A Bank-Loan Fund With Sights Set on Misrated Securities

Kenneth Oshodi: A well-executed, thorough process and cheap fees make Virtus Seix Floating Rate High Income a solid option among bank-loan funds.

George Goudelias has led the fund since its March 2006 inception and his comanager, Vincent Flanagan, joined him in August 2011. Both maintain sector analyst responsibilities, but they're also supported by seven seasoned high-yield and bank-loan analysts. The team's approach targets securities that it believes are misrated by the ratings agencies and show improvement in their underlying credit metrics. It favors the BB and B tiers of the market, but it also ventures into lower-quality territory. Asset-rich industries like healthcare, energy, and broadcasting are usually among the portfolio's top holdings.

The fund's long-term record is strong, despite some struggles as oil fluctuated in 2014 and 2015. From its March 2006 inception through November 2018, the fund's 4.3% annualized return outpaced two thirds of its distinct bank-loan Morningstar Category peers.

Overall, this fund's experienced and stable team, effective, well-executed process, and affordable expenses support its Morningstar Analyst Rating of Bronze.