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 47 holdings as of December 2015 and it was managing assets worth $26.6 million. As of December, its top ten equity holdings included British American Tobacco (BTI), Philip Morris International (PM), SAP (SAP), Priceline Group (PCLN), and SABMiller (SBMRY), comprising 20.0% of the fund’s portfolio.
For this analysis, we will be considering holdings as of September 2015, when the fund made available its latest sectoral breakdown. 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 the most weight in the consumer staples sector. It forms 38.4% of the fund’s assets. Healthcare forms over a fifth of the assets, followed by the consumer discretionary sector. Fund managers exited the energy sector in 2Q15. The fund is not invested in the telecom services and utilities sectors.
Exposure to consumer staples had decreased at the end of 1Q15 from the beginning of the year. However, it was increased as the year progressed and is now nearly the same as it was a year ago. On the other hand, the healthcare sector has seen an increase compared to a year ago. Another sector that has seen its share increase over 2015 is information technology.
Though the consumer discretionary sector is the third largest sector at present, it was the second largest a year ago. Through 2015, the sector has seen its share fall in the fund’s portfolio. The share of materials and industrials has also fallen.
Interestingly, financials used to form just 3.4% of the portfolio in December 2014. In 1Q15, after the ECB (European Central Bank) announced its stimulus measures, the fund started to load up on financial stocks, and at one time during this period, they comprised 11.4% of the portfolio. They form 9% of the fund’s assets at present.
Let’s see how the fund has fared in 2015 in the next article.