false2020FY0000883237us-gaap:AccountingStandardsUpdate201601MemberP4YP3YP3YP0Yus-gaap:OtherAssetsus-gaap:OtherLiabilitiesP1Y00008832372020-01-012020-12-31iso4217:USD00008832372020-06-30xbrli:shares00008832372021-02-120000883237vrts:ConsolidatedEntityExcludingVariableInterestEntitiesVIEandVotingInterestEntitiesVOEMember2020-12-310000883237vrts:ConsolidatedEntityExcludingVariableInterestEntitiesVIEandVotingInterestEntitiesVOEMember2019-12-3100008832372020-12-3100008832372019-12-310000883237vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMember2020-12-310000883237vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMember2019-12-31iso4217:USDxbrli:shares0000883237us-gaap:SeriesDPreferredStockMember2019-12-310000883237us-gaap:SeriesDPreferredStockMember2020-12-310000883237vrts:InvestmentManagementFeesMember2020-01-012020-12-310000883237vrts:InvestmentManagementFeesMember2019-01-012019-12-310000883237vrts:InvestmentManagementFeesMember2018-01-012018-12-310000883237vrts:DistributionAndServiceFeesMember2020-01-012020-12-310000883237vrts:DistributionAndServiceFeesMember2019-01-012019-12-310000883237vrts:DistributionAndServiceFeesMember2018-01-012018-12-310000883237vrts:AdministrationAndShareholderServiceFeesMember2020-01-012020-12-310000883237vrts:AdministrationAndShareholderServiceFeesMember2019-01-012019-12-310000883237vrts:AdministrationAndShareholderServiceFeesMember2018-01-012018-12-310000883237vrts:OtherIncomeAndfeesMember2020-01-012020-12-310000883237vrts:OtherIncomeAndfeesMember2019-01-012019-12-310000883237vrts:OtherIncomeAndfeesMember2018-01-012018-12-3100008832372019-01-012019-12-3100008832372018-01-012018-12-310000883237vrts:ConsolidatedEntityExcludingVariableInterestEntitiesVIEandVotingInterestEntitiesVOEMember2020-01-012020-12-310000883237vrts:ConsolidatedEntityExcludingVariableInterestEntitiesVIEandVotingInterestEntitiesVOEMember2019-01-012019-12-310000883237vrts:ConsolidatedEntityExcludingVariableInterestEntitiesVIEandVotingInterestEntitiesVOEMember2018-01-012018-12-310000883237vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMember2020-01-012020-12-310000883237vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMember2019-01-012019-12-310000883237vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMember2018-01-012018-12-310000883237us-gaap:CommonStockMember2017-12-310000883237us-gaap:PreferredStockMember2017-12-310000883237us-gaap:AdditionalPaidInCapitalMember2017-12-310000883237us-gaap:RetainedEarningsMember2017-12-310000883237us-gaap:AccumulatedOtherComprehensiveIncomeMember2017-12-310000883237us-gaap:TreasuryStockMember2017-12-310000883237us-gaap:ParentMember2017-12-310000883237us-gaap:NoncontrollingInterestMember2017-12-3100008832372017-12-3100008832372017-01-012017-12-310000883237srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:RetainedEarningsMember2017-12-310000883237us-gaap:AccumulatedOtherComprehensiveIncomeMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2017-12-310000883237srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2017-12-310000883237us-gaap:RetainedEarningsMember2018-01-012018-12-310000883237us-gaap:ParentMember2018-01-012018-12-310000883237us-gaap:NoncontrollingInterestMember2018-01-012018-12-310000883237us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-01-012018-12-310000883237us-gaap:AdditionalPaidInCapitalMember2018-01-012018-12-310000883237us-gaap:CommonStockMember2018-01-012018-12-310000883237us-gaap:TreasuryStockMember2018-01-012018-12-310000883237us-gaap:CommonStockMember2018-12-310000883237us-gaap:PreferredStockMember2018-12-310000883237us-gaap:AdditionalPaidInCapitalMember2018-12-310000883237us-gaap:RetainedEarningsMember2018-12-310000883237us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-12-310000883237us-gaap:TreasuryStockMember2018-12-310000883237us-gaap:ParentMember2018-12-310000883237us-gaap:NoncontrollingInterestMember2018-12-3100008832372018-12-310000883237us-gaap:RetainedEarningsMember2019-01-012019-12-310000883237us-gaap:ParentMember2019-01-012019-12-310000883237us-gaap:NoncontrollingInterestMember2019-01-012019-12-310000883237us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-01-012019-12-310000883237us-gaap:AdditionalPaidInCapitalMember2019-01-012019-12-310000883237us-gaap:CommonStockMember2019-01-012019-12-310000883237us-gaap:TreasuryStockMember2019-01-012019-12-310000883237us-gaap:CommonStockMember2019-12-310000883237us-gaap:PreferredStockMember2019-12-310000883237us-gaap:AdditionalPaidInCapitalMember2019-12-310000883237us-gaap:RetainedEarningsMember2019-12-310000883237us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310000883237us-gaap:TreasuryStockMember2019-12-310000883237us-gaap:ParentMember2019-12-310000883237us-gaap:NoncontrollingInterestMember2019-12-310000883237us-gaap:RetainedEarningsMember2020-01-012020-12-310000883237us-gaap:ParentMember2020-01-012020-12-310000883237us-gaap:NoncontrollingInterestMember2020-01-012020-12-310000883237us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-12-310000883237us-gaap:AdditionalPaidInCapitalMember2020-01-012020-12-310000883237us-gaap:CommonStockMember2020-01-012020-12-310000883237us-gaap:SeriesDPreferredStockMemberus-gaap:PreferredStockMember2020-01-012020-12-310000883237us-gaap:TreasuryStockMember2020-01-012020-12-310000883237us-gaap:CommonStockMember2020-12-310000883237us-gaap:PreferredStockMember2020-12-310000883237us-gaap:AdditionalPaidInCapitalMember2020-12-310000883237us-gaap:RetainedEarningsMember2020-12-310000883237us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310000883237us-gaap:TreasuryStockMember2020-12-310000883237us-gaap:ParentMember2020-12-310000883237us-gaap:NoncontrollingInterestMember2020-12-310000883237srt:MinimumMember2020-01-012020-12-310000883237srt:MaximumMember2020-01-012020-12-31vrts:Segment0000883237vrts:FurnitureAndOfficeEquipmentMembersrt:MinimumMember2020-01-012020-12-310000883237srt:MaximumMembervrts:FurnitureAndOfficeEquipmentMember2020-01-012020-12-310000883237vrts:ComputerEquipmentAndSoftwareMembersrt:MinimumMember2020-01-012020-12-310000883237srt:MaximumMembervrts:ComputerEquipmentAndSoftwareMember2020-01-012020-12-310000883237vrts:OpenEndFundsMember2020-01-012020-12-310000883237vrts:OpenEndFundsMember2019-01-012019-12-310000883237vrts:OpenEndFundsMember2018-01-012018-12-310000883237vrts:ClosedEndFundsMember2020-01-012020-12-310000883237vrts:ClosedEndFundsMember2019-01-012019-12-310000883237vrts:ClosedEndFundsMember2018-01-012018-12-310000883237vrts:RetailSeparateAccountsMember2020-01-012020-12-310000883237vrts:RetailSeparateAccountsMember2019-01-012019-12-310000883237vrts:RetailSeparateAccountsMember2018-01-012018-12-310000883237vrts:InstitutionalAccountsMember2020-01-012020-12-310000883237vrts:InstitutionalAccountsMember2019-01-012019-12-310000883237vrts:InstitutionalAccountsMember2018-01-012018-12-310000883237vrts:StructuredProductsMember2020-01-012020-12-310000883237vrts:StructuredProductsMember2019-01-012019-12-310000883237vrts:StructuredProductsMember2018-01-012018-12-310000883237vrts:OtherProductsMember2020-01-012020-12-310000883237vrts:OtherProductsMember2019-01-012019-12-310000883237vrts:OtherProductsMember2018-01-012018-12-310000883237srt:ParentCompanyMember2020-12-310000883237srt:ParentCompanyMember2019-12-310000883237vrts:SponsoredFundsMember2020-12-310000883237us-gaap:EquitySecuritiesMember2020-12-310000883237vrts:TradingDebtSecuritiesMember2020-12-310000883237vrts:SponsoredFundsMember2019-12-310000883237us-gaap:EquitySecuritiesMember2019-12-310000883237vrts:TradingDebtSecuritiesMember2019-12-310000883237vrts:CommitmentToProvideCapitalMember2020-12-310000883237us-gaap:FairValueInputsLevel1Member2020-12-310000883237us-gaap:FairValueInputsLevel2Member2020-12-310000883237us-gaap:FairValueInputsLevel3Member2020-12-310000883237vrts:SponsoredFundsMemberus-gaap:FairValueInputsLevel1Member2020-12-310000883237vrts:SponsoredFundsMemberus-gaap:FairValueInputsLevel2Member2020-12-310000883237vrts:SponsoredFundsMemberus-gaap:FairValueInputsLevel3Member2020-12-310000883237us-gaap:FairValueInputsLevel1Memberus-gaap:EquitySecuritiesMember2020-12-310000883237us-gaap:FairValueInputsLevel2Memberus-gaap:EquitySecuritiesMember2020-12-310000883237us-gaap:EquitySecuritiesMemberus-gaap:FairValueInputsLevel3Member2020-12-310000883237us-gaap:FairValueInputsLevel1Membervrts:TradingDebtSecuritiesMember2020-12-310000883237us-gaap:FairValueInputsLevel2Membervrts:TradingDebtSecuritiesMember2020-12-310000883237us-gaap:FairValueInputsLevel3Membervrts:TradingDebtSecuritiesMember2020-12-310000883237us-gaap:FairValueInputsLevel1Membervrts:NonqualifiedRetirementPlanAssetsMember2020-12-310000883237us-gaap:FairValueInputsLevel2Membervrts:NonqualifiedRetirementPlanAssetsMember2020-12-310000883237vrts:NonqualifiedRetirementPlanAssetsMemberus-gaap:FairValueInputsLevel3Member2020-12-310000883237vrts:NonqualifiedRetirementPlanAssetsMember2020-12-310000883237us-gaap:FairValueInputsLevel1Member2019-12-310000883237us-gaap:FairValueInputsLevel2Member2019-12-310000883237us-gaap:FairValueInputsLevel3Member2019-12-310000883237vrts:SponsoredFundsMemberus-gaap:FairValueInputsLevel1Member2019-12-310000883237vrts:SponsoredFundsMemberus-gaap:FairValueInputsLevel2Member2019-12-310000883237vrts:SponsoredFundsMemberus-gaap:FairValueInputsLevel3Member2019-12-310000883237us-gaap:FairValueInputsLevel1Memberus-gaap:EquitySecuritiesMember2019-12-310000883237us-gaap:FairValueInputsLevel2Memberus-gaap:EquitySecuritiesMember2019-12-310000883237us-gaap:EquitySecuritiesMemberus-gaap:FairValueInputsLevel3Member2019-12-310000883237us-gaap:FairValueInputsLevel1Membervrts:TradingDebtSecuritiesMember2019-12-310000883237us-gaap:FairValueInputsLevel2Membervrts:TradingDebtSecuritiesMember2019-12-310000883237us-gaap:FairValueInputsLevel3Membervrts:TradingDebtSecuritiesMember2019-12-310000883237us-gaap:FairValueInputsLevel1Membervrts:NonqualifiedRetirementPlanAssetsMember2019-12-310000883237us-gaap:FairValueInputsLevel2Membervrts:NonqualifiedRetirementPlanAssetsMember2019-12-310000883237vrts:NonqualifiedRetirementPlanAssetsMemberus-gaap:FairValueInputsLevel3Member2019-12-310000883237vrts:NonqualifiedRetirementPlanAssetsMember2019-12-310000883237us-gaap:InvestmentsMember2018-12-310000883237us-gaap:InvestmentsMember2019-01-012019-12-310000883237us-gaap:InvestmentsMember2019-12-310000883237srt:MinimumMember2020-12-310000883237srt:MaximumMember2020-12-31xbrli:pure0000883237us-gaap:DomesticCountryMember2020-12-310000883237us-gaap:StateAndLocalJurisdictionMember2020-12-310000883237vrts:CreditFacility2017Membervrts:TermLoanMember2017-06-010000883237vrts:TermLoanMembervrts:CreditAgreementMember2020-01-012020-12-310000883237us-gaap:RevolvingCreditFacilityMembervrts:CreditFacility2017Member2017-06-010000883237us-gaap:RevolvingCreditFacilityMembervrts:CreditAgreementMember2020-01-012020-12-310000883237vrts:CreditFacility2017Membervrts:TermLoanMember2020-12-310000883237us-gaap:RevolvingCreditFacilityMembervrts:CreditAgreementMember2020-12-310000883237us-gaap:RevolvingCreditFacilityMembervrts:CreditFacility2017Memberus-gaap:LondonInterbankOfferedRateLIBORMember2018-02-152018-02-150000883237vrts:CreditFacility2017Memberus-gaap:LondonInterbankOfferedRateLIBORMembervrts:TermLoanMember2018-02-152018-02-150000883237vrts:CreditFacility2017Memberus-gaap:LondonInterbankOfferedRateLIBORMember2018-02-152018-02-150000883237vrts:CreditFacility2017Memberus-gaap:BaseRateMember2018-02-152018-02-150000883237vrts:CreditFacility2017Memberus-gaap:LondonInterbankOfferedRateLIBORMember2018-02-150000883237vrts:AdditionalTermLoan2018Membervrts:TermLoanMember2018-02-150000883237vrts:CreditFacility2017Membervrts:TermLoanMember2020-01-012020-12-310000883237vrts:CreditFacility2017Membervrts:LeverageRatioBelow1.00Membervrts:TermLoanMember2020-01-012020-12-310000883237vrts:CreditFacility2017Membervrts:LeverageRatioBelow0.50Membervrts:TermLoanMember2020-01-012020-12-310000883237us-gaap:ConvertiblePreferredStockMember2020-02-030000883237us-gaap:CommonStockMember2020-02-032020-02-030000883237us-gaap:ConvertiblePreferredStockMember2020-02-032020-02-03vrts:day00008832372020-02-032020-02-0300008832372020-01-012020-03-3100008832372020-04-012020-06-3000008832372020-07-012020-09-3000008832372020-10-012020-12-3100008832372020-05-310000883237us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2019-12-310000883237us-gaap:AccumulatedTranslationAdjustmentMember2019-12-310000883237us-gaap:AccumulatedTranslationAdjustmentMember2020-01-012020-12-310000883237us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2020-01-012020-12-310000883237us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2020-12-310000883237us-gaap:AccumulatedTranslationAdjustmentMember2020-12-310000883237us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2018-12-310000883237us-gaap:AccumulatedTranslationAdjustmentMember2018-12-310000883237us-gaap:AccumulatedTranslationAdjustmentMember2019-01-012019-12-310000883237us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2019-01-012019-12-310000883237us-gaap:CommonStockMemberus-gaap:RestrictedStockUnitsRSUMember2020-01-012020-12-310000883237srt:MinimumMemberus-gaap:RestrictedStockUnitsRSUMember2020-01-012020-12-310000883237srt:MaximumMemberus-gaap:RestrictedStockUnitsRSUMember2020-01-012020-12-310000883237us-gaap:RestrictedStockUnitsRSUMember2019-12-310000883237us-gaap:RestrictedStockUnitsRSUMember2020-01-012020-12-310000883237us-gaap:RestrictedStockUnitsRSUMember2020-12-310000883237us-gaap:RestrictedStockUnitsRSUMember2019-01-012019-12-310000883237us-gaap:RestrictedStockUnitsRSUMember2018-01-012018-12-310000883237vrts:RestrictedStockUnitsRSUsPerformanceBasedMember2020-01-012020-12-310000883237vrts:RestrictedStockUnitsRSUsPerformanceBasedMember2019-01-012019-12-310000883237us-gaap:EmployeeStockOptionMember2020-01-012020-12-310000883237vrts:RestrictedStockUnitsRSUsandStockOptionsMember2020-01-012020-12-310000883237vrts:RestrictedStockUnitsRSUsandStockOptionsMember2019-01-012019-12-310000883237vrts:RestrictedStockUnitsRSUsandStockOptionsMember2018-01-012018-12-310000883237us-gaap:SalesRevenueNetMembervrts:VirtusSmallCapGrowthFundMember2020-01-012020-12-310000883237vrts:VirtusMultiSectorShortTermBondFundMemberus-gaap:SalesRevenueNetMember2018-01-012018-12-310000883237us-gaap:SalesRevenueNetMembervrts:VirtusEmergingMarketsOpportunitiesFundMember2018-01-012018-12-310000883237srt:AffiliatedEntityMember2019-12-310000883237srt:AffiliatedEntityMember2020-01-012020-12-310000883237vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMemberus-gaap:PortionAtOtherThanFairValueFairValueDisclosureMember2020-01-012020-12-310000883237srt:AffiliatedEntityMemberus-gaap:PortionAtOtherThanFairValueFairValueDisclosureMember2020-01-012020-12-310000883237us-gaap:PortionAtOtherThanFairValueFairValueDisclosureMember2020-01-012020-12-310000883237srt:AffiliatedEntityMember2020-12-310000883237vrts:VotingInterestEntityVOEMember2020-12-310000883237vrts:VariableInterestEntityPrimaryBeneficiaryCollateralizedLoanObligationMember2020-12-310000883237vrts:VariableInterestEntityPrimaryBeneficiaryOtherMember2020-12-310000883237vrts:VotingInterestEntityVOEMember2019-12-310000883237vrts:VariableInterestEntityPrimaryBeneficiaryCollateralizedLoanObligationMember2019-12-310000883237vrts:VariableInterestEntityPrimaryBeneficiaryOtherMember2019-12-31vrts:collateralizedLoanObligation0000883237us-gaap:LondonInterbankOfferedRateLIBORMembervrts:VariableInterestEntityPrimaryBeneficiaryCollateralizedLoanObligationMember2020-01-012020-12-310000883237us-gaap:SeniorNotesMembervrts:VariableInterestEntityPrimaryBeneficiaryCollateralizedLoanObligationMember2020-12-310000883237vrts:SubordinatedNotesNewfleetCLO20161Membervrts:VariableInterestEntityPrimaryBeneficiaryCollateralizedLoanObligationMember2020-12-310000883237vrts:SeniorSecuredFloatingRateNotesNewfleetCLO20161Memberus-gaap:SeniorNotesMembervrts:VariableInterestEntityPrimaryBeneficiaryCollateralizedLoanObligationMember2020-12-310000883237vrts:SubordinatedNotesNewfleetCLO20161Memberus-gaap:SubordinatedDebtMembervrts:VariableInterestEntityPrimaryBeneficiaryCollateralizedLoanObligationMember2020-12-310000883237srt:MinimumMemberus-gaap:LondonInterbankOfferedRateLIBORMembervrts:VariableInterestEntityPrimaryBeneficiaryCollateralizedLoanObligationMember2020-01-012020-12-310000883237srt:MaximumMemberus-gaap:LondonInterbankOfferedRateLIBORMembervrts:VariableInterestEntityPrimaryBeneficiaryCollateralizedLoanObligationMember2020-01-012020-12-310000883237vrts:VariableInterestEntityPrimaryBeneficiaryCollateralizedLoanObligationMember2020-01-012020-12-310000883237vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2020-12-310000883237vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2020-12-310000883237vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2020-12-310000883237vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310000883237vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberus-gaap:DebtSecuritiesMember2020-12-310000883237vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:DebtSecuritiesMember2020-12-310000883237vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:DebtSecuritiesMemberus-gaap:FairValueInputsLevel3Member2020-12-310000883237vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:DebtSecuritiesMember2020-12-310000883237vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberus-gaap:EquitySecuritiesMember2020-12-310000883237vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:EquitySecuritiesMember2020-12-310000883237vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:EquitySecuritiesMemberus-gaap:FairValueInputsLevel3Member2020-12-310000883237vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:EquitySecuritiesMember2020-12-310000883237vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2019-12-310000883237vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2019-12-310000883237vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2019-12-310000883237vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMemberus-gaap:FairValueMeasurementsRecurringMember2019-12-310000883237vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberus-gaap:DebtSecuritiesMember2019-12-310000883237vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:DebtSecuritiesMember2019-12-310000883237vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:DebtSecuritiesMemberus-gaap:FairValueInputsLevel3Member2019-12-310000883237vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:DebtSecuritiesMember2019-12-310000883237vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberus-gaap:EquitySecuritiesMember2019-12-310000883237vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:EquitySecuritiesMember2019-12-310000883237vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:EquitySecuritiesMemberus-gaap:FairValueInputsLevel3Member2019-12-310000883237vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:EquitySecuritiesMember2019-12-310000883237vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMemberus-gaap:DebtSecuritiesMember2019-12-310000883237vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMemberus-gaap:DebtSecuritiesMember2018-12-310000883237vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMemberus-gaap:DebtSecuritiesMember2020-01-012020-12-310000883237vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMemberus-gaap:DebtSecuritiesMember2019-01-012019-12-310000883237vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMemberus-gaap:DebtSecuritiesMember2020-12-310000883237us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember2020-12-310000883237us-gaap:SubsequentEventMember2021-02-242021-02-2400008832372019-10-012019-12-3100008832372019-07-012019-09-3000008832372019-04-012019-06-3000008832372019-01-012019-03-31
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2020
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                     to                     
Commission file number 1-10994
vrts-20201231_g1.jpg
 VIRTUS INVESTMENT PARTNERS, INC.
(Exact name of registrant as specified in its charter)

