A: PSFRX, C: PFSRX, I: PSFIX
VIRTUS NEWFLEET SENIOR
FLOATING RATE FUND IN “5”
The Virtus Newfleet Senior Floating Rate Fund is a specialized fixed income holding from Newfleet Asset Management, a
time-tested bond investment firm. Newfleet’s edge has been its ability to choose the right pockets of the global bond
market at the right times. The firm’s combination of active sector rotation and disciplined risk management has been the
key to outstanding long-term results.
Harnessing Sector Expertise
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Newfleet’s David L. Albrycht, CFA, a well-respected fixed income manager, has steered
the firm’s investment program since 1993. Co-portfolio managers Frank Ossino and
Kyle Jennings, CFA, bring substantial leveraged loan expertise to the day-to-day
management of the Fund.
The three managers have an average of 25 years of bank loan experience, which is crucial
for understanding the nuances of this specialized asset class.
Barron’s named Virtus “Best Taxable Bond Fund Family” for 2010 and 2012.
Interest Rate Hedge
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Newfleet’s multi-sector approach is helmed by a team of dedicated experts. The Fund draws
on the knowledge of bank loan sector specialists.
Experienced Leadership
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The Fund offers targeted exposure to bank loans, allowing investors to make a strategic
investment in a sector that has historically been negatively correlated to Treasuries, and has
offered attractive yields.
In low-rate environments, holders of bank debt are paid a higher-than-average coupon,
because the LIBOR floor provides a cushion against low rates.
In rising-rate environments, securities with floating-rate coupons should be protected, as
yields increase when interest rates rise.
Bank loans have effectively no duration risk, because their coupons re-set quarterly.
Reduced Credit Risk
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Bank loans sit high in the capital structure and thus are secured against default. They have
priority in repayment, and can also treat the issuer’s assets as collateral.
Bank loans usually come with agreements that restrict the borrower’s behavior and ability to
renege on their promises.
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From 1987 to 2011, the recovery rate1 for bank loans averaged about 80% of principal,
compared to 48% for unsecured bonds.2
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Strategic Fixed Income Holding
The Fund seeks a high level of income and total return.
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Because bank loans exhibit lower correlation to other fixed income asset classes, the Fund may
provide effective diversification, especially with regard to the prospect of rising interest rates.
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Significant credit events can have a negative impact on the Fund, which should be expected
to lag when lower-quality credits are in favor.
As measured by ultimate recovery, which is the recovery value that creditors actually receive at the resolution to default, usually at the time of emergence from Chapter 11
bankruptcy proceedings.
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Source: Moody’s Investors Service
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To learn more, please contact us at 1-800-243-4361 or visit Virtus.com
Effective May 8, 2017, this Fund changed its name from the Virtus Senior Floating Rate Fund.
Best Taxable Bond Fund Family ranked 1 of 62 Fund Families, on a one-year basis, in the 2012 Barron’s/Lipper 2012 Fund Survey, published in the February 11, 2013 issue of Barron’s. Ranked 42 of 58 in
2011 and 1 of 57 in 2010.
To qualify for the Barron’s/Lipper fund survey, a group must have at least three funds in Lipper’s general U.S.-stock category, as well as one in world equity, which combines global and international funds.
We also require at least one mixed-asset (or balanced) fund, which holds stocks and bonds. Fund shops also must have at least two taxable-bond funds and one tax-exempt offering. For the first time this
year, we’ve included the performance of emerging-market funds in the world equity category.
Each fund’s returns are adjusted for 12b-1 fees, which are used for marketing and distribution expenses. The funds usually add these fees back into returns. Our aim is to measure the manager’s skill. Fund
loads, or sales charges, aren’t included in the calculation of returns, either. Each fund’s return is measured against those of all funds in its Lipper category. That leads to a percentile ranking, with 100
the highest and 1 the lowest, which is then weighted by asset size relative to the fund family’s other assets in its general classification. If a family’s biggest funds do well, that boosts its overall ranking.
Poor performance in a big fund can have a big effect on the ranking. Finally, the score is multiplied by the weighting of its general classification, as determined by the entire Lipper universe of funds. The
category weightings for the one-year results: general equity, 34.9%; world equity, 16.3%; mixed-asset, 17.3%; taxable bonds, 27.2%; and tax-exempt bonds, 4.3%.
The scoring: Say a company has a fund in the general U.S. equity category that has $50 million in assets and that it accounts for half of the company’s assets in that category. Its ranking is the 75th
percentile. The first calculation would be 75 times 0.50, which comes to 37.5. That score is then multiplied by 38.04, general equity’s overall weighting in Lipper’s universe. So it would be 37.5 times 0.3804,
which totals 14.265. Similar calculations are done for each fund in our study. Then, all the numbers are added up for a total score. The fund shop with the highest score wins, both for every category and
overall. In 2010, the category weightings for the one-year results: general equity, 40.52%; world equity, 14.32%; mixed equity, 16.46%; taxable bond, 24.52%; tax-exempt bond, 4.18%. Barron’s is a
registered trademark of Dow Jones & Company; all rights reserved.
IMPORTANT RISK CONSIDERATIONS
Credit & Interest: Debt securities are subject to various risks, the most prominent of which are credit and interest rate risk. The issuer of a debt security may fail to
make interest and/or principal payments. Values of debt securities may rise or fall in response to changes in interest rates, and this risk may be enhanced with
longer-term maturities. Bank Loans: Loans may be unsecured or not fully collateralized, may be subject to restrictions on resale, and/or trade infrequently on the
secondary market. Loans can carry significant credit and call risk, can be difficult to value, and have longer settlement times than other investments, which can make
loans relatively illiquid at times. High Yield-High Risk Fixed Income Securities: There is a greater level of credit risk and price volatility involved with high yield
securities than investment grade securities. Leverage: When a fund leverages its portfolio, the value of its shares may be more volatile, and all other risks may be
compounded. Liquidity: Certain securities may be difficult to sell at a time and price beneficial to the fund. Prospectus: For additional information on risks, please see
the fund’s prospectus.
LIBOR is a benchmark rate that some of the world’s leading banks charge each other for short-term loans. It stands for London Interbank Offered Rate and serves as
the first step to calculating interest rates on various loans throughout the world.
Please carefully consider a Fund’s investment objectives, risks, charges, and expenses before investing. For this and other
information about any Virtus mutual fund, contact your financial representative, call 1-800-243-4361, or visit Virtus.com for
a prospectus or summary prospectus. Read it carefully before investing.
Not all products or marketing materials are available at all firms.
Not insured by FDIC/NCUSIF or any federal government agency. No bank guarantee. Not a deposit. May lose value.
Distributed by VP Distributors, LLC, member FINRA and subsidiary of Virtus Investment Partners, Inc.
6837 5-17 © 2017 Virtus Investment Partners, Inc.