The Virtus Greater European Opportunities Fund: Overview

We’ll be analyzing the Virtus Greater European Opportunities Fund – Class A (VGEAX) in this article. The Virtus Greater European Opportunities Fund (all asset classes) is the smallest fund in this review and was managing assets worth $25.3 million as of January 2016. As of December 2015, its assets were spread across 47 holdings and included stocks of British American Tobacco (BTI), Philip Morris International (PM), SAP (SAP), The Priceline Group (PCLN), and SABMiller (SBMRY), which comprised 20.0% of the fund’s portfolio.

The Virtus Greater European Opportunities Fund’s performance

From a purely NAV (net asset value) return standpoint, the VGEAX had a superlative one-year period until February 16, 2016, as well as in 2015. It topped its peer group in both periods. When we refer to the peer group, we mean the group of 12 funds chosen for this review. For a returns comparison, we’ve chosen two ETFs: the ALPS STOXX Europe 600 ETF (STXX) and the SPDR EURO STOXX 50 ETF (FEZ).

The Virtus Greater European Opportunities Fund: Top Performer

Other metrics

The VGEAX’s standard deviation, or the volatility of returns, in the one-year period ended February 16 was 15.4%. This is quite a bit lower than both the STOXX Europe 600 Index’s 18.7% and the peer group’s average of 18.0%. It made it the lowest volatile fund in this review.

The fund’s risk-adjusted returns, calculated by the Sharpe ratio, were 0.05, compared to the STOXX Europe 600’s -0.69 for the one-year period ended February 16, making it the only fund to have posted a positive ratio for the period. In 2015, its Sharpe ratio had stood at 0.58 against the index’s 0.02, making it the fund with the highest risk-adjusted returns for the year.

The information ratio, calculated with the STOXX Europe 600 Index as the benchmark, was 2.6 for the one-year period ended February 16, placing it as the best among the 12 funds in this review. The information ratio measures the fund manager’s consistency and ability to generate excess returns over a benchmark. The higher the reading, the better the consistency. Investors should remember that we can’t evaluate a negative information ratio.

A note to investors

Apart from its impressive risk-adjusted performance and consistency of returns, the VGEAX’s alpha for the one-year period ended February 16 topped the table and stood in the double digits. For 2015, it missed the top spot in terms of alpha by a small margin. Quantitative metrics are firmly on this fund’s side. The fund’s low volatility is also an asset. However, a look at longer-term performance is warranted for investors looking at a similar investment horizon. In the last article of the series, we’ll look at the overall picture that emerges from this analysis.

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