Delaware26-3962811
State or other jurisdiction of
incorporation or organization
(I.R.S. Employer
Identification No.)
One Financial Plaza, Hartford, CT 06103
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code:
(800) 248-7971
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $.01 par valueVRTSThe NASDAQ Stock Market LLC
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    x Yes    ¨  No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    ¨  Yes    x  No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    x  Yes    ¨  No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    x  Yes    ¨  No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer

x
Accelerated filer¨
Non-accelerated filer

¨
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨  
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).      Yes    x  No
The aggregate market value of the registrant's voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold (based on the closing share price as quoted on the NASDAQ Global Market) as of the last business day of the registrant's most recently completed second fiscal quarter was approximately $835,000,000. For purposes of this calculation, shares of common stock held or controlled by executive officers and directors of the registrant have been treated as shares held by affiliates.
There were 7,583,557 shares of the registrant's common stock outstanding on February 12, 2021.

DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's proxy statement that will be filed with the SEC in connection with the 2021 Annual Meeting of Shareholders are incorporated by reference into Part III of this Form 10-K.


Table of Contents
Virtus Investment Partners, Inc.
Annual Report on Form 10-K for the Fiscal Year Ended December 31, 2020
 
  Page
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Item 15.
Item 16.

"We," "us," "our," the "Company," and "Virtus" as used in this Annual Report on Form 10-K (the "Annual Report"), refer to Virtus Investment Partners, Inc., a Delaware corporation, and its subsidiaries.



Table of Contents
PART I
 
Item 1.Business.
Organization
Virtus Investment Partners, Inc. (the "Company"), a Delaware corporation, commenced operations on November 1, 1995 and became an independent publicly traded company on December 31, 2008 as a result of the distribution by Phoenix Life Insurance Company ("Phoenix"), the Company's former parent, of 100% of Virtus common stock to Phoenix stockholders in a spin-off transaction.
Our Business
We provide investment management and related services to individuals and institutions. We use a multi-manager, multi-style approach, offering investment strategies from affiliated managers, each having its own distinct investment style, autonomous investment process and individual brand. By offering a broad array of products, we believe we can appeal to a greater number of investors and have offerings across market cycles and through changes in investor preferences. Our earnings are primarily driven by asset-based fees charged for services relating to these various products, including investment management, fund administration, distribution and shareholder services.

We offer investment strategies for individual and institutional investors in different product structures and through multiple distribution channels. Our investment strategies are available in a diverse range of styles and disciplines, managed by a collection of differentiated investment managers. We have offerings in various asset classes (equity, fixed income and alternative), geographies (domestic, international and emerging) market capitalizations (large, mid and small), styles (growth, core and value) and investment approaches (fundamental, quantitative and thematic). Our retail products include open-end funds and exchange traded funds ("ETFs") as well as closed-end funds and retail separate accounts. Our institutional products are offered through separate accounts and pooled or commingled structures to a variety of institutional clients. We also provide subadvisory services to other investment advisers and serve as the collateral manager for structured products.

Our Investment Managers

We provide investment management services through our affiliated investment managers who are registered under the Investment Advisers Act of 1940, as amended (the "Investment Advisers Act"). The investment managers are responsible for portfolio management activities for our retail, institutional and structured products operating under advisory, subadvisory or collateral management agreements. We provide our affiliated managers with distribution, operational and administrative support, thereby allowing each manager to focus primarily on investment management. We also use the investment management services of select unaffiliated managers to sub-advise certain of our open-end funds and ETFs. We monitor our managers' services by assessing their performance, style and consistency and the discipline with which they apply their investment process.

1

Table of Contents
Our affiliated investment managers and their respective assets under management, products and strategies as of December 31, 2020 were as follows:
ManagerProductsStrategies
Assets
(in billions)
Ceredex Value AdvisorsOpen-end funds and institutional accounts
Value Equity Strategies
large-, mid- and small-cap domestic equities
$8.5 
Duff & Phelps Investment ManagementClosed- and open-end funds and institutional accounts
Income Focused Strategies
global listed infrastructure, domestic, international real estate and energy
$10.6 
Kayne Anderson Rudnick Investment ManagementOpen-end funds, institutional accounts, intermediary-sold managed accounts and private client accounts
Quality-Oriented Equity Strategies
small- to large-cap, including domestic global, international and emerging market strategies
$51.7 
Newfleet Asset ManagementClosed- and open-end funds, ETFs, institutional, private client accounts and structured products
Multi-Sector Fixed Income Strategies
multi-sector, enhanced core strategies and dedicated sector strategies such as bank loans and high yield
$10.0 
Seix Investment AdvisorsOpen-end funds, institutional, ETFs and structured products
Investment Grade and Leveraged Finance Fixed Income Strategies
high yield, bank loans, investment grade taxable, non-taxable and multi-sector strategies
$17.9 
Silvant Capital ManagementOpen-end funds and institutional
Growth Equity Strategies
including large-cap and small-cap
$0.8 
Sustainable Growth AdvisersInstitutional and private client accounts and open-end funds
Global Growth Equity Strategies
large-cap growth strategies, including domestic, global, international and emerging markets
$22.2 

As of December 31, 2020, $10.5 billion in assets under management were managed by unaffiliated managers including an unaffiliated manager in which the Company holds a minority interest.

Our Investment Products
Our assets under management are in open-end funds, closed-end funds, ETFs, retail separate accounts, institutional accounts and structured products.

Assets Under Management by Product as of
December 31, 2020
Fund assets(in billions)
Open-end funds$49.5 
Closed-end funds5.9 
Exchange traded funds0.8 
Retail separate accounts29.8 
Institutional accounts40.6 
Structured products4.1 
Total Long-Term130.7 
Liquidity (1)1.5 
Total Assets Under Management$132.2 
(1)     Represents assets under management in liquidity strategies, including in certain open-end funds and institutional accounts.

2

Table of Contents
Open-End Funds

Our open-end mutual funds are offered in a variety of asset classes (domestic and international equity, taxable and non-taxable fixed income, and alternative investments), market capitalizations (large, mid and small), styles (growth, core and value) and investment approaches (fundamental, quantitative and thematic). Our offshore funds are offered in select investment strategies to non-U.S. investors. Summary information about our open-end funds as of December 31, 2020 were as follows:
Asset ClassNumber of Funds OfferedTotal AssetsAdvisory Fee
Range (1)
(in millions)(%)
Domestic Equity20$23,774 2.15-0.40
Fixed Income2211,317 1.85-0.21
International/Global Equity1512,054 1.20-0.65
Alternatives91,303 1.30-0.55
Multi-Asset21,073 0.55-0.45
Total Open-End Funds68$49,521 

(1)Percentage of average daily net assets. The percentages listed represent the range of management advisory fees paid by the funds, from the highest to the lowest. The range indicated includes the impact of breakpoints at which management advisory fees for certain of the funds in each fund type decrease as assets in the funds increase. Subadvisory fees paid on funds managed by unaffiliated subadvisers are not reflected in the percentages listed.

Closed-End Funds

Our closed-end funds are offered in a variety of asset classes and various strategies such as infrastructure, energy and global multi-sector. We managed the following closed-end funds as of December 31, 2020, each of which is traded on the New York Stock Exchange:

Fund Type/NameTotal AssetsAdvisory
Fee
 
 (in millions)(%) 
Multi-Asset
DNP Select Income Fund Inc.$3,807 0.60-0.50(1)
Virtus Total Return Fund Inc.604 0.70(2)
Alternatives
Duff & Phelps Utility and Infrastructure Fund Inc.716 1.00(1)
Duff & Phelps Select MLP and Midstream Energy Fund Inc.19 1.00(2)
Fixed Income
Duff & Phelps Utility and Corporate Bond Trust Inc.370 0.50(1)
Virtus Global Multi-Sector Income Fund196 0.95(2)
DTF Tax-Free Income, Inc.202 0.50(1)
Total Closed-End Funds$5,914 
 

(1)Percentage of average weekly net assets. A range indicates that the fund has breakpoints at which management advisory fees decrease as assets in the fund increase.
(2)Percentage of average daily net assets of each fund.

