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Item 1. Business

2023-02-27 compared with 2022-02-25 · 98 added, 99 removed, 155 unchanged (56% of the section changed)

Virtus Investment Partners, Inc.

(the "Company"), a Delaware corporation, commenced operations on November 1, 1995 and became an independent publicly traded company on December 31, 2008 as a result of the distribution by Phoenix Life Insurance Company ("Phoenix"), the Company's former parent, of 100% of Virtus common stock to Phoenix stockholders in a spin-off transaction.

(the "Company"), a Delaware corporation, commenced operations on November 1, 1995 and became an independent publicly traded company on December 31, 2008.

We provide investment management and related services to individuals and institutions.

We use a multi-manager, multi-style approach, offering investment strategies from affiliated managers, each having its own distinct investment style, autonomous investment process, individual brand, as well as from select unaffiliated subadvisers.

By offering a broad array of products, we believe we can appeal to a greater number of investors and have offerings across market cycles and through changes in investor preferences.

Our earnings are primarily driven by asset-based fees charged for services relating to these various products, including investment management, fund administration, distribution and shareholder services.

Through our multi-manager model, we provide our affiliated managers with centralized U.S.

retail distribution capabilities and offer institutional sales and business support resources to support affiliate operations.

We offer investment strategies for individual and institutional investors in different investment products and through multiple distribution channels.

Our investment strategies are available in a diverse range of styles and disciplines, managed by differentiated investment managers.

We have offerings in various asset classes (equity, fixed income, multi-asset and alternative), geographies (domestic, global, international and emerging), market capitalizations (large, mid and small), styles (growth, core and value) and investment approaches (fundamental, quantitative and specialty).

Our retail products include open-end funds and exchange traded funds ("ETFs") as well as closed-end funds and retail separate accounts.

Our institutional products are offered through separate accounts and pooled or commingled structures to a variety of institutional clients.

Our retail products include mutual funds registered pursuant to the Investment Company Act of 1940, as amended ("U.S.

retail funds");

Undertaking for Collective Investment in Transferable Securities and Qualifying Investor Funds (collectively, "global funds") and collectively with U.S.

retail funds, variable insurance funds, exchange-traded funds ("ETFs"), the "open-end funds");

closed-end funds (collectively, with open-end funds, the "funds");

and retail separate accounts that include intermediary-sold and private client accounts.

Our investment strategies are offered to institutional clients through separate accounts and pooled, or commingled, structures.

We also provide subadvisory services to other investment advisers and serve as the collateral manager for structured products.

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We provide investment management services through our affiliated investment managers who are registered under the Investment Advisers Act of 1940, as amended (the "Investment Advisers Act").

The investment managers are responsible for portfolio management activities for our retail, institutional and structured products operating under advisory, subadvisory or collateral management agreements.

We provide our affiliated managers with distribution, operational and administrative support, thereby allowing each manager to focus primarily on investment management.

We also use the investment management services of select unaffiliated managers to sub-advise certain of our open- and closed-end funds, ETFs and retail separate accounts.

The investment managers are responsible for portfolio management activities for our retail and institutional products operating under advisory, subadvisory or collateral management agreements.

We also use the investment management services of select unaffiliated managers to sub-advise certain of our open- and closed-end funds.

We monitor our managers' services by assessing their performance, style and consistency and the discipline with which they apply their investment process.

Our affiliated investment managers and their respective assets under management, products and strategies as of December 31, 2021 were as follows:

Manager Products Strategies Assets

Our affiliated investment managers, their respective investment styles and assets under management as of December 31, 2022 were as follows:

Affiliated Manager Headquarters Investment Style Assets

(in billions)

Ceredex Value Advisors Open-end funds, institutional and intermediary-sold managed accounts

large-, mid- and small-cap domestic equities

Duff & Phelps Investment Management Open- and closed-end funds, ETFs and intermediary-sold managed accounts

Income Focused Equities

global listed infrastructure, domestic, global, real asset and international real estate and energy

Kayne Anderson Rudnick Investment Management Intermediary-sold managed accounts, open-end funds, institutional accounts and private client accounts

