Virtus Convertible Fund Class A (ANZAX)

Overview

The fund is designed to fulfill its investment goals primarily by allocating at least 80% of its net assets, alongside any borrowed funds intended for investment purposes, into convertible securities. This type of financial instrument is particularly appealing for investors looking for a blend of fixed-income stability and the growth potential of equity investments. Convertible securities often offer lower interest rates than regular bonds due to the conversion feature, which provides an additional avenue for potential profit through conversion into equity shares under certain conditions. This strategic focus on convertible securities positions the fund to potentially benefit from both market stability and growth, catering to those who seek a balanced investment approach.

Products and Services

The fund offers an investment avenue through several types of convertible securities, each with unique characteristics and benefits:

• Corporate Bonds: These are debt securities issued by corporations with a promise to pay the bondholder a specified amount of interest over a specified period and to repay the principal at the bond's maturity. The fund's investment in corporate bonds allows investors to gain from stable income with the added potential for conversion into company shares.
• Debentures: Similar to corporate bonds, debentures are an unsecured form of investment. They are not backed by physical assets or collateral but by the issuer's reputation and creditworthiness. This type of convertible security offers a higher risk and potential return, as it relies more on the issuer's financial stability.
• Notes: Notes are similar to bonds but typically have shorter maturity periods. Investing in convertible notes provides the fund's investors with the opportunity to convert their debt investments into equity, usually under more favorable terms due to the shorter commitment and higher risk.
• Preferred Stocks and their Hybrids: Preferred stocks are hybrid securities that offer features of both debt and equity. They typically provide fixed dividends and have priority over common stock in dividend payments and liquidation proceeds. The convertible feature of these preferred stocks into common stocks introduces an equity participation opportunity, adding to the fund's appeal for investors seeking income and potential equity upside.