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Virtus KAR Small-Cap Growth R6 VRSGX Fund Analysis

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Morningstar’s Analysis VRSGX

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Virtus KAR Small-Cap Growth Reopens to New Investors After 5 Years; Ratings Unchanged

null Tony Thorn

Tony Thorn

Analyst Note

Virtus KAR Small-Cap Growth will reopen to new investors on or about Jan. 29, 2024. Its Pillar ratings and overall Morningstar Medalist Ratings are unchanged. The fund closed to new investors in September 2018 after strong inflows had pushed the strategy’s total assets to nearly $7 billion. Although the closure stopped new assets from coming in, price appreciation of the strategy’s holdings pushed total assets to more than $10 billion in late 2020, a hefty amount for a small-cap equity strategy. In the past three years, however, the mutual fund has had more than $3 billion of outflows, and other vehicles lost assets as well. As of November 2023, total strategy assets stood at roughly $5 billion, with approximately $3 billion in the mutual fund. To their credit, the managers’ process didn’t change during these fluctuations, though the decline in assets has helped them bring down the portfolio’s average market cap as they focus more on small-cap stocks, where they’ve had their greatest success. Virtus currently estimates that it will close the strategy again if total assets hit $7 billion, leaving roughly $2 billion to maneuver.

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