Quality-Oriented Equity

small- to large-cap, including domestic, global, long/short, global dividend, international and emerging market strategies

Newfleet Asset Management Open- and closed-end funds, structured products, institutional accounts, ETFs and intermediary-sold managed accounts

Multi-Sector Fixed Income

multi-sector, enhanced core and dedicated sector strategies such as bank loans and high yield

NFJ Investment Group Intermediary-sold managed accounts, open- and closed-end funds, and institutional accounts

Global Value Equity

small- to large-cap, including domestic, global, international and emerging market strategies

Seix Investment Advisors Institutional, open-end funds, structured products, intermediary-sold managed accounts, private client accounts and ETFs

Investment Grade and Leveraged Finance Fixed Income

high yield, bank loans, investment grade taxable, non-taxable and multi-sector strategies

Silvant Capital Management Institutional accounts, open-end funds and private client accounts

Growth Equity

including large-cap and small-cap

Sustainable Growth Advisers Institutional accounts, intermediary-sold managed accounts, open-end funds and private client accounts

Global Growth Equity

large-cap growth strategies, including domestic, global, international and emerging markets

Westchester Capital Management Open-end funds and institutional accounts

merger arbitrage, multi-strategy and credit event

Our select unaffiliated subadvisers and their respective assets under management, products and strategies as of December 31, 2021 were as follows:

Unaffiliated Subadviser Products Strategies Assets

Ceredex Value Advisors

Orlando, FL Value Equities $ 7.0

Duff & Phelps Investment Management

Chicago, IL Listed Real Assets $ 12.0

Kayne Anderson Rudnick Investment Management

Los Angeles, CA Quality-Oriented Equities $ 47.4

Newfleet Asset Management (1)

Hartford, CT Multi-Sector Fixed Income $ 12.1

NFJ Investment Group

Dallas, TX Global Value Equities $ 6.8

Seix Investment Advisors (1)

Park Ridge, NJ Investment Grade and Leveraged Finance Fixed Income $ 14.4

Silvant Capital Management

Atlanta, GA Growth Equities $ 1.7

Stone Harbor Investment Partners (1)

New York, NY Emerging Markets Debt $ 6.6

Sustainable Growth Advisers

Stamford, CT Global Growth Equities $ 20.8

Westchester Capital Management

Valhalla, NY Event-Driven Equity $ 5.1

Virtus Multi-Asset (1) Hartford, CT Global Multi-Asset $ 0.2

Virtus Systematic (1) San Diego, CA Systematic Equity $ 0.5

Zevenbergen Capital Investments (2)

Seattle, WA High Growth Equity $ 1.3

(1) Operates as a division within a broader legal entity.

(2) Affiliated through ownership of a minority interest.

Our select unaffiliated subadvisers, their respective investment styles and assets under management as of December 31, 2022 were as follows:

Unaffiliated Subadviser Investment Style Assets

(in billions)

Allianz Global Investors Open- and closed-end funds and intermediary-sold managed accounts Various

domestic, global and international equity, fixed income, multi-asset and specialty

Voya Investment Management Income & Growth and Convertible $ 9.8

Vontobel Asset Management, Inc.

Open-end funds Global Growth Equity

international and global equity

Zevenbergen Capital Investments (1) Open-end funds High Growth Equity

domestic all-cap equity

Other Open-end funds and ETFs Various

domestic, international, global and specialty equity

(1) We hold a minority interest in this subadviser.

International Growth Equity $ 2.6

Other Risk-Based Quantitative, Income-Focused Equity and Systematic Quantitative $ 1.1

Our Investment Products

Our assets under management are in open-end funds, closed-end funds, ETFs, retail separate accounts, institutional accounts and structured products.

Assets Under Management by Product as of

December 31, 2021

Our assets under management are in open-end funds, closed-end funds, retail separate accounts and institutional accounts.

Our earnings are primarily from asset-based fees charged for services relating to these various products, including investment management, fund administration, distribution and shareholder services.