3

Table of Contents
Exchange Traded Funds

Our ETFs are offered in a range of actively managed and index-based investment capabilities across multiple asset classes. We managed the following ETFs as of December 31, 2020:
ETF NameTotal AssetsAdvisory
Fee (1)
 (in millions)(%)
Alternative
Virtus InfraCap U.S. Preferred Stock ETF$225 0.140
Virtus Real Asset Income ETF152 0.033
InfraCap MLP ETF147 0.075
InfraCap REIT Preferred ETF59 0.075
Virtus Reaves Utilities ETF30 0.490
Equity
Virtus Terranova U.S. Quality Momentum ETF92 0.290
Virtus LifeSci Biotech Clinical Trials ETF47 0.450
Virtus LifeSci Biotech Products ETF29 0.450
Virtus WMC International Dividend ETF0.280
Fixed Income
Virtus Newfleet Multi-Sector Bond ETF18 0.700
Virtus Newfleet Dynamic Credit ETF 0.550
Virtus Seix Senior Loan ETF0.570
Multi-Asset
Virtus Private Credit Strategy ETF210.467
Total ETFs$837 
(1)    Percentage of average daily net assets of each fund. Subadvisory fees paid on funds managed by unaffiliated subadvisers are not reflected in the percentages listed.

Retail Separate Accounts

Intermediary-Sold Managed Accounts

Intermediary-sold managed accounts are individual investment accounts that are primarily contracted through intermediaries as part of investment programs offered to retail investors.  Summary information about our intermediary-sold managed accounts as of December 31, 2020 were as follows:
Asset ClassTotal Assets
(in millions)
Equity
Domestic equity$21,489 
International equity329 
Fixed Income
Investment grade244 
Leveraged finance1,789 
Alternative
Total Intermediary-Sold Managed Accounts$23,852 

4

Table of Contents
Private Client Accounts

Private client accounts are investment accounts offered by certain affiliates directly to individual investors. Services provided include investment and wealth advisory services employing both affiliated and unaffiliated investment managers and select third-party business partners.  Summary information about our private client accounts as of December 31, 2020 was as follows:
Asset ClassTotal Assets
(in millions)
Multi-Asset$5,750 
Fixed Income103 
Equity46 
Total Private Client Accounts$5,899 

Institutional Accounts

Our institutional clients include corporations, multi-employer retirement funds, public employee retirement systems, foundations and endowments; in addition, we provide subadvisory services to unaffiliated mutual funds. Summary information about our institutional accounts as of December 31, 2020 was as follows:
Asset ClassTotal Assets
(in millions)
Equity
Domestic equity$19,664 
International equity8,738 
Fixed Income
Investment grade6,655 
Leveraged finance2,288 
Alternative2,333 
Multi-Asset945 
Total Institutional Accounts$40,623 

Structured Products

We act as collateral manager for structured finance products that primarily consist of collateralized loan obligations ("CLOs"). We managed the following structured products as of December 31, 2020:
Fund NameInceptionTotal Assets
(in millions)
Mountain View CLO IX Ltd.2015$541 
Mountain View CLO 2017-1 Ltd.2017494 
Mountain View CLO 2016-1 Ltd.2016405 
Mountain View CLO XV Ltd.2020405 
Mountain View CLO 2017-2 Ltd.2018399 
Mountain View CLO XIV Ltd.2019398 
Mountain View CLO 2013-1 Ltd.2013377 
Mountain View CLO X Ltd.2015342 
Newfleet CLO 2016-1 Ltd.2016305 
Mountain View CLO 2014-1 Ltd.2014259 
Broderick CDO 1 Ltd.2005135 
Total Structured Products$4,060 

5

Table of Contents
Our Investment Management, Administration and Shareholder Services
Our investment management, administration and shareholder service fees earned in each of the last three years were as follows: 
 Years Ended December 31,
(in thousands)202020192018
Open-end funds $247,519 $229,637 $231,175 
Closed-end funds36,833 42,199 41,455 
Retail separate accounts104,932 82,999 73,532 
Institutional accounts109,531 96,429 77,711 
Structured products4,012 6,381 9,622 
Other products2,511 3,832 3,526 
Total investment management fees505,338 461,477 437,021 
Administration fees41,582 42,009 44,503 
Shareholder service fees17,881 17,875 19,111 
Total$564,801 $521,361 $500,635 


Investment Management Fees

We provide investment management services pursuant to investment management agreements through our affiliated investment advisers (each an "Adviser"). With respect to our funds, the Adviser provides overall investment management services, pursuant to agreements with the funds. We earn fees based on each fund's average daily or weekly net assets with most fee schedules providing for rate declines or "breakpoints" as asset levels increase to certain thresholds. For funds managed by subadvisers, the day-to-day investment management of the fund's portfolio is performed by the subadviser, which receives a management fee based on a percentage of the Adviser's management fee. Each fund bears all expenses associated with its operations. In some cases, to the extent total fund expenses exceed a specified percentage of a fund's average net assets, the Adviser has agreed to reimburse the funds for such excess expenses.

For retail separate accounts and institutional accounts, investment management fees are negotiated and based primarily on portfolio size and complexity, individual client requests and investment strategy capacity, as appropriate. In certain instances, institutional fees may include performance related fees. Generally, we are entitled to performance related fees only if the returns on the portfolios exceed agreed upon periodic or cumulative return targets, primarily benchmark indices. Fees for structured finance products, for which we act as the collateral manager, consist of senior, subordinated and, in certain instances, incentive management fees. Senior and subordinated management fees are calculated at a contractual fee rate applied against the end of the preceding quarter par value of the total collateral being managed with subordinated fees being recognized only after certain portfolio criteria are met. Incentive fees on certain of our structured products are typically a percentage of the excess cash flows available to holders of the subordinated notes, above a threshold level internal rate of return.

Administration Fees

We provide various administrative fund services to our open-end mutual funds, ETFs and certain of our closed-end funds. We earn fees based on each fund's average daily or weekly net assets. These services include: record keeping, preparing and filing documents required to comply with securities laws, legal administration and compliance services, customer service, supervision of the activities of the funds' service providers, tax services and treasury services as well as providing office space, equipment and personnel that may be necessary for managing and administering the business affairs of the funds.

Shareholder Service Fees

We provide shareholder services to our open-end mutual funds. We earn fees based on each fund's average daily net assets. Shareholder services include maintaining shareholder accounts, processing shareholder transactions, preparing filings and performing necessary reporting, among other things.
6

Table of Contents

Our Distribution Services

We distribute our open-end funds and ETFs principally through financial intermediaries. We have broad distribution access in the retail market, with distribution partners that include national and regional broker-dealers, independent broker-dealers and registered investment advisers, banks and insurance companies. In many of these firms, we have a number of products that are on preferred "recommended" lists and on fee-based advisory programs. Our sales efforts are supported by regional sales professionals, a national account relationship group and separate teams for ETFs and the retirement and insurance channels.

Our retail separate accounts are distributed through financial intermediaries and directly to private clients by teams at our affiliated managers. Our institutional services are marketed through relationships with consultants as well as directly to clients. We target key market segments, including foundations and endowments, corporate, public and private pension plans, and subadvisory relationships.

Our Broker-Dealer Services

We operate a broker-dealer that is registered under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and is a member of the Financial Industry Regulatory Authority ("FINRA"). Our broker-dealer serves as the principal underwriter and distributor of our open-end mutual funds and ETFs under sales agreements with unaffiliated financial intermediaries, and also market advisory services to sponsors of retail separate accounts. Our broker-dealer is subject to the net capital rule of the Securities and Exchange Commission (the "SEC"), which is designed to enforce minimum standards regarding the general financial condition and liquidity of broker-dealers.

Our Competition

We face significant competition from a wide variety of financial institutions, including other investment management companies, as well as from proprietary products offered by our distribution partners such as banks, broker-dealers and financial planning firms. Competition in our businesses is based on several factors, including investment performance, fees charged, access to distribution channels, and service to financial advisors and their clients. Our competitors, many of which are larger than us, often offer similar products and use similar distribution sources, and may also offer less expensive products, have greater access to key distribution channels and have greater resources than we do.

Our Regulatory Matters

We are subject to regulation by the SEC, FINRA and other federal and state agencies and self-regulatory organizations. Each affiliated investment manager and unaffiliated subadviser is registered with the SEC under the Investment Advisers Act. Each open-end mutual fund, closed-end fund and ETF is registered with the SEC under the Investment Company Act of 1940, as amended (the "Investment Company Act"). Our offshore funds are subject to regulation by the Central Bank of Ireland (the "CBI"), and the funds and each investment manager and sub-investment manager are also registered with the CBI.

The financial services industry is highly regulated, and failure to comply with related laws and regulations can result in the revocation of registrations, the imposition of censures or fines and the suspension or expulsion of a firm and/or its employees from the industry. All of our U.S.-domiciled open-end mutual funds are generally available-for-sale and are qualified in all 50 states, Washington, D.C., Puerto Rico, Guam and the U.S. Virgin Islands. Our offshore funds are sold to both retail investors who are not citizens or residents of the United States or non-U.S. institutional clients. Most aspects of our investment management business, including the business of the unaffiliated subadvisers, are subject to various U.S. federal and state laws and regulations.

Our officers, directors and employees may, from time to time, own securities that are also held by one or more of our funds. We have adopted a Code of Ethics pursuant to the provisions of the Investment Company Act and the Investment Advisers Act that require the disclosure of personal securities holdings and trading activity by all employees on a quarterly and annual basis.  Employees with investment discretion or access to investment decisions are subject to additional restrictions with respect to the pre-clearance of the purchase or sale of securities over which they have investment discretion or beneficial interest. Our Code of Ethics also imposes restrictions with respect to personal transactions in securities that are held, recently sold, or contemplated for purchase by our mutual funds, and certain transactions are restricted so as to avoid the possibility of improper use of information relating to the management of client accounts.
7

Table of Contents

Human Capital

We believe our value as a company derives from the talents and diversity of our employees. We foster a dynamic, entrepreneurial, and collaborative environment where talented people excel and are recognized and rewarded for their contributions. We are committed to creating and maintaining an equitable, welcoming and inclusive environment that promotes respect for every employee.

As of December 31, 2020, we employed 581 employees and operated offices in seven states. We strive to attract and retain talented individuals by creating an environment of excellence and opportunity that serves as a foundation for all employees to reach their potential and make meaningful contributions to the organization.

We engage with employees in all areas of the organization to raise the awareness of, and advance, our diversity and inclusion efforts and ensure the greatest alignment of resources with business priorities.
We offer career enhancement opportunities to maximize each employee's potential and develop leaders throughout the organization.
We provide an education assistance program with tuition reimbursement for employees who wish to continue their education to secure increased responsibility and growth within their careers.

