Virtus Zevenbergen Technology Fund

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Mutual Fund Specialty

Virtus Zevenbergen Technology Fund

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Ticker
RAGTX
CUSIP
92837Q801
POP
$ (as of )
Inception
02/05/2002
Total Assets by Class
$443,063,411.00 (as of 12/02/2022)
Total Assets by Fund
$1,128,601,241.37 (as of 12/02/2022)
Morningstar Category
Technology

Portfolio Overview

Investment Overview

The Fund seeks attractive long-term competitive returns by investing in a diversified portfolio of innovative technology companies that are capitalizing on the major themes powering tech sector growth.

Effective July 25, 2022, this Fund's name and subadviser have changed.

Management Team

Investment Partner

Zevenbergen Capital Investments LLC

Zevenbergen Capital Investments LLC is a growth equity boutique. The investment team applies rigorous fundamental research to build exclusively high-growth portfolios.


Learn more about Zevenbergen Capital Investments LLC

Investment Professionals

Nancy Zevenbergen

Nancy Zevenbergen, CFA

President, Co-Chief Investment Officer, Portfolio Manager

Industry start date: 1981
Start date as fund Portfolio Manager: 2022

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Brooke de Boutray

Brooke de Boutray, CFA

Co-Chief Investment Officer, Portfolio Manager

Industry start date: 1982
Start date as fund Portfolio Manager: 2022

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Joe Dennison

Joseph Dennison, CFA

Portfolio Manager

Industry start date: 2011
Start date as fund Portfolio Manager: 2022

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Anthony Zackery

Anthony Zackery, CFA

Portfolio Manager, Sustainable Investment Lead

Industry start date: 2011
Start date as fund Portfolio Manager: 2022

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Key Features

Capitalizing on Technological Growth Trends

The Fund aims to identify significant growth trends ahead of the crowd, building an intimate knowledge of technology companies with optimal exposure to key trends and investing in those that demonstrate market leading potential

Diversified Technology Portfolio

The Fund invests in 40-70 emerging and mature technology companies, focusing on revenue, cash flow, and earnings growth in companies with strong management and solid fundamentals

Leveraging an Information Advantage

The portfolio management team has deep experience uncovering emerging trends and managing investments in technology companies across lifecycles, applying perspective from decades of industry knowledge

Portfolio Characteristics

Characteristics4

(as of 09/30/2022)
Average Weighted Market Cap (billions) $604.24
Median Market Cap (billions) $39.86
Trailing P/E Ex-Negative Earnings 28.05
Price-to-Cash Flow 28.12
Price-to-Book Value 9.54
3-Year Earnings Growth Rate 34.61

Top Holdings (% Fund)

(as of 09/30/2022)
Security
Microsoft Corp
8.40
 8.40%
Amazon.com Inc
8.05
 8.05%
Alphabet, Inc.- Cl C
7.72
 7.72%
Apple Inc
7.71
 7.71%
Tesla Inc
3.67
 3.67%
ON Semiconductor Corp
3.50
 3.50%
Palo Alto Networks Inc
3.38
 3.38%
Crowdstrike Holdings Inc
3.16
 3.16%
Trade Desk Inc/The
2.88
 2.88%
NVIDIA Corp
2.50
 2.50%

Holdings are subject to change.

Industry Allocation (% Equity)

(as of 09/30/2022)
Software
31.48
 31.48%
Semiconductors & Semiconductor Equipment
14.44
 14.44%
IT Services
11.38
 11.38%
Internet & Direct Marketing Retail
10.26
 10.26%
Interactive Media & Services
9.84
 9.84%
Technology Hardware Storage & Peripherals
7.93
 7.93%
Automobiles
4.38
 4.38%
Media
2.96
 2.96%
Electronic Equipment Instruments & Components
2.60
 2.60%
Road & Rail
1.50
 1.50%
Hotels Restaurants & Leisure
1.13
 1.13%
Aerospace & Defense
0.70
 0.70%
Banks
0.51
 0.51%
Health Care Technology
0.49
 0.49%
Communications Equipment
0.40
 0.40%

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

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 (e.g., Russia's invasion of Ukraine), acts of terrorism, the spread of infectious illness (e.g., COVID-19 pandemic) or other public health issues, 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.
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.
Focused Investments: To the extent the portfolio focuses its investments on a limited number of issuers, sectors, industries or geographic regions, it may be subject to increased risk and volatility.
Foreign Investing: Investing in foreign securities subjects the portfolio to additional risks such as increased volatility; currency fluctuations; less liquidity; less publicly available information about the foreign investment; and political, regulatory, economic, and market risk.
Prospectus: For additional information on risks, please see the fund's prospectus.

