Virtus Convertible & Income Fund II

Virtus Convertible & Income Fund II

The fund launched in 2015 as a successor to the original Virtus Convertible & Income Fund, extending the firm's convertible-bond franchise into a semi-liquid interval structure. David Albrycht, CIO of Newfleet Asset Management, a Virtus affiliate, has led the convertible and multi-sector credit teams since the predecessor fund's inception. The strategy draws on Virtus's broader fixed-income platform, which spans investment-grade corporates, bank loans, and structured credit, to construct a portfolio that sits at the intersection of high-yield credit and equity-linked instruments. The fund allocates primarily across convertible bonds, high-yield corporate credit, leveraged loans, and mortgage-backed securities. Convertibles typically form the core, with manager discretion shifting toward straight credit when equity volatility compresses the option value embedded in convertibles. Public filings and portfolio commentaries indicate exposure to names across technology, healthcare, and financials, with a tilt toward mid-cap issuers. The interval structure permits up to 5% of net assets in private or illiquid holdings, a feature absent from their daily-dealing open-end mutual fund counterparts. The fund executes direct purchases and may participate in Rule 144A private placements, though the bulk of trading occurs in publicly issued convertibles and syndicated bank loans. Virtus Investment Partners, the parent, reported total assets under management of $171.4 billion across its affiliated managers as of September 30, 2023 (per Virtus, Q3 2023 earnings release). The firm's multi-boutique model houses Newfleet alongside other specialist managers such as Kayne Anderson Rudnick, Seix Investment Advisors, and Ceredex Value Advisors. No dedicated fund-level asset total is publicly reported for Fund II, but the broader Virtus convertible and income interval fund complex has attracted interest from registered investment advisors and private wealth platforms seeking enhanced yield with quarterly liquidity. George R. Aylward has served as CEO of the parent company since 2008, overseeing an acquisition-driven build-out that expanded the firm's fixed-income capabilities. The interval-fund wrapper stands as the vehicle's structural differentiator. Unlike traditional closed-end funds that trade on exchanges at uncertain premiums or discounts, Fund II offers repurchase offers at net asset value each quarter, typically for 5% of outstanding shares. This construction allows the manager to own more complex credit instruments without marking to market daily, but it also subjects shareholders to potential proration if redemption requests exceed the quarterly cap. That balance—illiquidity tolerance for higher potential income against constrained exit—defines the investor experience and distinguishes it from the broader Virtus convertible mutual fund lineup.