Assets Under Management by Product as of December 31, 2022

Products (in billions)

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Closed-end funds 10.4

Exchange traded funds 1.5

Retail separate accounts 35.4

Institutional accounts (2) 50.7

Structured products 3.7

Total Assets Under Management $ 149.4

(1) Represents assets under management of U.S.

funds, global funds and variable insurance funds.

retail funds, global funds, ETFs and variable insurance funds.

(2) Represents assets under management of institutional separate and commingled accounts, including structured products.

Open-End Funds

Our open-end mutual funds are offered in a variety of asset classes (domestic, global and international equity, taxable and non-taxable fixed income, multi-asset and alternative investments), market capitalizations (large, mid and small), styles (growth, core and value) and investment approaches (fundamental, quantitative and specialty).

retail funds are offered in a variety of asset classes (domestic, global and international equity, taxable and non-taxable fixed income, multi-asset and alternative investments), market capitalizations (large, mid and small), styles (growth, core and value) and investment approaches (fundamental and quantitative).

Our global funds are offered in select investment strategies to non-U.S.

Our ETFs are offered in a range of actively managed and index-based investment capabilities across multiple asset classes.

Summary information about our open-end funds as of December 31, 2022 was as follows:

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Closed-End Funds

Our closed-end funds are offered in a variety of asset classes such as equity, fixed income and multi-asset and options.

Our closed-end funds are offered in a variety of asset classes such as equity, fixed income and multi-asset.

We managed the following closed-end funds as of December 31, 2022, each of which is traded on the New York Stock Exchange:

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Subadvisory fees paid on funds managed by unaffiliated subadvisers are not reflected in the percentages listed.

Exchange Traded Funds

Our ETFs are offered in a range of actively managed and index-based investment capabilities across multiple asset classes.

We managed the following ETFs as of December 31, 2021:

Asset Class Number of Funds Total Assets

(in millions)

Fixed Income 5 $ 650 0.57 - 0.14

Alternative 4 596 0.75 - 0.33

Equity 5 204 0.66 - 0.28

Multi-Asset 1 29 0.47

Total ETFs $ 1,479

(1) Percentage of average daily net assets.

The percentages listed represent the range of management advisory fees paid by the funds, from the highest to the lowest.

Subadvisory fees paid on funds managed by unaffiliated subadvisers are not reflected in the percentages listed.

Retail Separate Accounts

Intermediary-Sold Managed Accounts

Intermediary-sold managed accounts are individual investment accounts that are primarily contracted through intermediaries as part of investment programs offered to retail investors.

Intermediary-sold managed accounts are individual investment accounts that are contracted through intermediaries as part of investment programs offered to retail investors.

Summary information about our intermediary-sold managed accounts as of December 31, 2022 was as follows:

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Domestic $ 26,789

Specialty 131

International 82

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Multi-Asset 198

Alternative 1

Total Intermediary-Sold Managed Accounts $ 29,160

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Our institutional clients include corporations, multi-employer retirement funds, public employee retirement systems, foundations and endowments.

We also act as collateral manager for 12 collateralized loan obligations ("CLOs").

In addition, we provide subadvisory services to unaffiliated mutual funds.

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International 1,241

Investment grade 5,152

Multi-sector 1,053

Leveraged finance 12,338

Investment grade 5,752

Alternative 3,653

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Total Institutional Accounts 50,663

Structured Products

We act as collateral manager for structured finance products of 11 collateralized loan obligations ("CLOs") with aggregate assets of $3.7 billion having a range of fees (senior plus subordinate) from 0.35% to 0.14%.

Other Fee Earning Assets

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Institutional accounts 157,404 148,213 113,543

Structured products 4,726 4,012 6,381

Other products 1,479 2,511 3,832

Total investment management fees 728,339 781,585 505,338

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We provide investment management services through our affiliated investment advisers (each an "Adviser") pursuant to investment management agreements.

We earn fees based on each fund's average daily or weekly net assets with most fee schedules providing for rate declines or "breakpoints" as asset levels increase to certain thresholds.

For our sponsored funds, we earn fees based on each fund's average daily or weekly net assets with most fee schedules providing for rate declines or "breakpoints" as asset levels increase to certain thresholds.

For funds managed by subadvisers, the day-to-day investment management of the fund's portfolio is performed by the subadviser, which receives a management fee based on a percentage of the Adviser's management fee.

