EXPERIENCE.
DISCIPLINE.
RESULTS.
The Newfleet Philosophy
Our cornerstone philosophy emphasizes relative value across the fixed income
market. We seek to achieve consistent excess returns through active sector
rotation combined with disciplined risk management.
EXPERIENCE. DISCIPLINE. RESULTS. Newfleet Asset Management | 1Newfleet Asset Management | 1
Our team’s deep understanding of individual market sectors has built and
sustained the track record of our flagship multi-sector portfolios, as well as our
dedicated sector strategies.
Newfleet Asset Management is a long-tenured team of value investors in fixed income. We manage $13.0 billion* for foundations, endowments, corporations, public funds, multi-employer plans, and mutual funds.
An affiliated manager of Virtus Investment Partners, we are responsible for managing the firm’s fixed income portfolios. As an indication of our success, Virtus was named “Best Taxable Bond Fund Family” for 2012 and 2010 by Barron’s. As pioneers in unconstrained multi-sector fixed income investing, we have steered our flagship portfolio since 1993. That experience is reflected in our dedicated sector strategies, which include high yield bonds, bank loans, emerging markets debt, and municipal securities.
Newfleet
Asset
Management
Whether an individual or an institution, living in retirement or years away from it, conservative or aggressive, most investors regard fixed income as an integral part of their portfolio. But today, “fixed income” is no longer a monolithic category; the market has become increasingly segmented and specialized.
Many investors are unsure how to navigate unpredictable interest rate trends, meet their income goals, and invest in fixed income sectors that behave more like equities than traditional bonds.
A broadly diversified portfolio, by definition, should include exposure to fixed income. To achieve that exposure, it is more clear than ever that investors need experienced, professional fixed income management.
Fixed Income:
A Key
Component
of a
Well-Diversified
Portfolio
EXPERIENCE. DISCIPLINE. RESULTS. Newfleet Asset Management | 3
David L. Albrycht, CFA is Chief Investment Officer of Newfleet. With nearly 30 years of investment experience, Mr. Albrycht has been recognized by the industry as a leading multi-sector fixed income strategist.
Dedicated sector specialists cover the fundamental, technical, and relative value factors affecting their respective sector. Together with Mr. Albrycht, the entire team works to:
u Identify current opportunities in the fixed income universe; u Correctly determine the relative value of each sector; and
u Dynamically allocate the multi-sector portfolios to undervalued areas.
Sector
Specialists
Scrutinize the
Fixed Income
Market
Chief Investment Officer
David L. Albrycht, CFA
Residential Mortgage-Backed Securities and Agency Mortgage-Backed Securities
Andrew Szabo, CFA
Yankees and Foreign Corporates
Daniel Senecal, CFA
Emerging Markets
Stephen Hooker, CFA
Foreign (Dollar/Local FX)
Andrew Sniffin, CFA
Corporate Investment Grade
Eric Hess, CFA
Bank Loans
Kyle Jennings, CFA Francesco Ossino
Municipals
Timothy Heaney, CFA
Taxable Municipals
Lisa Leonard
Corporate High Yield
Jonathan Stanley, CFA
Commercial Mortgage-Backed Securities and Asset-Backed Securities
Nicodemus Rinaldi
The collegial and respectful nature of our interactions allows the best ideas to come to the fore, and be reflected in our portfolios. We align our success with that of our clients through our team approach and our compensation structure.
Because market outperformers among the 14 global fixed income sectors can vary widely from year to year, maintaining a diversified fixed income portfolio with overweights to those sectors offering the best relative value may be beneficial to the fixed income investor.