We have competitive salaries and offer a comprehensive suite of benefits, including programs that support wellness, financial security, and professional development.

We regularly assess and benchmark our compensation and benefit practices and conduct internal and external pay comparisons to assist us in ensuring that employees are compensated fairly, equitably, and competitively.
We offer benefits that promote financial and personal security including comprehensive insurance coverage, matching 401(k) employee contributions, an employee stock purchase plan, and employee reimbursement of work-related expenses.
Our wellness programs include health screenings and wellness earned premium rebates, as well as paid time off for vacation, illness, bereavement, parental and family care leave, and volunteer activities.

We depend upon our key personnel to manage our business, including our senior executives, portfolio managers, securities analysts, investment advisers, sales personnel and other professionals. The retention of our key investment personnel is material to the management of our business. The departure of our key investment personnel could cause us to lose certain client accounts, which could adversely affect our business.


Available Information

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as well as proxy statements, are available free of charge on our website located at www.virtus.com as soon as reasonably practicable after they are filed with, or furnished to, the SEC. Reports, proxy statements and other information regarding issuers that file electronically with the SEC, including our filings, are also available to the public on the SEC's website at http://www.sec.gov.

A copy of our Corporate Governance Principles, our Code of Conduct and the charters of our Audit Committee, Compensation Committee, Governance Committee and Risk and Finance Committee are posted on our website at http://ir.virtus.com under "Corporate Governance" and are available in print to any person who requests copies by contacting Investor Relations by email to: investor.relations@virtus.com or by mail to Virtus Investment Partners, Inc., c/o Investor Relations, One Financial Plaza, Hartford, CT 06103. Information contained on the website is not incorporated by reference or otherwise considered part of this document.


Item 1A.Risk Factors.

This section describes some of the potential risks relating to our business. The risks described below are some of the more important factors that could affect our business. You should carefully consider the risks described below, together with all of the other information included in this Annual Report on Form 10-K, in evaluating the Company and our common stock. If
8

Table of Contents
any of the risks described below actually occur, our business, revenues, profitability, results of operations, financial condition, cash flows, reputation and stock price could be materially adversely affected.

RISKS RELATED TO OUR INDUSTRY, BUSINESS AND OPERATIONS

We earn substantially all of our revenues based on assets under management, which fluctuate based on many factors, including market conditions, investment performance and client withdrawals, and any reduction would reduce our revenues and profitability.

The majority of our revenues are generated from asset-based fees from investment management products and services to individuals and institutions. Therefore, if assets under management decline, our fee revenues would decline, reducing profitability as certain of our expenses are fixed or have contractual terms. Assets under management could decline due to a variety of factors, including, but not limited to, the following:

General domestic and global economic and political conditions. Capital, equity and credit markets can experience substantial volatility. Changes in interest rates, the availability and cost of credit, inflation rates, economic uncertainty, changes in laws, trade barriers, commodity prices, currency exchange rates and controls, and national and international political circumstances (including wars, terrorist acts, pandemics, civil unrest and security operations) and other conditions may impact the capital, equity and credit markets which may impact our assets under management. Employment rates, economic weakness and budgetary challenges in parts of the world, the impact of the United Kingdom's withdrawal from the European Union, uncertainty regarding international trade policies, regional turmoil in the Middle East, concern over prospects in China and emerging markets, growing debt for certain countries, and uncertainty about the consequences of governments withdrawing monetary stimulus all indicate that economic and political conditions remain unpredictable.

If the security markets decline or experience volatility, our assets under management and our revenues could be negatively impacted. Changes in currency exchange rates, such as an increase in the value of the U.S. dollar relative to non-U.S. currencies, could result in a decrease in the U.S. dollar value of assets under management that are denominated in non-U.S. currencies. In addition, diminishing investor confidence in the markets and/or adverse market conditions could result in a decrease in investor risk tolerance. Such a decrease could prompt investors to reduce their rate of investment or to fully withdraw from markets, which could reduce our overall assets under management and have an adverse effect on our revenues, earnings and growth prospects.

The volatility in the markets in the past has highlighted the interconnection of the global markets and demonstrated how the deteriorating financial condition of one institution may materially adversely impact the performance of other institutions. Our assets under management have exposure to many different industries and counterparties and may be exposed to credit, operational or other risk due to the default by a counterparty or client or in the event of a market failure or disruption. In the event of extreme circumstances, including economic, political or business crises, such as a widespread systemic failure in the global financial system or failures of firms that have significant obligations as counterparties, we may suffer significant declines in assets under management and severe liquidity or valuation issues.

Price declines in specific securities, market segments or geographic areas where those assets are invested. Funds and portfolios that we manage that are focused on certain geographic markets and industry sectors, are particularly vulnerable to political, social and economic events in those markets and sectors. If these markets or industries decline or experience volatility, this could have a negative impact on our assets under management and our revenues. For example, certain non-U.S. markets, particularly emerging markets, are not as developed or as efficient as the U.S. financial markets and, as a result, may be less liquid, less regulated and significantly more volatile than the U.S. financial markets. Liquidity in such markets may be adversely impacted by factors including political or economic events, government policies, expropriation, volume trading limits by foreign investors, and social or civil unrest, etc. These factors may negatively impact the market value of an investment or our ability to dispose of it.

Any real or perceived negative absolute or relative performance. Sales and redemptions of our investment strategies can be affected by investment performance relative to other competing investment strategies or to established benchmarks. Our investment management strategies are rated, ranked or assessed by independent third-parties, distribution partners and industry periodicals and services. These assessments often influence the investment decisions of clients. If the performance or assessment of our investment strategies is seen as underperforming relative to peers, it could result in an increase in the withdrawal of assets by existing clients and the inability to attract additional investments from existing and new clients. Certain of our investment strategies have capacity constraints, as there is a limit to the number of securities
9

Table of Contents
available for the strategy to operate effectively. In those instances, we may choose to limit access to new or existing investors.

Changes in interest rates. Increases in interest rates from their historically low levels may adversely affect the net asset values of our assets under management. Furthermore, increases in interest rates may result in reduced prices in equity markets. Conversely, decreases in interest rates could lead to outflows in fixed income assets that we manage as investors seek higher yields.

We may engage in significant strategic transactions that may not achieve the expected benefits or could expose us to additional or increased risks.

We regularly review, and from time to time have discussions on and engage in, potential significant transactions, including acquisitions, consolidations, joint ventures, strategic partnerships, or similar transactions, some of which may be material. We cannot provide assurance that we will be successful in negotiation of the required agreements, closing transactions after signing such agreements, or achieving expected financial benefits, including such things as revenue or cost synergies.

Any strategic transaction may also involve a number of other risks, including additional demands on our staff, unanticipated problems regarding integration of operating facilities, technologies and new employees, and the existence of liabilities or contingencies not disclosed to, or otherwise unknown by, us prior to closing a transaction. In addition, any business we acquire may underperform relative to expectations or may lose customers or employees.

Our business, results of operations and financial condition could be negatively affected by the ongoing effects of the COVID-19 pandemic and associated global economic disruption and uncertainty.

Our results of operations are affected by certain economic factors, including the condition of the securities markets. The global financial markets, including the capital, equity and credit markets, have been challenged in reaction to the COVID-19 pandemic and its related economic impact. Although there are effective vaccines for COVID-19 that have been approved for use, distribution of the vaccines did not begin until late 2020, and a majority of the public will likely not have access to a vaccination until sometime in 2021. In addition, new strains of the virus appear to have increased transmissibility, which could complicate treatment and vaccination programs. Accordingly, the broader implications of the COVID-19 pandemic on our results of operations and overall financial performance remain uncertain and, to the extent the financial markets experience challenges, we may suffer declines in our assets under management, which will adversely affect our revenues and earnings, and the fair value of our investments. Although we believe we have sufficient liquidity and capital resources to effectively continue operations for the foreseeable future, deterioration of worldwide credit and financial markets may limit our ability to raise capital and financing may not be available to us in sufficient amounts, on acceptable terms, or at all. If we are unable to access sufficient capital on acceptable terms, our business could be adversely impacted.

In an effort to protect the health and safety of our employees, we implemented various measures to reduce the impact of COVID-19 across our organization, while also maintaining business continuity. Consistent with government guidelines and mandates, these initiatives included the adoption of social distancing policies, work-at-home arrangements, and suspending employee travel. Currently, the majority of our employees are working remotely from home in an effort to reduce the spread of the virus and maintain the health and safety of our employees. While our work from home efforts have been successful to date, operating remotely for an extended period could result in operational challenges, strain our technology resources and/or expose us to an increased number of cybersecurity threats. A decline in the health and safety of our employees, including key employees, or material disruptions to their ability to work remotely, including power or Internet outages or electronic systems failures, could negatively affect our ability to operate our business normally and have a material adverse impact on our results of operations or financial condition.

Additionally, many of the key service providers and vendors upon which we rely also have transitioned to remote work environments pursuant to business continuity plans. While, to date, the effects of COVID-19 have not had a material negative impact on the services they provide to us, or, we believe, their business operations or service levels, to the extent that the COVID-19 virus continues to spread and affect the employee base or operations of our service providers, disruptions in or the inability to provide services to us could negatively impact our business operations.

10

Table of Contents

Our investment advisory agreements are subject to renegotiation or termination on short notice, which could negatively impact our business.

Our clients include our sponsored mutual fund investors, that are represented by boards of directors, managed account program sponsors, private clients and institutional clients. Our investment management agreements with these clients may be terminated on short notice and without penalty. As a result, there would be little impediment for these clients or sponsors to terminate our agreements. Our clients may renegotiate their investment contracts, or reduce the assets we manage for them, due to a number of reasons including, but not limited to: poor investment performance; loss of key investment personnel; a change in the client's or third-party distributors decision makers; and reputational, regulatory or compliance issues. The board of directors of our sponsored funds may deem it to be in the best interests of a fund's shareholders to make decisions adverse to us, such as reducing the compensation paid to us, requesting that we subsidize fund expenses over certain thresholds, or imposing restrictions on our management of the fund. Under the Investment Company Act, investment advisory agreements automatically terminate in the event of an assignment, which may occur if, among other events, the Company undergoes a change in control, such as any person acquiring 25% of the voting rights of our common stock. If an assignment were to occur, we cannot be certain that the funds' board of directors and shareholders would approve a new investment advisory agreement. In addition, investment advisory agreements for separate accounts we manage may not be assigned without the consent of the client. If an assignment occurs, we cannot be certain that the Company will be able to obtain the necessary approvals or client consents. The withdrawal, renegotiation or termination of any investment management contract relating to a material portion of assets under management would have an adverse impact on our results of operations and financial condition.