Each fund bears all expenses associated with its

Each fund bears all expenses associated with its operations.

In some cases, to the extent total fund expenses exceed a specified percentage of a fund's average net assets, the Adviser has agreed to reimburse the fund's expenses in excess of that level.

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In certain instances, institutional fees may include performance-related fees, generally earned if the returns on the portfolios exceed agreed upon periodic or cumulative return targets, primarily benchmark indices.

Fees for structured finance products, for which we act as the collateral manager, consist of senior, subordinated and, in certain instances, incentive management fees.

Fees for CLOs, for which we act as the collateral manager,

consist of senior, subordinated and, in certain instances, incentive management fees.

Senior and subordinated management fees are calculated at a contractual fee rate applied against the end of the preceding quarter par value of the total collateral being managed with subordinated fees being recognized only after certain portfolio criteria are met.

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Administration Fees

We provide various administrative services to our open-end mutual funds, ETFs and the majority of our closed-end funds.

We provide various administrative services to our U.S.

retail funds, ETFs and the majority of our closed-end funds.

We earn fees based on each fund's average daily or weekly net assets.

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Shareholder Service Fees

We provide shareholder services to our open-end mutual funds.

We provide shareholder services to our U.S.

retail funds.

We earn fees based on each fund's average daily net assets.

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Our Distribution Services

We distribute our open-end funds and ETFs principally through financial intermediaries.

We have broad distribution access in the retail market, with distribution partners that include national and regional broker-dealers, independent broker-dealers and registered investment advisers, banks and insurance companies.

Our products are offered through various retail and institutional distribution channels.

Our retail distribution resources in the U.S.

consist of regional sales professionals, a national account relationship group and specialized teams for retirement and ETFs.

retail funds and retail separate accounts are distributed through financial intermediaries.

We have broad distribution access in the U.S.

retail market, with distribution partners that include national and regional broker-dealers, independent broker-dealers and registered investment advisers, banks and insurance companies.

In many of these firms, we have a number of products that are on preferred "recommended" lists and on fee-based advisory programs.

Our sales efforts are supported by regional sales professionals, a national account relationship group and separate teams for ETFs and the retirement and insurance channels.

Our retail separate accounts are distributed through financial intermediaries and directly to private clients by teams at our affiliated investment managers.

Our institutional services are marketed through relationships with consultants as well as directly to clients.

We target key market segments, including foundations and endowments, corporate, public and private pension plans, and subadvisory relationships.

Our private client business is marketed directly to individual clients by financial advisory teams at our affiliated investment managers.

Institutional

Our institutional distribution resources include affiliate specific institutional sales teams primarily focused on the U.S.

market, supported by shared consultant relation support and non-U.S.

institutional distribution.

Our institutional products are marketed through relationships with consultants as well as directly to clients.

We target key market segments, including foundations and endowments, corporations, public and private pension plans, sovereign wealth funds and subadvisory relationships.

Our Broker-Dealer Services

We operate a broker-dealer that is registered under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and is a member of the Financial Industry Regulatory Authority ("FINRA").

Our broker-dealer serves as the principal underwriter and distributor of our open-end mutual funds and ETFs under sales agreements with unaffiliated financial intermediaries, provides market advisory services to sponsors of retail separate accounts, and is also a program manager and distributor of a qualified tuition plan under Section 529 of the Internal Revenue Code ("529 Plan").

Our broker-dealer serves as the principal underwriter and distributor of our funds under sales agreements with unaffiliated financial intermediaries, provides market advisory services to sponsors of retail separate accounts, and is also a program manager and distributor of a qualified tuition plan under Section 529 of the Internal Revenue Code ("529 Plan").

Our broker-dealer is subject to the net capital rule of the Securities and Exchange Commission (the "SEC"), which is designed to enforce minimum standards regarding the general financial condition and liquidity of broker-dealers.

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Our Regulatory Matters

We are subject to regulation by the SEC, FINRA and other federal and state agencies and self-regulatory organizations.

Each affiliated investment manager and unaffiliated subadviser is registered with the SEC under the Investment Advisers Act.

