/29/2023)
UGI Corp
MonotaRO Co Ltd
Cogeco Communications Inc
Kaiser Aluminum Corp
Rexford Industrial Realty Inc
Terreno Realty Corp
Addus HomeCare Corp
Genpact Ltd
Globus Medical Inc
Commerce Bancshares Inc/MO

Holdings are subject to change.

Sector Allocation (% Equity)

(as of 09/29/2023)
Real Estate
Health Care
Consumer Discretionary
Information Technology
Communication Services
Consumer Staples

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 or military conflict, 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

The third quarter challenged U.S. equity markets, as interest rate spikes, an inverted yield curve, and credit tightening drove equity risk premiums upward and stock valuations downward. Adding to the uncertainty, Federal Reserve (Fed) policymakers indicated the fed funds rate may stay higher for longer into 2024, boding poorly for risk assets. Within the benchmark Russell 2000® Value Index, just two sectors—energy and financials—generated positive returns for the quarter. In contrast, the healthcare, technology, and utilities sectors slumped double digits.

Fund Performance

The Virtus NFJ Small-Cap Value Fund returned -3.23% (Class INST) in the quarter, compared to the Russell 2000 Value Index, which returned -2.96%. Performance results were driven by negative sector allocation, which offset neutral stock selection during the quarter. 

HF Sinclair and Ovintiv were the largest contributors to performance over the quarter.

  • Energy company HF Sinclair beat consensus earnings estimates due in part to strength from refining and improved performance from marketing and renewables. Management also authorized a $1 billion share repurchase program. The investment team harvested gains and exited the position during the quarter.
  • Oil and gas exploration & production company Ovintiv reported better-than-expected quarterly earnings and free cash flow due in part to productivity gains.
  • SM Energy, Nicolet Bankshares, and YETI were also the largest contributors.

MonotaRO and Wolverine World Wide were the largest detractors from performance over the quarter.

  • MonotaRO is one of the few firms globally that specializes almost exclusively in the online business-to-business sale of maintenance, repair, and operating supplies to infrastructure-related customers. Though the company’s non-consolidated sales and gross profits in the first half of 2023 were ahead of management’s expectations, selling, general and administrative expenses were also greater than anticipated. The investment team took advantage of an attractive entry point to initiate a position during the quarter.
  • While quarterly adjusted earnings for footwear and apparel retailer Wolverine World Wide were in line with expectations, gross margin disappointed and management cut guidance for the second half of the year on slower wholesale order demand and cautious ordering. The company also appointed Wolverine World Wide veteran Chris Hufnagel as chief executive officer and president, effective immediately.
  • MarketAxess, UGI, and Globus Medical were also among the largest detractors.

Portfolio Changes

In addition to the HF Sinclair and MonotaRO trades discussed above, the investment team took advantage of an attractive entry point to add to a position in UGI after the natural gas and propane distributor reported below-consensus quarterly revenue. Toward the end of August, management announced it has begun the process of evaluating potential strategic alternatives to help unlock shareholder value, and shares rose on the news.

Shares of Nicolet Bankshares rose after the regional bank delivered solid quarterly results, including robust net interest margin expansion, that exceeded consensus estimates. We harvested gains and exited the position during the quarter.


The most widely predicted recession in decades has yet to materialize, as the economy continues to stay afloat. The labor market has proved remarkably resilient, and consumers and companies still have excess cash from various stimulus programs. It is also possible that dislocations caused by the pandemic already caused different economic segments to undergo recessions at different times. These “rolling recessions” may have less impact when compared against a single, significant downturn. Given this backdrop, the U.S. may experience a general recession in the coming year, but it might not be as severe as recessions past.

Inflation figures are slowing significantly, and without the economic slowdown that many believe is necessary—the consummate “Goldilocks” scenario (not too hot, not too cold). Furthermore, the largest driver of the most recent Consumer Price Index (CPI) reports has been housing, and real-time data on shelter costs have been rolling over as well. The latest CPI showed 3.7% annualized inflation. As this figure continues to drop, central bank policymakers may find themselves near the end of the current tightening cycle. That said, the Fed’s latest meeting indicated it may be some time before rate cuts take place. This fact, on top of market concern for rising deficits and political dysfunction, has resulted in Treasury yields surging to 16-year highs. If anything were to “break” the economic expansion, this tightening of credit offers the greatest risk.

Irrespective of recession predictions, we believe U.S. stocks are fairly rich at today’s prices. The S&P 500® Index currently trades at 19.4 times forward earnings, suggesting that a soft landing may already be priced in, leaving the risk-reward skewed somewhat to the downside. Furthermore, the “there is no alternative” narrative of recent years espousing stocks as investors’ only option for returns has weakened considerably. With risk-free government bonds yielding nearly 5%, the equity risk premium is now below its 40-year average, suggesting that investors do have viable alternatives. Within equities, the prospect of elevated interest rates over an extended period suggests more speculative growth areas may face headwinds, making the case for value stocks in investor portfolios.

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 - A
Virtus NFJ Small-Cap Value Fund Fact Sheet - R6
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.

© 2023 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.