Our Core
Multi-Sector
Investment
Style
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
12.82 12.07 12.18 11.47 13.74 58.21 20.40 23.81 22.62 7.44
12.73 7.02 11.85 9.01 8.34 44.87 15.12 9.81 15.81 6.15
11.13 5.69 8.15 7.06 6.61 44.86 14.91 7.84 12.50 1.33
8.85 3.01 7.33 6.97 6.48 30.55 9.98 6.36 9.66 0.49
5.60 2.79 5.22 6.90 5.53 28.45 8.27 6.23 9.43 0.23
5.06 2.74 4.81 6.75 5.24 18.56 7.99 6.10 8.84 0.08
4.70 2.61 4.73 5.84 1.78 11.50 7.16 6.02 8.17 -0.31
4.34 2.43 4.55 5.57 -4.11 6.84 6.90 5.52 4.70 -1.30
4.29 1.90 4.46 5.10 -4.82 5.93 6.54 4.98 4.21 -1.41
4.10 1.82 4.33 5.00 -16.68 5.89 5.87 4.79 4.14 -2.00
3.86 1.50 4.21 4.70 -20.52 5.78 5.37 4.18 2.59 -2.02
3.54 1.29 3.08 2.10 -20.97 4.89 3.15 3.46 1.99 -2.61
1.78 0.87 3.04 1.88 -26.16 2.68 2.46 1.82 1.86 -2.75
1.34 -9.17 2.54 1.87 -28.75 -3.57 1.81 1.55 0.98 -6.11
Asset-Backed Agency Debentures Bank Loans Barclays Aggregate Commercial MBS
Corp. High Yield Corp. Investment Grade Emerging Markets Debt Agency MBS
Municipals
Non-U.S. Dollar Taxable Municipals U.S. Treasuries Yankee High Quality Market Leadership Varies Widely from Year to Year
Annual returns in percent. As of 12/31/13. Source: Morningstar and Barclays Live.
Past performance is not indicative of future results.
We manage a suite of multi-sector strategies that strive to provide diversified fixed income exposure while individual sector strategies offer tactical exposure to market segments. This broad product range enables our clients to employ Newfleet as their complete core-satellite fixed income manager.
The table above is presented for informational purposes only and is not meant to represent the performance of any Newfleet or Virtus portfolio. Performance of all cited indexes is calculated on a total-return basis with dividends reinvested. Indexes are unmanaged, their returns do not reflect any fees, expenses, or sales charges, and are not available for direct investment. For index definitions, please see page 9.
EXPERIENCE. DISCIPLINE. RESULTS. Newfleet Asset Management | 5
As opportunistic value investors, we search for relative value across the fixed income market. The ability to allocate tactically among sectors and maneuver quickly as conditions change has been a key contributor to the success of our multi-sector approach.
Our multi-sector strategies represent core fixed income holdings that include exposure to U.S. and international economies, currencies, sectors, and securities. They offer a range of duration and credit exposure.
We Emphasize
Active Sector
Rotation
The expertise gained over decades of multi-sector investing is demonstrated further through our dedicated sector strategies. While the multi-sector strategies reflect the team’s best ideas, given the investment guidelines of each portfolio, the individual strategies express each sector strategist’s views in their purest form.
Our active participation in each fixed income sector allows us to apply that expertise to a growing line-up of dedicated sector strategies.
Distinct
Specialty
Capabilities
Allow Us
to Express
Sector Views
Institutional Strategiesu Floating Rate Bank Loan Strategy u High Yield Strategyu Emerging Markets Debt Strategy u National Municipal Bond Strategy u California Municipal Bond Strategy
Mutual Funds Managed by Newfleet u Virtus Senior Floating Rate Fund u Virtus High Yield Fund
u Virtus Emerging Markets Debt Fund u Virtus Tax-Exempt Bond Fund u Virtus CA Tax-Exempt Bond Fund u Virtus Tactical Allocation Fund
(Fixed Income Allocation)
u Virtus Balanced Fund
(Fixed Income Allocation)
Institutional Strategies
u Multi-Sector Low Duration Core
Strategy
u Multi-Sector Short Duration
Strategy
u Multi-Sector Core Plus Strategy u Multi-Sector Opportunistic Strategy
Mutual Funds Managed by Newfleet u Virtus Low Duration Income Fund u Virtus Multi-Sector Short Term
Bond Fund
u Virtus Bond Fund
u Virtus Multi-Sector Intermediate
Bond Fund
We determine the sector weightings for our multi-sector portfolios through a series of formal and informal meetings at which every team member’s voice is heard. The sector specialists present their views and engage in dialogue with their colleagues. An atmosphere of trust makes team members feel comfortable asking questions and challenging one another.
