VRTS — Virtus Investment Partners, Inc.

Summary of VRTS Q4 2025 Earnings Call

1. Key Financial Results and Metrics:

• Assets Under Management (AUM): $159 billion at December 31, down from $169 billion due to net outflows and market performance.
• Total Sales: $5.3 billion, a decrease from $6.3 billion in Q3, with institutional sales at $1.4 billion and retail separate accounts at $1.2 billion.
• Net Outflows: $8.1 billion, primarily from equities, with institutional net outflows of $3 billion and retail separate accounts experiencing $2.5 billion in outflows.
• Earnings Per Share (EPS): $6.50, down from $6.69 in Q3.
• Operating Margin: 32.4%, a slight decline from 33% in the previous quarter.
• Investment Management Fees: $168.9 million, down 4% due to lower average AUM and a modestly lower average fee rate of 40.6 basis points.

2. Strategic Updates and Business Highlights:

• Continued strong performance in ETFs, with $600 million in positive net flows and a year-over-year growth of 72%.
• Launched three new actively managed ETFs and expanded into private markets with the acquisition of a majority interest in Keystone National Group and a minority investment in Crescent Cove.
• Focus on broadening product offerings, including interval funds and additional retail separate account strategies.
• Positive long-term investment performance in fixed income and alternatives, with 76% and 60% of AUM outperforming benchmarks respectively.

3. Forward Guidance and Outlook:

• Anticipated average fee rates for Q1 between 41 to 42 basis points, with expectations of 43 to 45 basis points beyond Q1.
• Early signs of improved net flows in January, with the best sales levels since June and positive fixed income net flows.
• Keystone National is expected to close in Q1, which may enhance growth opportunities in private credit.

4. Bad News, Challenges, or Points of Concern:

• The quality-oriented equity strategies, representing half of AUM, faced significant headwinds, leading to increased net outflows and underperformance relative to momentum-driven stocks.
• The overall market environment remains challenging, with institutional redemptions exceeding new wins and retail funds continuing to face headwinds.
• The decline in AUM and earnings reflects the ongoing struggles in the equity market, particularly for quality-focused strategies.

5. Notable Q&A Insights:

• Management acknowledged the fee rate compression due to discrete expenses and indicated a stable outlook for fee rates moving forward.
• Discussion on diversification strategies highlighted the potential for future M&A, particularly in broadening growth equity footprints and expanding distribution channels.
• Concerns about technology exposure were addressed, noting that the firm is generally underweight in technology, which has affected some quality-oriented strategies.
• Management expressed optimism about leveraging the Keystone acquisition to enhance growth in both retail and institutional channels, emphasizing the differentiated approach of Keystone’s asset-based lending strategy.

Overall, while VRTS faces significant challenges in the current market environment, particularly with quality-oriented equity strategies, the company is actively pursuing strategic initiatives to diversify its offerings and improve its financial performance moving forward.