Virtus Investment Partners: A Strategic Analysis of AUM Trends and Market Position as of September 30, 2025

The asset management industry in 2025 is defined by duality: record global assets under management (AUM) of $147 trillion driven by market performance and inflows, yet persistent structural challenges such as fee compression and outflows from active funds, as outlined in Asset management 2025. Virtus Investment Partners, a mid-cap-focused asset manager, finds itself at the intersection of these dynamics. As of September 30, 2025, the firm reported preliminary AUM of $169.3 billion, a 7.8% decline from $183.7 billion in September 2024. This drop reflects broader industry headwinds, yet Virtus' strategic emphasis on ETFs and alternative assets positions it to navigate volatility while capitalizing on evolving investor preferences.

AUM Trends: Navigating Outflows and ETF Momentum

Virtus' AUM trajectory in 2025 reveals a mixed picture. While the firm's total AUM fell sequentially from $170.7 billion in June 2025 to $169.3 billion in September 2025, ETFs emerged as a critical growth engine. Net outflows in U.S. retail funds, institutional accounts, and retail separate accounts were partially offset by ETF inflows, which contributed to a 73% organic growth rate in the ETF segment over the past year, per the Virtus KAR Mid-Cap ETF page. By product type, open-end funds held $55.7 billion, while institutional accounts totaled $55.9 billion (Virtus' preliminary AUM report). Equity assets under management stood at $92.1 billion, but fixed income grew to $39.8 billion, reflecting shifting investor demand for yield (Virtus' preliminary AUM report).

This performance aligns with industry trends. U.S. long-term mutual funds have seen $2.9 trillion in net outflows over the past decade, while ETFs attracted $4.5 trillion, according to Deloitte Insights. Virtus' ETFs, though still a small portion of total AUM (e.g., $3.4 billion in Q1 2025, per the VRTS Q1 2025 transcript), are gaining traction. The firm's active ETFs, such as the Virtus KAR Mid-Cap ETF, emphasize low-turnover strategies and downside protection, appealing to investors seeking active management in a passive-dominated landscape (Virtus' product materials).

Market Position: Resilience Amid Convergence

Virtus' market position is shaped by its ability to adapt to the "great convergence" of traditional and alternative asset management (McKinsey's Asset management 2025). The firm's mid-cap strategies, which target companies with strong balance sheets and durable competitive advantages, have outperformed benchmarks: 74% of equity strategies and 69% of fixed-income strategies beat their benchmarks over 10 years (VRTS Q1 2025 transcript). This performance is critical in an environment where investors increasingly demand alpha generation to justify active management fees.

However, Virtus faces challenges. The firm's AUM decline in 2025 mirrors industry-wide struggles with fee compression. For instance, investment management fees fell 7% year-to-date due to lower average AUM and a shift toward lower-fee fixed-income assets (VRTS Q1 2025 transcript). This mirrors broader pressure on traditional managers, as investors migrate to passive strategies and discount providers like Vanguard erode revenue yields (McKinsey's analysis).

Historical context from 2022 to 2025 reveals additional insights into Virtus' resilience. Despite a 13% sequential decline in operating income to $78 million in Q2 2022 (Virtus product and financial disclosures), the firm maintained a disciplined approach to capital management. Share buybacks increased to $40 million in Q2 2022, reducing shares outstanding by 4.9% over the past year (industry analysis). This counters concerns about fee compression, as the firm's operating margin remained stable at 39.2% in Q2 2022 (Virtus disclosures). Meanwhile, employment expenses rose to 47.8% of revenues in Q3 2022 (VRTS Q1 2025 transcript), reflecting ongoing cost pressures, yet the company's focus on global distribution and technology investments (Virtus' preliminary AUM report) suggests a long-term strategy to offset these challenges.

Strategic Initiatives: ETF Expansion and Alternative Assets

To counter these pressures, Virtus has prioritized ETF innovation and alternative asset classes. The firm plans to expand its active ETF lineup, leveraging its multi-boutique model to differentiate offerings, according to a SWOT analysis. For example, its Q2 2025 results highlighted $5.6 billion in total sales, with ETF inflows partially offsetting $3.9 billion in net outflows from equity strategies (Virtus' preliminary AUM report). Additionally, Virtus is deepening its focus on private credit-a sector projected to reach $1.4 trillion in fee-earning AUM by 2025 (McKinsey's Asset management 2025). This aligns with industry forecasts of $6–$10.5 trillion in "money in motion" as public and private investing converge (McKinsey's analysis).

International expansion also figures prominently in Virtus' strategy. The firm aims to establish a presence in markets like London and Singapore, targeting institutional clients and leveraging distribution partnerships with global banks (SWOT analysis). Such moves could diversify revenue streams and mitigate U.S.-centric risks.

Growth Potential: Balancing Risks and Opportunities

Virtus' growth potential hinges on its ability to scale ETF assets while maintaining fee competitiveness. While ETFs accounted for only $3.4 billion of AUM in Q1 2025 (VRTS Q1 2025 transcript), their 73% organic growth rate suggests untapped potential. However, the firm must address client retention challenges: AUM fell 4.3% in Q1 2025 due to outflows in traditional segments (VRTS Q1 2025 transcript). Strengthening distribution relationships in U.S. wealth channels and enhancing ETF product offerings could mitigate this risk.

Technological advancements further bolster Virtus' prospects. Innovations in digital distribution and real-time portfolio disclosures-key features of ETFs-position the firm to attract tech-savvy investors (Deloitte Insights). Yet, the firm must balance innovation with cost management, as rising operational expenses threaten margins (McKinsey's Asset management 2025).

Conclusion

Virtus Investment Partners stands at a pivotal juncture. Its AUM decline in 2025 underscores the challenges of an industry grappling with fee compression and passive investing dominance. However, the firm's strategic focus on ETFs, alternative assets, and international expansion offers a clear path to resilience. By leveraging its active management expertise and adapting to structural shifts, Virtus can transform headwinds into opportunities in the evolving asset management landscape.