Virtus Leans On ETFs For Growth, Adds Emerging Markets Dividend Fund Amid Equity Pressure

Last week, Virtus Investment Partners Inc (NYSE:VRTS) introduced the Virtus Emerging Markets Dividend ETF (NYSE:VEM), an actively managed fund holding dividend-paying companies across developing economies.

The ETF uses AI-driven sentiment analysis alongside a quantitative stock-selection model to identify opportunities tied to the MSCI Emerging Markets Index.

The strategy currently leans toward financials and information technology stocks — Taiwan Semiconductor Manufacturing Co Ltd (NYSE:TSM) is its largest holding — sectors often associated with income generation and structural growth trends in emerging markets. The launch reflects continued demand for income-oriented strategies as investors look beyond developed markets for yield and diversification.

ETF Growth Contrasts With Broader Outflows

The rollout came as Virtus reported financial results for the quarter ended Dec 31, 2025, highlighting mixed business conditions. President and CEO George Aylward said quality-focused equity strategies, representing about half of total assets under management, remained out of favor, contributing to higher net outflows.

Still, ETFs have been a bright spot. ETF assets rose to roughly $5.2 billion, up about $500 million sequentially and 72% year over year, supported by steady net inflows and new product launches. The firm also introduced three actively managed funds during the quarter and expects several additional ETF launches over the next two quarters.

Financial Snapshot and Strategic Moves

Overall assets under management stood near $159 billion at year-end, down from $169 billion in the prior quarter. Net outflows totaled $8.1 billion, driven largely by equity strategies, while total sales declined to $5.3 billion from $6.3 billion previously. Adjusted earnings per share slipped slightly to $6.50 from $6.69, and operating margin edged down to 32.4%.

Beyond ETFs, Virtus is expanding into alternative assets.

The firm announced a pending majority acquisition of private credit manager Keystone National Group and a minority investment in venture growth manager Crescent Cove.

Management expects fee rates to remain in the low-40-basis-point range initially, with potential upside as the Keystone transaction is integrated.

The new emerging-markets dividend ETF underscores Virtus' broader push into actively managed ETFs and alternative strategies, areas the firm sees as critical for offsetting equity outflows and driving future growth.

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