Virtus Investment Partners, Inc. Q2 FY2025 earnings call

• Assets under management grew 2% in the quarter due to market rebound. - Net outflows in quality-oriented equity strategies but positive net flows in ETFs. - Higher earnings per share and operating margin. - Highest level of share repurchases in 3 years. - Focus on expanding offerings: retail separate accounts, ETFs, global funds; launching multiple products from various firms; leveraging fixed income capabilities with first interval fund; increasing ETF availability and wealth management asset-raising. - Strong investment performance: 74% of equity assets and 69% of fixed income assets beat benchmarks over 10 years; 73% of equity funds and 85% of fixed funds outperformed peer median among mutual funds; 27 retail funds rated 4 or 5 stars, 86% of rated retail fund assets in 3-5 stars.

Total assets under management were $171 billion at June 30, up $4 billion sequentially. By product, institutional is the largest category at 33% of AUM. Retail separate accounts, including wealth management, is 28% and U.S. retail mutual funds is 27%. The remaining 12% comprises closed-end funds, global funds, and ETFs. Sales were $5.6 billion compared with $6.2 billion in the first quarter. Total net outflows for the quarter were $3.9 billion, largely in equity strategies. ETFs had positive net flows, with an organic growth rate of 74% over the trailing 12 months and $3.9 billion in AUM as of yesterday.

• Anticipate launching multiple ETF and global funds over coming quarters from Silvant, Sykes, Stone Harbor, and AlphaSimplex. - Plan to launch new CLO later in third quarter targeting $400 million in AUM. - Anticipated capital uses in third quarter include potential new CLO ($30 million), last of scheduled minority interest purchases with SGA (~$30 million).

• Market conditions and volatility could cause actual results to differ materially from forward-looking statements. - Risks and uncertainties set forth in SEC filings may impact results.

Q: Ben Budish of Barclays asked about share repurchases and inorganic opportunities.

A: Mike Angerthal said they take a balanced approach to capital management, and George Aylward discussed evaluating various opportunities for product extensions, distribution expansion, and scale enhancement, including private markets and traditional strategies.

Q: Bill Katz of TD Cowen asked about flows and institutional allocations.

A: George Aylward and Mike Angerthal discussed improving flows in June and July, with strength in fixed income and ETFs, and institutional outflows in quality large-cap growth but inflows in emerging market debt and REITs.

Q: Crispin Love of Piper Sandler asked about M&A valuations and private markets flows.

A: George Aylward talked about valuations in private markets and continued momentum in flows, especially in fixed income and some equity areas.

Q: Michael Cyprys of Morgan Stanley asked about ETFs and inorganic activity.

A: George Aylward discussed ETF success and growth initiatives, and approaches to inorganic activity including considering JVs and partnerships for private market opportunities.