The ongoing conversation extends beyond the sector specialists and portfolio managers to our analysts and traders. Newer members of the team benefit from the insights of their more experienced colleagues. The team’s ultimate goal is to uncover undervalued opportunities in pursuit of superior long-term returns.
u Sector Review Meeting: Formal monthly meeting during which the entire team of
investment professionals hears presentations from each sector specialist about the fundamental, technical, and relative value factors affecting their space.
u Sector Allocation Meeting: The next day, the team collaborates on the relative
value analysis to determine the allocation of our multi-sector portfolios. The goal is to overweight sectors that represent the best value.
u Portfolio Review Meeting: Ten days later, the portfolio managers update the team
on implementation of the sector recommendations, as well as performance and attribution.
u Daily Team Meeting: Each morning, the team gathers around the trading desk
to discuss news that impacts the market. The traders report on developments such as changes in secondary market inventory or new opportunities to enact the team’s views.
Regular
Collaboration
Differentiates
Our Firm
EXPERIENCE. DISCIPLINE. RESULTS. Newfleet Asset Management | 7
We build our portfolios through rigorous core credit analysis and active portfolio management. Our investment professionals screen individual opportunities using a fundamental approach that emphasizes quantitative and qualitative analysis. We seek broad diversification across industries and issuers in an attempt to limit downside risk.
Making Decisions as a Team
Our collaborative approach extends to issue selection. We conduct regular credit review meetings that allow the team to debate and evaluate each investment idea. We also hold issue-specific meetings for early detection of potentially deteriorating credits or to identify potentially profitable trading opportunities. This results in diversified portfolios with conviction-weighted allocations. Our sell discipline is triggered when an issuer’s credit quality or industry fundamentals weaken, or when we see more attractively valued opportunities elsewhere in the market.
A Proven,
Repeatable
Issue
Selection
Process
DIVERSIFIED PORTFOLIO Credit
Meeting Capital
Structure Analysis Focus on
Relative Value Initial
PERFORMANCE Process
An opportunistic relative value approach that is well thought-out and repeatable.
Leads to
The Newfleet team is deeply invested in the success of our clients and our portfolios. In our culture, each team member constantly seeks better ideas and new ways to innovate. We never settle for “good enough.” This is demonstrated in the tenure of the team, as well as our long-term performance results. We are committed to achieving the goals of our clients and our team.
Investing with
Newfleet
“
The way we work together elevates
everybody’s game. We’ve built this
team by design and by invitation.
”
David L. Albrycht, CFA President and Chief Investment Officer, Newfleet Asset Management
People
An experienced group that works well together and has years of
continuity as a team.
INDEX DEFINITIONS:
Asset Backed: Barclays ABS 3-5 Year Index has three subsectors: credit and charge cards, autos, and utilities. The index includes pass-through, bullet, and controlled amortization structures. The ABS Index includes only the senior class of each ABS issue and the ERISA-eligible B and C tranche. The issues must be fixed rate, investment grade, and have an average life of three to five years.
Agency Debentures: Barclays U.S. Agency 1-3 Year Index includes native currency agency debentures from issuers such as Fannie Mae, Freddie Mac, and Federal Home Loan Bank with a term of 1 to 3 years. It is a subcomponent of the Government-Related Index (which also includes non-native currency agency bonds, sovereigns, supranationals, and local authority debt) and the U.S. Government Index (which also includes U.S. Treasury debt). The index includes callable and non-callable agency securities that are publicly issued by U.S. government agencies, quasi-federal corporations, and corporate or foreign debt guaranteed by the U.S. government (such as USAID securities).
Bank Loans: Credit Suisse Leveraged Loan Index tracks the investable market of the U.S. dollar denominated leveraged loan market. It consists of issues rated “5B” or lower, meaning that the highest rated issues included in this index are Moody’s/S&P ratings of Baa1/BB+ or Ba1/BBB+. All loans are funded term loans with a tenor of at least one year and are made by issuers domiciled in developed countries.
Barclays Aggregate: Barclays U.S. Aggregate Bond Index is a broad-based benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS, and CMBS.
Commercial MBS: Barclays CMBS ERISA-Eligible Index is the ERISA-eligible component of the Barclays CMBS Index. This index, which includes investment grade securities that are ERISA eligible under the underwriter’s exemption, is the only CMBS sector that is included in the U.S. Aggregate Index.