Our business could be harmed by any damage to our reputation and lead to a reduction in our revenues and profitability.

Maintaining a positive reputation with existing and potential clients, the investment community and other constituencies is critical to our success. Our reputation is vulnerable to many threats that can be difficult or impossible to control, and costly or impossible to remediate even if they are without merit or satisfactorily addressed. Our reputation may be impacted by many factors including, but not limited to, poor performance; litigation; conflicts of interests; regulatory inquiries, investigations or findings; operational failures (including cyber breaches); intentional or unintentional misrepresentation of our products or services by us or our third party service providers; material weaknesses in our internal controls; or employee misconduct or rumors. Any damage to our reputation could impede our ability to attract and retain clients and key personnel, adversely impact relationships with clients, third-party distributors and other business partners, and lead to a reduction in the amount of our assets under management, any of which could adversely affect our results of operations and financial condition.

Our debt agreements contain covenants, required principal repayments and other provisions that could adversely affect our financial position or results of operations

We incur indebtedness for a variety of business reasons, including in relation to financing acquisitions. The indebtedness we incur can take many forms including, but not limited to, term loans or revolving lines of credit that customarily contain covenants.

At December 31, 2020, the Company had $205.7 million of total debt outstanding under its credit agreement, excluding debt of consolidated investment products ("CIP"), and had no borrowings outstanding under its $100.0 million credit facility. Under our credit agreement, we are required to use a portion of our cash flow to service interest and make required annual principal payments, which will restrict our cash flow available to pursue business growth opportunities. The credit agreement also contains covenants that limit our ability to return capital to shareholders. In addition, our indebtedness may make it more difficult for us to withstand or respond to adverse or changing business, regulatory and economic conditions. We cannot provide assurances that at all times in the future we will satisfy all such covenants or obtain any required waiver or amendment, in which event all indebtedness could become immediately due. Any or all of the above factors could materially adversely affect our financial position or results of operations.

Our business relies on the ability to attract and retain key employees, and the loss of such employees could negatively affect our financial performance.

The success of our business is dependent to a large extent on our ability to attract and retain key employees, such as senior executives, portfolio managers, securities analysts and sales personnel. Competition in the job market for these professionals is generally intense, and compensation levels in the industry are highly competitive. Our industry is also characterized by the movement of investment professionals among different firms.
11

Table of Contents

If we are unable to continue to attract and retain key employees, or if compensation costs required to attract and retain key employees increase, our performance, including our competitive position, could be materially adversely affected. Additionally, we utilize Company equity awards as part of our compensation plans and as a means for recruiting and retaining key employees. Declines in our stock price could result in deterioration of the value of equity awards granted, thus lessening the effectiveness of using stock-based awards to retain key employees.

In certain circumstances, the departure of key investment personnel could cause higher redemption rates in certain strategies or the loss of certain client accounts. Any inability to retain key employees, attract qualified employees or replace key employees in a timely manner could lead to a reduction in the amount of our assets under management, which could have a material adverse effect on our revenues and profitability. In addition, there could be additional costs to replace, retain or attract new talent that could result in a decrease in our profitability and have an adverse impact on our results of operations and financial condition.

We operate in a highly competitive industry that may require us to reduce our fees, or increase amounts paid to financial intermediaries, which could result in a reduction of our revenues and profitability.

We face significant competition from a wide variety of financial institutions, including other investment management companies, as well as from proprietary products offered by our distribution partners such as banks, broker-dealers and financial planning firms. Competition in our businesses is based on several factors, including investment performance, fees charged, access to distribution channels and service to financial advisers. Our competitors, many of which are larger than we are, often offer similar products, use the same distribution sources, offer less expensive products, maintain greater access to key distribution channels, and have greater resources, geographic footprints and name recognition than we do. Additionally, certain products and asset classes that we do not currently offer, such as passive or index-based products, are popular with investors. Existing clients may withdraw their assets in order to invest in these products, and we may be unable to attract additional investments from existing and new clients, which would lead to a decline in our assets under management and market share.

Our profits are highly dependent on the fees charged for our products and services. In recent years, there has been a trend in certain segments of our markets toward lower fees and lower-fee products, such as passive products. Competition could cause us to reduce the fees that we charge. In order to maintain appropriate fee levels in a competitive environment, we must provide clients with investment products and services they view as appropriate in relation to the fees charged. If our clients, including our fund boards, were to view our fees as being high relative to the market or the returns provided by our investment products, we may choose, or be required to, reduce our fee levels or we may experience significant redemptions in our assets under management, which could have an adverse impact on our results of operations and financial condition.

We utilize unaffiliated firms to provide investment management services, and any matters that adversely impact them, or any change in our relationships with them, could lead to a reduction in assets under management, which would adversely affect our revenues and profitability.

We utilize unaffiliated subadvisers as investment managers for certain of our retail products, and we have licensing arrangements with unaffiliated data providers. Because we typically have no ownership interests in these unaffiliated firms, we do not control their business activities. Problems stemming from the business activities of these unaffiliated firms may negatively impact or disrupt their operations or expose them to disciplinary action or reputational harm. Furthermore, any such matters at these unaffiliated firms may have an adverse impact on our business or reputation or expose us to regulatory scrutiny, including with respect to our oversight of such firms.

We periodically negotiate provisions and renewals of these relationships, and we cannot provide assurance that such terms will remain acceptable to us or the unaffiliated firms. These relationships can also be terminated upon short notice without penalty. In addition, the departure of key employees at unaffiliated subadvisers firms could cause higher redemption rates for certain assets under management and/or the loss of certain client accounts. An interruption or termination of unaffiliated firm relationships could affect our ability to market our products and result in a reduction in assets under management, which could have an adverse impact on our results of operations and financial condition.

We distribute our products through intermediaries and changes in key distribution relationships could reduce our revenues, increase our costs and adversely affect our profitability.

Our primary source of distribution for retail products is through intermediaries that include third-party financial institutions, such as: major wire-houses; national, regional and independent broker-dealers and financial advisors; banks and
12

Table of Contents
financial planners; and registered investment advisers. Our success is highly dependent on access to these various distribution systems. These distributors are generally not contractually required to distribute our products and typically offer their clients various investment products and services, including proprietary products and services, in addition to, and in competition with, our products and services. While we compensate these intermediaries for selling our products and services pursuant to contractual agreements, we may not be able to retain access to these channels at all or at similar pricing. Increasing competition for these distribution channels could cause our distribution costs to rise, which could have a material adverse effect on our business, revenues and profitability. To the extent that existing or future intermediaries prefer to do business with our competitors, the sales of our products as well as our market share, revenues and profitability could decline.

We and our third-party service providers rely on numerous technology systems, and any temporary business interruption, security breach or system failure could negatively impact our business and profitability.

Our technology systems, and those of third-party service providers, are critical to our operations. The ability to consistently and reliably obtain accurate securities pricing information, process client portfolio and fund shareholder transactions, and provide reports and other customer service to fund shareholders and clients in other accounts managed by us is an essential part of our business. Any delays or inaccuracies in obtaining pricing information, processing such transactions or reports, other breaches and errors, and any inadequacies in other customer service could result in reimbursement obligations or other liabilities or alienate customers and potentially give rise to claims against us. Our customer service capability, as well as our ability to obtain prompt and accurate securities pricing information and to process transactions and reports, is highly dependent on third-party service providers' information systems. Any failure or interruption of those systems, whether resulting from technology or infrastructure breakdowns, defects or external causes such as fire, natural disaster, computer viruses, acts of terrorism or power disruptions, could result in financial loss, negatively impact our reputation and negatively affect our ability to do business. Although we, and our third-party service providers, have disaster recovery plans in place, we may nonetheless experience interruptions if a natural or man-made disaster or prolonged power outage were to occur, which could have an adverse impact on our results of operations and financial condition.

In addition, like other companies, our computer systems are regularly subject to, and expected to continue to be the target of, computer viruses or other malicious codes, unauthorized access, cyber-attacks or other computer-related penetrations. The sophistication of cyber threats continues to increase, and any controls we put in place and preventative actions we take to reduce the risk of cyber incidents and protect our information systems may be insufficient to detect or prevent unauthorized access, cyber-attacks or other security breaches to our computer systems or those of third parties with whom we do business. A breach of our technology systems, or of those of third parties with whom we do business, through cyber-attacks or failure to manage and secure our technology environment could result in interruptions or malfunctions in the operations of our business, loss of valuable information, liability for stolen assets or information, remediation costs to repair damage caused by a breach or to recover access to our systems, additional costs to mitigate against future incidents, and litigation costs resulting from an incident.

We and certain of our third-party vendors receive and store personal information as well as non-public business information. Although we and our third-party vendors take precautions, we may still be vulnerable to hacking or other unauthorized use. A breach of the systems or hardware could result in unauthorized access to our proprietary business or client data or release of this type of data, which could subject us to legal liability or regulatory action under data protection and privacy laws, which may result in fines or penalties, the termination of existing client contracts, costly mitigation activities and harm to our reputation. The occurrence of any of these risk could have an adverse impact on our results of operations and financial condition.

We have significant Company assets invested in marketable securities, which exposes us to earnings volatility as the value of these investments fluctuate, as well as risk of capital loss.

We use capital to incubate new investment strategies and make investments to introduce new products or enhance distribution access of existing products. At December 31, 2020, the Company had $135.4 million of such investments, comprising $36.2 million of marketable securities and $99.2 million of net interests in CIP. The Company also had $65.3 million of net investments in CLOs. These investments are in a variety of asset classes, including alternative, fixed income and equity strategies including first loss tranches of CLO equity. Many of these investments employ a long-term investment strategy and entail an optimal investment period spanning several years. Accordingly, during this investment period, the Company's capital utilized in these investments may not be available for other corporate purposes, or if required for alternative corporate purposes without significantly diminishing our invested capital or our investment return. We cannot provide assurance that these investments will perform as expected. Moreover, increases or decreases in the value of these investments
13

Table of Contents
will increase the volatility of our earnings, and an other than temporary or permanent decline in the value of these investments would result in the loss of capital and have an adverse impact on our results of operations and financial condition.

