Virtus Mid-Cap Growth gets new subadviser, tweaks investment strategy

By Toni Weeks

San Diego, Feb. 22 - Virtus Mid-Cap Growth Fund shareholders voted at a meeting on Feb. 21 to change the fund's subadviser to Kayne Anderson Rudnick Investment Management, LLC from the current subadviser, Harris Investment Management, effective Feb. 22.

According to a 497 filing with the Securities and Exchange Commission, the fund's principal investment strategies will also be modified to reflect those used by Kayne.

The fund will invest in a select group of mid-cap growth companies that Kayne believes are undervalued relative to their future growth potential and have a sustainable competitive advantage, strong management, low financial risk and the ability to grow over market cycles.

The subadviser will use a strategy that emphasizes consistently growing, highly profitable, low-debt companies with rising cash flows. If a company meets these criteria, the subadviser will research and analyze that company's management strength, relative competitive position in the industry and financial structure.

The subadviser will also seek to dispose of holdings that, among other things, are the subject of negative developments individually or as an industry and provide funding to upgrade and improve portfolio holdings or meet diversification requirements.

The fund will continue to invest at least 80% of its assets in equity securities of medium capitalization companies that have market capitalizations within the range of the Russell Midcap Growth Index.

As of Dec. 31, the market capitalization range of companies included in the index was $117 million to $20.5 billion.

The previous investment strategy focused on fundamentals, investor interest and valuations employing a quantitative model to identify companies with higher growth rates. The strategy also invested at least 80% of its assets in common stocks that had market capitalizations at the time of purchase within companies included in the Russell Midcap Growth Index.

The portfolio managers will be Doug Foreman and Gregory Toppe, both employees of Kayne.

Hartford-based Virtus Investment Advisers, Inc. serves as the fund's investment adviser.

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