Corporate High Yield: Barclays U.S. Corporate High-Yield Index measures the market of USD-denominated, non-investment grade, fixed-rate, taxable corporate bonds. Securities are classified as high yield if the middle rating of Moody’s, Fitch, and S&P is Ba1/BB+/BB+ or below. The index excludes emerging market debt.
Corporate Investment Grade: Barclays U.S. Corporate Intermediate Index is a broad-based benchmark that measures the investment grade, fixed-rate, taxable, corporate bond market with a term of 1 to 10 years. It includes USD-denominated securities publicly issued by U.S. and non-U.S. industrial, utility, and financial issuers that meet specified maturity, liquidity, and quality requirements.
Emerging Markets Debt: Barclays Emerging Markets Bond Index includes fixed- and floating-rate USD-denominated debt from emerging markets in the following regions: Americas, Europe, Middle East, Africa, and Asia. For the index, an emerging market is defined as any country that has a long term foreign currency debt sovereign rating of Baa1/BBB+/BBB+ or below, using the middle rating of Moody’s, S&P, and Fitch. MBS: Barclays U.S. MBS Index covers agency mortgage-backed pass-through securities (both fixed-rate and hybrid ARM) issued by Ginnie Mae (GNMA), Fannie Mae (FNMA), and Freddie Mac (FHLMC). Introduced in 1986, the GNMA, FHLMC, and FNMA fixed-rate indices for 30- and 15-year securities were backdated to January 1976, May 1977, and November 1982, respectively. Balloon securities were added in 1992 and removed on January 1, 2008. 20-year securities were added in July 2000. On April 1, 2007, agency hybrid adjustable-rate mortgage (ARM) pass-through securities were added to the index. Hybrid ARMs are eligible until one year prior to their floating coupon date.
Municipals: Barclays Municipal 3 Year (2-4 Year Maturity) Index is a subindex of the U.S. Municipal Index and covers the 2 to 4 year maturity USD-denominated tax exempt bond market. The index has four main sectors: state and local general obligation bonds, revenue bonds, insured bonds, and prerefunded bonds.
Non-U.S. Dollar: Citi WBIG NonUSD Index is a multi-sector, multi currency index excluding U.S. dollar denominated securities. The WBIG index uses the Citi WGBI (World Global Bond Index), a world government index comprised of 23 countries, as its core while including other fixed income asset classes such as credit.
Taxable Municipals: Barclays Taxable Municipal U.S. Aggregate Eligible Index is a rules-based, market-value weighted index engineered for the long-term taxable bond market. To be included in the index, the bonds must meet the eligibility requirements of the U.S. Aggregate Index. Bonds must be rated investment-grade (Baa3/BBB- or higher) by at least two of the following ratings agencies if all three rate the bond: Moody’s, S&P, Fitch. If only two of the three agencies rate the security, the lower rating is used to determine index eligibility. If only one of the three agencies rates a security, the rating must be investment-grade. They must have an outstanding par value of at least $7 million and be issued as part of a transaction of at least $75 million. The bonds must be fixed rate and must be at least one year from their maturity date. Remarketed issues (unless converted to fixed rate), bonds with floating rates, and derivatives, are excluded from the benchmark.
U.S. Treasuries: Barclays Aggregate Bond Treasury Index consists of the Treasury subset of the Barclays U.S. Aggregate Bond Index, a broad-based benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS, and CMBS. Represents public obligations of the U.S. Treasury with a remaining maturity of one year or more. Yankee High Quality: Barclays Intermediate Yankee Index contains bonds issued by foreign countries and corporations. These bonds are denominated in U.S. dollars, pay interest in U.S. dollars, and trade on U.S. exchanges. To be eligible for this index, the bonds must have a final maturity between one and ten years.
Indexes are unmanaged, their returns do not reflect any fees, expenses, or sales charges, and are not available for direct investment.
More information about
Newfleet’s strategies for
individual and institutional
investors can be found at
www.virtus.com
Newfleet Asset Management, LLC
100 Pearl Street, Hartford, CT 06103
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Not insured by FDIC/NCUSIF or any federal government agency. No bank guarantee. Not a deposit. May lose value.