We may need to obtain additional capital in the future that may not be available to us in sufficient amounts or on acceptable terms, which could have an adverse impact on our business.

Our ability to meet our future cash needs is dependent upon our ability to generate cash. Although we have generated sufficient cash in the past, we may not do so in the future. The Company also had $100.0 million of unused capacity under our credit facility. Also at December 31, 2020, we had $205.7 million in debt outstanding, excluding the notes payable of our CIP for which risk of loss to the Company is limited to our $65.3 million investment in such products. See Note 19 of our consolidated financial statements for additional information on the notes payable of the CIP. Our ability to access capital markets efficiently depends on a number of factors, including the state of credit and equity markets, interest rates and credit spreads. We may need to raise capital to fund new business initiatives in the future, and financing may not be available to us in sufficient amounts, on acceptable terms, or at all. If we are unable to access sufficient capital on acceptable terms, our business could be adversely impacted.

LEGAL AND REGULATORY RISKS

We are subject to an extensive and complex regulatory environment, and changes in regulations or failure to comply with them could adversely affect our revenues and profitability.

The investment management industry in which we operate is subject to extensive and frequently changing regulation. We are regulated by the SEC under the Exchange Act, the Investment Company Act and the Investment Advisers Act, and we are subject to regulation by the Commodities Futures Trading Commission under the Commodities Exchange Act. The Central Bank of Ireland regulates our global funds (UCITS) and has approved the Company entities that advise these funds. We are also regulated by FINRA, the Department of Labor under the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), as well as other federal and state laws and regulations.

Although we spend extensive time and resources to ensure compliance with all applicable laws and regulations, if we fail to properly modify and update our compliance procedures in a timely manner in this changing and highly complex regulatory environment, we may be subject to various legal proceedings, including civil litigation, governmental investigations and enforcement actions that could result in fines, penalties, suspensions of individual employees, or limitations on particular business activities, any of which could have an adverse impact on our results of operations and financial condition.

We manage assets under agreements that have investment guidelines or other contractual requirements and failure to comply could result in claims, losses or regulatory sanctions, which could negatively impact our revenues and profitability.

The agreements under which we manage client assets often have established investment guidelines or other contractual requirements with which we are required to comply in providing our investment management services. Although we maintain various compliance procedures and other controls to prevent, detect and correct such errors, any failure or allegation of a failure to comply with these guidelines or other requirement could result in client claims, reputational damage, withdrawal of assets and potential regulatory sanctions, any of which could have an adverse impact on our results of operations and financial condition.

We could be subject to civil litigation and government investigations or proceedings, which could adversely affect our business.

Many aspects of our business involve substantial risks of liability, and there have been substantial incidences of litigation and regulatory investigations in the financial services industry in recent years, including customer claims as well as class action suits seeking substantial damages. From time to time, we and/or our funds may be named as defendants or co-defendants in lawsuits or be involved in disputes that involve the threat of lawsuits seeking substantial damages. We and/or our funds are also involved from time to time in governmental and self-regulatory organization investigations and proceedings. See Item 3. "Legal Proceedings" for further description of the Company's litigation matters.

Any lawsuits, investigations or proceedings could result in reputational damage, loss of clients and assets, settlements, awards, injunctions, fines, penalties, increased costs and expenses in resolving a claim, diversion of employee resources and resultant financial losses. Predicting the outcome of such matters is inherently difficult, particularly where claims are brought on behalf of various classes of claimants or by a large number of claimants, when claimants seek substantial or unspecified damages, or when investigations or legal proceedings are at an early stage. A substantial judgment, settlement, fine or penalty
14

Table of Contents
could be material to our operating results or cash flows for a particular period, depending on our results for that period, or could cause us significant reputational harm, which could harm our business prospects.

We depend to a large extent on our business relationships and our reputation to attract and retain clients. As a result, allegations of improper conduct by private litigants, including investors in our funds, or regulators, whether the ultimate outcome is favorable or unfavorable to us, as well as negative publicity and press speculation about us, our investment activities or the asset management industry in general, whether or not valid, may harm our reputation, which may be more damaging to our business than to other types of businesses. We may incur substantial legal expenses in defending against proceedings commenced by a client, regulatory authority or other private litigant. Substantial legal liability levied on us could cause significant reputational harm and have an adverse impact on our results of operations and financial condition.

We are subject to multiple tax jurisdictions and any changes in tax laws or unanticipated tax obligations could have an adverse impact on our financial condition, results of operations and cash flow.

We are subject to income taxes as well as non-income-based taxes, and are subject to ongoing tax audits, in various jurisdictions in which we operate. Tax authorities may disagree with certain positions we have taken which may result in the assessment of additional taxes. We regularly assess the appropriateness of our tax positions and reporting. We cannot provide assurance, however, that we will accurately predict the outcomes of audits, and the actual outcomes of these audits could be unfavorable. Any changes to tax laws could impact our estimated effective tax rate and overall tax expense and could result in adjustments to our treatment of deferred taxes, including the realization or value thereof, which could have an adverse effect on our business, financial condition and results of operations. In addition, our ability to use net operating loss carryforwards and other tax attributes available to us will be dependent on our ability to generate taxable income.

RISKS RELATED TO OWNERSHIP OF OUR COMMON STOCK

We have a large amount of our common stock concentrated with a small number of shareholders, which could increase the volatility in our stock trading and affect our share price.

A large percentage of our common stock is held by a limited number of shareholders. If our larger shareholders decide to liquidate their positions, it could cause significant fluctuation in the share price of our common stock. Public companies with a relatively concentrated level of institutional shareholders, such as we have, often have difficulty generating trading volume in their stock, which may increase the volatility in the price of our common stock.

We may not pay quarterly dividends as intended or at all.

The declaration, payment and determination of the amount of our quarterly dividends may change at any time. In making decisions regarding our quarterly dividends, we consider general economic and business conditions as well as our strategic plans and prospects, business and investment opportunities, financial condition and operating results, working capital requirements and anticipated cash needs, contractual and regulatory restrictions (including under the terms of our credit agreement) and other obligations, that may have implications on the payment of distributions by us to our shareholders or by our subsidiaries to us, and such other factors as we may deem relevant. Our ability to pay dividends in excess of our current quarterly dividends is subject to restrictions under the terms of our credit agreement. We cannot make any assurances that any dividends whether quarterly or otherwise will continue to be paid in the future.

We have corporate governance provisions that may make an acquisition of us more difficult.

Certain provisions of our certificate of incorporation and bylaws could discourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares. These provisions also could limit the price that investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of our common stock. Stockholders who wish to participate in these transactions may not have the opportunity to do so. In addition, the provisions of Section 203 of the Delaware General Corporation Law also restrict certain business combinations with interested stockholders.

GENERAL RISK FACTORS

Our insurance policies may not cover all losses and costs to which we may be exposed.

We carry insurance in amounts and under terms that we believe are appropriate. Our insurance may not cover all liabilities and losses to which we may be exposed. Certain insurance coverage may not be available or may be prohibitively expensive in
15

Table of Contents
future periods. As our insurance policies come up for renewal, we may need to assume higher deductibles or pay higher premiums, which could have an adverse impact on our results of operations and financial condition.

We have goodwill and intangible assets on our balance sheet that could become impaired.

Our goodwill and indefinite-lived intangible assets are subject to annual impairment reviews. We also have definite-lived intangible assets that are subject to impairment testing if indicators of impairment are identified. A variety of factors could cause the carrying values to become impaired, which would adversely affect our results of operations.


SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains statements that are, or may be considered to be, forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995, as amended, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements that are not historical facts, including statements about our beliefs or expectations, are "forward-looking statements." These statements may be identified by such forward-looking terminology as "expect," "estimate," "intent," "plan," "intend," "believe," "anticipate," "may," "will," "should," "could," "continue," "project," "opportunity," "predict," "would," "potential," "future," "forecast," "guarantee," "assume," "likely," "target" or similar statements or variations of such terms.
Our forward-looking statements are based on a series of expectations, assumptions and projections about the Company and the markets in which we operate, are not guarantees of future results or performance, and involve substantial risks and uncertainty, including assumptions and projections concerning our assets under management, net asset inflows and outflows, operating cash flows, business plans and ability to borrow, for all future periods. All forward-looking statements contained in this Annual Report on Form 10-K are as of the date of this Annual Report on Form 10-K only.

We can give no assurance that such expectations or forward-looking statements will prove to be correct. Actual results may differ materially. We do not undertake or plan to update or revise any such forward-looking statements to reflect actual results, changes in plans, assumptions, estimates or projections, or other circumstances occurring after the date of this Annual Report on Form 10-K, even if such results, changes or circumstances make it clear that any forward-looking information will not be realized. If there are any future public statements or disclosures by us that modify or impact any of the forward-looking statements contained in or accompanying this Annual Report on Form 10-K, such statements or disclosures will be deemed to modify or supersede such statements in this Annual Report on Form 10-K.

Our business and our forward-looking statements involve substantial known and unknown risks and uncertainties, including those discussed under "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Annual Report on Form 10-K, resulting from: (i) a reduction in our assets under management; (ii) inability to achieve expected acquisition-related benefits; and other risks and uncertainties; (iii) the on-going effects of the COVID-19 pandemic and associated global economic disruptions; (iv) withdrawal, renegotiation or termination of investment advisory agreements; (v) damage to our reputation; (vi) inability to satisfy financial covenants or make debt payments; (vii) inability to attract and retain key personnel; (viii) challenges from competition; (ix) adverse developments related to unaffiliated subadvisers; (x) negative implications of changes in key distribution relationships; (xi) interruptions in or failure to provide critical technological service by us or third parties; (xii) losses on our investments; (xiii) lack of sufficient capital on satisfactory terms; (xiv) adverse regulatory and legal developments; (xv) failure to comply with investment guidelines or other contractual requirements; (xvi) adverse civil litigation and government investigations or proceedings; (xvii) unfavorable changes in tax laws or limitations; (xviii) volatility in the trading of our common stock; (xix) inability to make quarterly common stock dividend payments; (xx) losses or costs not covered by insurance; (xxi) impairment of goodwill or intangible assets; and other risks and uncertainties. Any occurrence of, or any material adverse change in, one or more risk factors or risks and uncertainties referred to in this Annual Report on Form 10-K and our other periodic reports filed with the SEC could materially and adversely affect our operations, financial results, cash flows, prospects and liquidity.

