Virtus Total Return Fund Stock Price, News & Analysis

Virtus Total Return Fund Inc. (NYSE: ZTR) is a diversified closed-end management investment company. According to the fund’s disclosures, its primary investment objective is capital appreciation, with income as a secondary objective. The fund describes itself as a diversified closed-end fund and a diversified management investment company, indicating that it invests in a mix of securities rather than concentrating in a single issuer or strategy.

The fund states that it seeks to meet its objectives through a balance of equity and fixed income investments. As a closed-end fund, its shares trade on the New York Stock Exchange under the ticker symbol ZTR, and the market price of its shares may trade at a premium or discount to the fund’s net asset value (NAV). The fund notes that an investment in the fund is subject to risk, including the risk of possible loss of principal, and that its shares may be worth less upon their sale than what an investor paid for them.

Investment objectives and approach

Virtus Total Return Fund Inc. emphasizes capital appreciation as its main objective, with income as a secondary goal. The fund indicates that it uses a combination of equity and fixed income securities in an effort to pursue these objectives. The fund also references a Managed Distribution Plan, under which it seeks to maintain a consistent distribution level that may be paid from net investment income, realized capital gains, or a combination of these sources. The fund explains that if aggregate net investment income and net realized capital gains are less than the distribution level, the difference may be distributed from the fund’s assets and may represent a return of capital.

The fund repeatedly cautions that shareholders should not draw conclusions about investment performance from the amount of any distribution or from the terms of the Managed Distribution Plan. It explains that a return of capital may occur when some or all of the money that an investor originally invested in the fund is paid back to that investor, and that such a return of capital does not necessarily reflect the fund’s investment performance and should not be confused with yield or income.

Adviser and subadvisers

Virtus Total Return Fund Inc. identifies Virtus Investment Advisers, LLC (or in some disclosures, Virtus Investment Advisers, Inc.) as its investment adviser. Virtus Investment Advisers, LLC is described as a registered investment adviser and an affiliate of Virtus Investment Partners, Inc. The fund also identifies two subadvisers: Duff & Phelps Investment Management Co. and Newfleet Asset Management.

According to the fund’s disclosures, Duff & Phelps Investment Management Co. pursues investment strategies with substantial resources and experience, and has managed investment portfolios for more than 35 years. Duff & Phelps is described as having expertise in areas such as global listed infrastructure, global listed real estate, clean energy, and diversified real assets, implemented in institutional separate accounts and open- and closed-end funds.

Newfleet Asset Management is described as providing fixed income portfolio management in multiple strategies. The disclosures state that the Newfleet Multi-Sector Strategies team that manages Virtus Total Return Fund Inc. uses active sector rotation and disciplined risk management in portfolio construction, while avoiding interest rate bets and remaining duration neutral relative to each strategy’s stated benchmark. Newfleet Asset Management is described as a division of Virtus Fixed Income Advisers, LLC, which is a registered investment adviser affiliated with Virtus Investment Partners.

Distributions and Managed Distribution Plan

The fund regularly announces monthly distributions and provides Section 19(a) notices that estimate the sources of those distributions. In these notices, Virtus Total Return Fund Inc. breaks down each distribution into components such as net investment income, net realized short-term capital gains, net realized long-term capital gains, and return of capital (or other capital source). The fund emphasizes that these breakdowns are estimates and are not provided for tax reporting purposes. It notes that actual amounts and sources for tax purposes depend on the fund’s investment experience over the fiscal year and may change based on tax regulations.

The fund also provides information about performance and distribution rates based on NAV, including average annual total return on NAV over multi-year periods, an annualized current distribution rate, fiscal year-to-date cumulative total return on NAV, and fiscal year-to-date cumulative distribution rate. The fund clarifies that these performance figures are based on NAV, not market price, and are not intended to represent individual shareholder performance.

Tender offers and share repurchases

Virtus Total Return Fund Inc. has disclosed that it may conduct tender offers to repurchase a portion of its outstanding shares. In its announcements, the fund describes tender offers to acquire up to a specified percentage of its outstanding shares for cash at a price equal to a stated percentage of the fund’s NAV per share as of a particular pricing date. The fund has reported both the commencement of tender offers and preliminary and final results, including the total number of shares tendered, the percentage of outstanding shares accepted, and the proration of accepted shares when offers are oversubscribed.

The fund has also described a conditional tender offer structure in which a tender offer may be triggered if the fund’s average trading discount to NAV exceeds a stated threshold over a defined measurement period. When such conditions were met, the fund announced that it would proceed with a tender offer to repurchase a portion of its outstanding shares at a price equal to a percentage of NAV, net of expenses related to the offer.

Risk disclosures

In its public communications, Virtus Total Return Fund Inc. highlights several key risk considerations. It states that an investment in the fund is subject to risk, including the risk of possible loss of principal, and that the fund’s shares may be worth less upon their sale than the amount originally paid by an investor. The fund notes that shares of closed-end funds may trade at a premium or discount to their NAV, and that this trading behavior can affect the market value of an investor’s holdings relative to the underlying NAV.

The fund directs investors to its annual report for more detailed information about its investment objective and risks. It explains that a copy of the most recent annual report can be obtained free of charge by contacting shareholder services or accessing the closed-end funds section of Virtus-related materials. The fund also emphasizes that investing involves risk and that it is possible to lose money on an investment in the fund.

Regulatory and tax information

Virtus Total Return Fund Inc. notes that its tender offers are conducted pursuant to a tender offer statement on Schedule TO, which includes an offer to purchase, a letter of transmittal, and related documents filed with the U.S. Securities and Exchange Commission (SEC). The fund indicates that these materials are made available through SEC channels and that shareholders should review them carefully, including any amendments or supplements, because they contain important information about the terms and conditions of each tender offer.

For distributions, the fund explains that Section 19(a) notices are estimates and are not intended for tax reporting. It states that shareholders will receive a Form 1099-DIV for the calendar year, which will specify what distributions should be reported for federal income tax purposes. The fund underscores that the amounts and sources of distributions for tax purposes may differ from the estimates provided in the Section 19(a) notices.

Summary of ZTR as a listed closed-end fund

Overall, Virtus Total Return Fund Inc. (ZTR) is presented as a diversified closed-end fund listed on the New York Stock Exchange, with a stated focus on capital appreciation and income, and a strategy that combines equity and fixed income investments. The fund is advised by Virtus Investment Advisers and subadvised by Duff & Phelps Investment Management Co. and Newfleet Asset Management. Its public disclosures place particular emphasis on managed distributions, the possibility of return of capital, the use of tender offers to repurchase shares under certain conditions, and the risks associated with investing in closed-end funds whose shares may trade at premiums or discounts to NAV.