Virtus Investment Partners Navigates Volatile Markets with Resilient Strategies in Q1 2025

The first quarter of 2025 brought mixed signals for asset managers, as market volatility and shifting investor preferences tested even the most seasoned firms. virtus investment partners (VRTX) reported its quarterly results this week, revealing a company navigating these headwinds with a blend of discipline and strategic focus. While assets under management (AUM) dipped slightly, the firm’s long-term performance metrics, product diversification, and balance sheet strength suggest a path toward stability—and perhaps even opportunity—in uncertain times.

AUM Declines, but Flows Stabilize

Virtus’s AUM fell to $167.5 billion as of March 31, 2025, a 4% decline from the end of 2024. The drop was driven by market performance volatility and net outflows of $3.0 billion—a modest improvement from the $4.8 billion in outflows in Q4 2024. However, sales remained steady at $6.2 billion, with institutional sales ($1.5 billion) and retail separate accounts ($1.7 billion) proving resilient. The firm’s focus on stabilizing flows, particularly in its retail separate accounts, is critical as it works to offset institutional redemptions.

Ask Aime: How can Virtus Investment Partners maintain its stability despite market volatility and declining AUM?

Performance: A Shield Against Volatility

Virtus’s investment performance stood out. Over 70% of its equity strategies outperformed benchmarks in Q1, and 74% of equity assets beat benchmarks over a 10-year period—a testament to its active management ethos. Barron’s recently ranked Virtus the #1 fund family for 10-year performance, while its taxable bond offerings placed third in 2024. These rankings underscore the firm’s ability to deliver consistent results, even in turbulent markets.

The rise of ETFs is another bright spot. Assets in these vehicles hit $3.4 billion, with $0.3 billion in net flows, marking a 73% organic growth rate over the past year. This growth aligns with Virtus’s push to diversify its product mix, which now includes preparations for its first interval fund launch—a hybrid structure designed to attract investors seeking liquidity and active management.

Capital Allocation: Prudent and Strategic

Virtus’s capital management continues to reflect its conservative approach. The firm spent $26 million repurchasing shares, reducing outstanding stock by 3% over the past year. Its debt position improved, too: net debt dropped 26% to $100 million, with leverage at just 0.3x EBITDA—a healthy margin of safety. Management also reduced a lingering contingent liability (revenue participation obligations) to $40 million, with most payments now due by Q1 2026.

Operational Challenges and the Road Ahead

Not all metrics were positive. Operating margins dipped to 27.6% (non-GAAP) in Q1, down from 35.1% in Q4, due to seasonal employment costs and lower AUM-driven fees. Yet the firm’s cash reserves grew 9% year-over-year to $135.4 million—a buffer that should support growth initiatives and shareholder returns.

Looking ahead, management remains cautiously optimistic. While Q2 2025 faces “ongoing market uncertainty,” Virtus is leveraging its institutional client relationships, with engagement across six managers and eight strategies. The soft closure of a high-growth mid-cap equity strategy—responsible for $0.7 billion in retail outflows—highlights the need for disciplined risk management, but Virtus insists capacity remains in other mid-cap offerings.

Conclusion: A Steady Hand in Unsteady Markets

Virtus Investment Partners’ Q1 results reveal a company balancing short-term headwinds with long-term ambition. While AUM and net flows remain under pressure, its investment performance, ETF growth, and balance sheet strength provide a solid foundation. The firm’s focus on active management—particularly in downside-protected strategies like high-conviction equity and credit-focused fixed income—aligns with investor demand for stability in volatile markets.

The numbers tell the story: 70% outperformance in equities, 73% organic ETF growth, and a 27.6% operating margin (despite seasonal pressures) signal a company that’s weathering the storm. Even as Virtus navigates selective institutional demand and soft closures in certain products, its disciplined capital allocation and product diversification position it to capitalize on recovery. For investors, Virtus’s Q1 results are a reminder that in an era of market turbulence, consistency—and the right strategy—can be the ultimate differentiators.