Virtus Greater European Opportunities Fund
The Virtus Greater European Opportunities Fund Class A (VGEAX) “seeks to offer investors exposure to European market economies through well-established companies. The securities selected for inclusion in the fund are believed by the subadviser to be well-managed businesses with consistent operating histories and financial performance that have favorable long-term economic prospects and, in most cases, generate free cash flow. Over full market cycles, the investment style is designed with the objective of capturing part of the up market cycles and may offer protection in down market cycles.”
While Virtus Investment Advisers is the investment adviser to the fund, Vontobel Asset Management functions as its sub-adviser.
The fund’s assets were spread across 45 holdings as of September 2015. Additionally, it was managing assets worth $21.0 million as of October’s end. As of the October portfolio, its top ten equity holdings included British American Tobacco (BTI), Philip Morris International (PM), Priceline Group (PCLN), Imperial Tobacco Group (ITYBY), and SABMiller (SBMRY), comprising 21.6% of the fund’s portfolio.
In the graph above, the sectoral composition for October 2015 has been taken from the fund house’s website.
We’ll be considering holdings as of September 2015 as that’s the latest available sectoral breakdown we have. The holdings after September reflect valuation-driven changes to the portfolio, not the actual holdings.
The portfolio of the fund is quite different from that of its peers. Unlike any other fund in this review, the fund has consumer staples as its largest sector. It forms over 38% of the fund’s assets. Healthcare forms a shade less than 19% of the assets, followed by the consumer discretionary sector. No other sector’s portfolio weight reads in two digits.
Fund managers exited the energy sector sometime in 2Q15, and the fund isn’t invested in the telecom services and utilities sectors.
In the one-year period ended October 2015, the portfolio has undergone several changes. Financials and industrials are two prime examples. Financials used to form less than 4% of the portfolio in October 2014. In 1Q15, after the ECB (European Central Bank) announced its stimulus measures, the fund started to load up on financial stocks. At one time during this period, financial stocks comprised 11.4% of the portfolio. They form slightly less than 9% at present.
Industrials used to form over 10% of the portfolio until 3Q14. But in the following quarter, the fund’s managers started reducing exposure to the sector and have continued doing the same to the present. Stocks from the sector make up a little less than 5% of the portfolio.
Next, let’s see how the fund fared in October 2015.