Each open-end mutual fund, closed-end fund and ETF is registered with the SEC under the Investment Company Act of 1940, as amended (the "Investment Company Act").

We are subject to regulation by the SEC and other federal and state agencies, as well as FINRA and other self-regulatory organizations.

Each of our affiliated investment managers and unaffiliated subadvisers is registered with the SEC under the Investment Advisers Act.

Our affiliated investment managers operating outside of the U.S.

are also subject to regulation by various regulatory authorities and exchanges in the relevant jurisdictions, including, for those active in the United Kingdom (the "UK"), the Financial Conduct Authority (the "FCA").

We have distribution teams that operate offices in the UK and Singapore and are subject to regulation by both the FCA and Monetary Authority of Singapore, respectively.

Each of our U.S.

sponsored funds is registered with the SEC under the Investment Company Act of 1940, as amended ("the Investment Company Act").

Our global funds are registered with and subject to regulation by the Central Bank of Ireland.

New regulations or interpretations of existing laws may result in enhanced disclosure obligations, including with respect to climate change or other environmental, social and governance ("ESG") matters, which could negatively affect us or materially increase our regulatory burden.

Increased regulations generally increase our costs, and we could continue to experience higher costs if new laws require us to spend more time, hire additional personnel, or purchase new technology to comply effectively.

The financial services industry is highly regulated, and failure to comply with related laws and regulations can result in the revocation of registrations, the imposition of censures or fines and the suspension or expulsion of a firm and/or its employees from the industry.

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federal and state laws and regulations.

All of our U.S.-domiciled open-end mutual funds are generally available for sale and are qualified in all 50 states, Washington, D.C., Puerto Rico, Guam and the U.S.

Our U.S.-domiciled open-end mutual funds are generally available for sale and are qualified in all 50 states, Washington, D.C., Puerto Rico, Guam and the U.S.

Virgin Islands.

Our global funds are sold to both retail investors who are not citizens or residents of the United States or are non-U.S.

institutional clients.

Our officers, directors and employees may, from time to time, own securities that are also held by one or more of our funds.

Our global funds are sold to non-U.S.

institutional and retail clients who are not citizens or residents of the U.S.

Our officers, directors and employees may, from time to time, own securities that are also held by one or more of our funds or strategies offered to clients.

We have adopted a Code of Ethics pursuant to the provisions of the Investment Company Act and the Investment Advisers Act that require the disclosure of personal securities holdings and trading activity by all employees on a quarterly and annual basis.

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Human Capital

As of December 31, 2021, we employed 668 employees and we operate offices in the United States and United Kingdom.

As of December 31, 2022, we employed 772 employees and we operate offices in the U.S., UK and Singapore.

We strive to attract and retain talented individuals by creating an environment of excellence and opportunity that serves as a foundation for all employees to reach their potential and make meaningful contributions to the organization.

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The collective sum of our individual differences, backgrounds, unique skills, and life experiences creates an environment where employees and the company can achieve the highest levels of performance.

Our programs and practices in:

(i) workforce diversity, (ii) inclusive culture (iii) community participation, (iv) employee involvement, and (v) philanthropy, are designed to help us deliver on our commitment to maintaining an organization that is diverse, equitable, and inclusive for all employees.

Our programs and practices in (i) workforce diversity, (ii) inclusive culture, (iii) community participation, (iv) employee involvement, and (v) philanthropy are designed to help us deliver on our commitment to maintaining an organization that is diverse, equitable, and inclusive for all employees.

▪ We collaborate with organizations, institutions, and referral sources to identify diverse talent pools and increase the diversity of potential candidates.

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investor.relations@virtus.com or by mail to Virtus Investment Partners, Inc., c/o Investor Relations, One Financial Plaza, Hartford, CT 06103.

The Company may use its website as a distribution channel of material company information.

Financial and other important information regarding the Company is routinely posted on and accessible through the Company’s website at http://ir.virtus.com.

In addition, you may automatically receive email alerts and other information about the Company when you enroll your email address by visiting http://ir.virtus.com.

Information contained on the website is not incorporated by reference or otherwise considered part of this document.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business