Commentary

3Q22

Market Review

Macro headlines led market activity again this quarter, with many investor worries persisting—Federal Reserve policy and interest rates, inflation trends, supply chain constraints, Ukraine conflict, and political discourse. Most equity indexes across styles and capitalizations were negative for the quarter and remained decidedly down year to date. Day-to-day fluctuations in interest rates often became the focus for the equity markets as investors ruminated on the potential effects of further interest rate moves.

Fund Performance

The Virtus Zevenbergen Technology Fund returned -4.01% (Class I) in the quarter, slightly outperforming the S&P North American Technology Index, which returned -6.32%. At the sector level, information technology holdings (software and services, semiconductors/semiconductor equipment) were the greatest detractors to performance, followed by consumer discretionary (retailing, automobiles). Despite uncertain operating conditions, recent company fundamental reports and management discussions affirmed the investment team’s long-term growth outlook for portfolio holdings and their relative weights.

The Trade Desk and ON Semiconductor were the largest contributors to performance in the quarter.

  • Founder-led advertising technology platform company The Trade Desk benefited from the ongoing shift of advertising budgets from offline to online channels. Strong execution led to resilient fundamental results as the company powered through ad industry concerns and more uncertain economic conditions. The company continues to win share thanks to its highly transparent, data-driven approach to delivering value for advertisers. Early leadership in Connected TV positions The Trade Desk well for the coming wave of incremental ad-supported streaming options, while initiatives around shopper marketing, international expansion, and identity are differentiated long-term stakes leveraging the company’s scale and relationships.
  • Sensor and power semiconductor company ON Semiconductor (ON) exceeded expectations across revenue (25% year-over-year growth), gross margins, and profitability. The strong results highlighted ON’s relevant position in fast-growing electric vehicles, renewable energy, and industrial automation applications. Investors are optimistic about ON’s vertical integration in silicon carbide, a specialized area with meaningful potential in electric vehicle range improvements. Further, the company successfully extended long-term supply agreements, a sign of confidence in ON’s technology and supply chain management.
  • Additional top contributors were Aspen Technology, Snowflake, and Tesla.

Alphabet and Microsoft were the largest detractors from performance in the quarter.

  • Alphabet reported a pullback in customer spending on Google display and YouTube ads amid concerns around the health of the broader advertising market. Quelling some anxieties, search revenues proved more resilient, rising 14% year over year led by travel and retail verticals. Within the cloud computing business, results were healthy, but marked by a modest sequential slowdown. Management’s near-term outlook contained some caution given the challenging operating environment brands face, but confidence in the long-term opportunity supported by digital transformations was reiterated.
  • Microsoft shares declined in the third quarter over fears of a slowdown in public cloud adoption and weakening demand for personal electronics. While management acknowledged some signs of pressure within consumer and small business end-markets (groups more sensitive to macroeconomic volatility), the Azure cloud platform revenue growth exceeded 40% year over year, supported by a record number of $100+ million and $1+ billion contracts. Adjusting for foreign exchange headwinds (a downside of U.S. dollar strength), guidance was deemed “better than feared” and the dividend was raised.
  • Additional bottom detractors were NVIDIA, Meta Platforms, and MongoDB.

Perspective

“If you are sad, and you want to be sad, you’re at the right place. If you’re happy and you want to be happy, guess what? You’re at the right place.”1 There are reasons to be concerned about investing in the current market environment, but there are also developments to view optimistically. Inflation, evolving supply chain dynamics, and geopolitical discourse have pushed management teams to reassess the status quo. Amid rising costs, some have been forced to optimize headcount or reduce expenditure. While volatility (whether in markets or corporate cultures) is painful, it is often the catalyst for innovation and transformation. Technology is the common thread around most of these transformations, often allowing corporations to do more with less, leverage data to navigate uncertainty, and accelerate strategic pivots. To the credit of visionary founders and dedicated leadership teams, companies in the portfolio are adapting to the evolving landscape and reasserting their revenue and secular growth trends.

1 Elvis [Film]. Directed by Baz Luhrmann, Warner Bros. Entertainment, 2022.

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 Zevenbergen Technology Fund Fact Sheet - INST
Virtus Zevenbergen Technology Fund Fact Sheet - A

Financial Materials

Virtus Investment Trust Statutory Prospectus
Virtus Zevenbergen Technology Fund Summary Prospectus
Virtus Investment Trust SAI
Virtus Investment Trust Annual Report
Virtus Investment Trust Semiannual Report
Virtus Zevenbergen Technology Fund Information Statement

Holdings

Virtus Zevenbergen Technology Quarterly Holdings
Virtus Zevenbergen Technology Fund Top Holdings
Virtus Zevenbergen Technology Fund Holdings Fiscal Q1
Virtus AllianzGI Technology 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 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.