Virtus Silvant Focused Growth Fund
Virtus Silvant Focused Growth Fund
Investment Overview
The Fund seeks to generate capital appreciation by investing in a concentrated portfolio of U.S. large-cap companies that exhibit strong business fundamentals and above-average growth potential. A disciplined investment process focuses on identifying positive fundamental trends, including earnings and revenue growth, improving cash flows, and increasing return on invested capital.
Effective July 25, 2022, this Fund's name and subadviser have changed.
Investment Partner
Silvant Capital Management LLC
Silvant Capital Management is a growth equity boutique that leverages the passion and talents of a diverse, experienced group of investment professionals. Guided by their belief that growth companies can be found in every corner of the economy, Silvant strives to evaluate positive secular trends and disruptive products and services that can change the business landscape, identifying those companies best positioned to exceed investor expectations.
Learn more about Silvant Capital Management LLC
Investment Professionals
Michael A. Sansoterra
Chief Investment Officer, Managing Director, Senior Portfolio Manager
Industry start date: 1996
Start date as fund Portfolio Manager: 2022
Sandeep Bhatia, Ph.D., CFA
Managing Director, Senior Portfolio Manager
Industry start date: 2000
Start date as fund Portfolio Manager: 2022
Brandi Allen
Managing Director, Portfolio Manager
Industry start date: 1997
Start date as fund Portfolio Manager: 2022
Key Features
Growth as a Condition, Not a Category
Searches for large-cap growth opportunities across the market, including segments overlooked by many traditional growth managers
Extensive Fundamental Research
Bottom-up analysis strives to identify well-run businesses with positive investment characteristics and potential to grow earnings faster than peers
Focused on True Game Changers
Evaluates secular trends and disruptive products and services with potential to disrupt the business landscape and exceed investor expectations
Characteristics4
(as of 12/30/2022)| Average Weighted Market Cap (billions) | $833.09 |
| Median Market Cap (billions) | $131.40 |
| Trailing P/E Ex-Negative Earnings | 30.13 |
| Price-to-Cash Flow | 22.25 |
| Price-to-Book Value | 9.23 |
| 3-Year Earnings Growth Rate | 26.06 |
Top Holdings (% Fund)
| Security | |
|---|---|
| Microsoft Corp | |
| Apple Inc | |
| Amazon.com Inc | |
| Visa Inc | |
| Eli Lilly & Co | |
| NVIDIA Corp | |
| UnitedHealth Group Inc | |
| Alphabet, Inc.- Cl A | |
| Estee Lauder Cos Inc/The | |
| Alphabet, Inc.- Cl C |
Holdings are subject to change.
Sector Allocation (% Equity)
| Information Technology | |
| Health Care | |
| Consumer Discretionary | |
| Communication Services | |
| Industrials | |
| Consumer Staples | |
| Materials |
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
Financial Materials
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.
Market Review
Growth equities rose broadly in the quarter, capping off a volatile year. Gains were driven by cooler inflation numbers and investor optimism that the surge in Consumer Price Index (CPI) increases that have weighed on markets and driven interest rates higher may have peaked. The Federal Reserve (Fed) also slowed the pace of its federal funds rate hikes from four straight 0.75% increases to 0.5% in December, not exactly dovish behavior but a notable downshift nonetheless.
Cyclical stocks led the rally, with value securities generally outperforming growth names as revenue and earnings expectations reset lower on anticipated slowing economic growth. The Russell 1000® Growth Index gained 2.20% in the period to end 2022 down 29.14%, with the largest sector increases for the quarter in utilities (+16.56%), industrials (+15.41%), healthcare (+13.07%), and energy (+12.83%). Only consumer discretionary (-15.65%) and communication services (-6.39%) posted declines.
Performance
The Virtus Silvant Focused Growth Fund gained 0.42% (Class INST) for the quarter versus the Russell 1000 Growth Index’s rise of 2.20%. Large performance detractors included stock selection in consumer discretionary, stock selection and an overweight in communication services, and an overweight in financials. Stock selection in industrials and an overweight in healthcare contributed to performance.
Boeing and Visa were among the strongest stock contributors.
Tesla and Apple were among the largest stock detractors.
Portfolio Changes
ASML was the only new portfolio addition. There were no exits during the quarter.
Outlook
Looking ahead, we believe the general market positives remain moderately ahead of the potential negatives. Employment continues to be healthy, which is good news for consumer sentiment and income, particularly real wages as inflation begins to come down. The Fed’s tightening cycle is likely near its peak, and China’s reopening from zero-COVID lockdowns should be supportive of increased global demand. If consumers keep spending, job growth remains resilient, and inflation continues to moderate, the broader economy may be able to avoid recession. That seems more probable now than it did last quarter, and if it proves to be the case, stocks should be able to gain, though the path may be volatile.
Still, market expectations have clearly reset for a slower growth rate. The question at this point is whether revenue and earnings outlooks have come down enough? In this environment, we continue to focus on bottom-up company fundamentals, seeking out businesses whose key metrics are inflecting, where growth is a condition, rather than a category. In our view, these are the stocks that should continue to offer the potential to surprise markets on the upside and reward investors.