Certain other factors that may impact our continuing operations, prospects, financial results and liquidity, or that may cause actual results to differ from such forward-looking statements, are discussed or included in the Company's periodic reports filed with the SEC and are available on our website at www.virtus.com under "Investor Relations." You are urged to carefully consider all such factors.

16

Table of Contents
Item 1B.Unresolved Staff Comments.
None.

Item 2.Properties.
We lease our principal offices, which are located at One Financial Plaza, Hartford, CT 06103. In addition, we lease office space in California, Connecticut, Florida, Georgia, Illinois, New Jersey and New York.

Item 3.Legal Proceedings.
The information set forth in response to Item 103 of Regulation S-K under "Legal Proceedings" is incorporated
by reference from Part II, Item 8. "Financial Statements and Supplementary Data," Note 11 "Commitments and Contingencies" of this Annual Report on Form 10-K.

Item 4.Mine Safety Disclosures.
Not applicable.
17

Table of Contents
PART II

Item 5.Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Our common stock is traded on the NASDAQ Global Market under the trading symbol "VRTS." As of February 12, 2021, we had 7,583,557 shares of common stock outstanding that were held by approximately 45,000 holders of record.
In making decisions regarding our quarterly dividend, we consider general economic and business conditions, our strategic plans and prospects, our businesses and investment opportunities, our financial condition and operating results, working capital requirements and anticipated cash needs, contractual restrictions and obligations, legal, tax, regulatory and other restrictions that may have implications on the payment of distributions by us to our common shareholders or by our subsidiaries to us, and such other factors as we may deem relevant. We cannot provide any assurances that any distributions, whether quarterly or otherwise, will continue to be paid in the future.
On February 3, 2020, 1,150,000 shares of mandatory convertible preferred stock ("MCPS") converted to 912,870 shares of the Company's common stock. Each share of MCPS converted to 0.7938 shares of common stock at a conversion price of $125.97 per share, subject to customary anti-dilution adjustments. The number of shares of common stock issued upon conversion was determined based on the volume-weighted average price per share of our common stock over the 20 consecutive trading day period beginning on, and including, the 22nd scheduled trading day immediately preceding the mandatory conversion date.
On February 24, 2021, our Board of Directors declared a quarterly cash dividend of $0.82 per common share to be paid on May 14, 2021 to shareholders of record at the close of business on April 30, 2021.
Issuer Purchases of Equity Securities

As of December 31, 2020, an aggregate of 4,930,045 shares of our common stock had been authorized to be repurchased under the share repurchase program originally approved by our Board of Directors in 2010, and 722,642 shares remain available for repurchase. Under the terms of the program, we may repurchase shares of our common stock from time to time at our discretion through open market repurchases, privately negotiated transactions and/or other mechanisms, depending on price and prevailing market and business conditions. The program, which has no specified term, may be suspended or terminated at any time.

During the year ended December 31, 2020, we repurchased a total of 279,796 common shares for approximately $32.5 million. The following table sets forth information regarding our share repurchases in each month during the quarter ended December 31, 2020:
PeriodTotal number of shares purchasedAverage price paid per share (1)Total number of shares purchased as part of publicly announced plans or programs (2)Maximum number of shares that may yet be purchased under the plans or programs (2)
October 1—31, 20203,545 $159.23 3,545 759,173 
November 1—30, 202021,076 $178.27 21,076 738,097 
December 1—31, 202015,455 $205.56 15,455 722,642 
Total40,076 40,076 
(1)Average price paid per share is calculated on a settlement basis and excludes commissions.
(2)The share repurchases above were completed pursuant to a program announced in the fourth quarter of 2010 and most recently increased in May 2020. This repurchase program is not subject to an expiration date.

There were no unregistered sales of equity securities during the fourth quarter of fiscal 2020. Shares of our common stock purchased by participants in our Employee Stock Purchase Plan were delivered to participant accounts via open market purchases at fair value by the third-party administrator under the plan. We do not reserve shares for this plan or discount the purchase price of the shares.
18

Table of Contents
Item 6.Selected Financial Data.
The following table sets forth our selected consolidated financial and other data at the dates and for the periods indicated. The selected financial data should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the notes thereto appearing elsewhere in this Annual Report on Form 10-K.
Years Ended December 31,
(in thousands, except per share data)2020 (1)2019 (1)2018 (1)2017 (2)2016 (2)
Results of Operations
Revenues$603,896 $563,246 $552,235 $425,607 $322,554 
Operating expenses460,732 438,536 439,136 367,572 271,740 
Operating income (loss)143,164 124,710 113,099 58,035 50,814 
Income tax expense (benefit)43,935 35,177 32,961 40,490 21,044 
Net income (loss)119,963 105,508 76,080 39,939 48,763 
Net income (loss) attributable to common stockholders79,957 87,312 67,192 28,676 48,502 
Earnings (loss) per share—basic10.49 12.54 9.37 4.09 6.34 
Earnings (loss) per share—diluted10.02 11.74 8.86 3.96 6.20 
Cash dividends declared per preferred share— 7.25 7.25 7.25 — 
Cash dividends declared per common share2.98 2.44 2.00 1.80 1.80 
 As of December 31,
(in thousands)2020 (1)2019 (1)2018 (2)2017 (2)2016 (2)
Balance Sheet Data
Cash and cash equivalents$246,511 $221,781 $201,705 $132,150 $64,588 
Investments64,944 83,206 79,558 108,492 89,371 
Investments of CIP2,333,277 2,030,110 1,749,568 1,597,752 489,042 
Goodwill and other intangible assets, net570,630 600,757 629,178 472,107 45,215 
Total assets3,466,943 3,204,634 2,870,535 2,590,799 824,388 
Accrued compensation and benefits122,514 101,377 93,339 86,658 47,885 
Debt201,212 277,839 329,184 248,320 30,000 
Notes payable of CIP2,190,445 1,834,535 1,620,260 1,457,435 328,761 
Total liabilities2,630,490 2,454,532 2,169,187 1,981,397 465,449 
Redeemable noncontrolling interests115,513 63,845 57,481 4,178 37,266 
Mandatory convertible preferred stock — 110,843 110,843 110,843 — 
Total equity720,940 686,257 643,867 605,224 321,673 
 As of December 31,
(in millions)20202019201820172016
Assets Under Management
Total assets under management$132,194 $108,904 $92,030 $90,963 $45,366 
Total long-term assets under management$130,706 $107,726 $90,417 $88,835 $45,366 
 
(1)Derived from audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
(2)Derived from audited consolidated financial statements not included in this Annual Report on Form 10-K.

19

Table of Contents
Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations.
Overview

Our Business

We provide investment management and related services to individuals and institutions. We use a multi-manager, multi-style approach, offering investment strategies from affiliated managers, each having its own distinct investment style, autonomous investment process and individual brand. By offering a broad array of products, we believe we can appeal to a greater number of investors and have offerings across market cycles and through changes in investor preferences. Our earnings are primarily driven by asset-based fees charged for services relating to these various products, including investment management, fund administration, distribution and shareholder services.

We offer investment strategies for individual and institutional investors in different product structures and through multiple distribution channels. Our investment strategies are available in a diverse range of styles and disciplines, managed by a collection of differentiated investment managers. We have offerings in various asset classes (equity, fixed income and alternative), geographies (domestic, international and emerging), market capitalizations (large, mid and small), styles (growth, core and value) and investment approaches (fundamental, quantitative and thematic). Our retail products include open-end funds and exchange traded funds ("ETFs") as well as closed-end funds and retail separate accounts. Our institutional products are offered through separate accounts and pooled or commingled structures to a variety of institutional clients. We also provide subadvisory services to other investment advisers and serve as the collateral manager for structured products.

We distribute our open-end funds and ETFs principally through financial intermediaries. We have broad distribution access in the retail market, with distribution partners that include national and regional broker-dealers, independent broker-dealers and registered investment advisers, banks and insurance companies. In many of these firms, we have a number of products that are on preferred "recommended" lists and on fee-based advisory programs. Our sales efforts are supported by regional sales professionals, a national account relationship group, and separate teams for ETFs and the retirement and insurance channels. We leverage third-party distributors for offshore products and in certain international jurisdictions. Our retail separate accounts are distributed through financial intermediaries and directly to private clients by teams at an affiliated manager.

Our institutional services are marketed through relationships with consultants as well as directly to clients. We target key market segments, including foundations and endowments, corporate, public and private pension plans, and subadvisory relationships.

Market Developments

The financial markets have a significant impact on the value of our assets under management and on the level of our sales and net flows. The capital and financial markets could experience fluctuation, volatility and declines as they have in the past, which could impact investment returns and asset flows of our investment products as well as in investor choices and preferences among investment products. The changes in our assets under management may also be affected by the factors discussed in Item 1A. "Risk Factors" of this Annual Report on Form 10-K.

During 2020, the novel coronavirus global pandemic ("COVID-19") significantly impacted the global economy and financial markets, creating uncertainty, market volatility and dislocation. In an effort to contain COVID-19 in the U.S., or slow its spread, the federal government and nearly every state enacted varying degrees of social containment measures, restricting business and related activities, closing borders, and restricting travel. Governments around the world responded to the impact of COVID-19 with economic stimulus measures. These measures are intended to support businesses, employees and consumers until economic activities recover. Financial markets experienced significant declines during the first quarter of 2020 and volatility in subsequent quarters, although certain markets, including domestic equity securities, experienced recoveries that more than offset the first quarter decline. Despite the general recovery of the financial markets, particularly domestic equity securities, since the first quarter of 2020, the economy has been slower to recover. The timing and magnitude of the economic recovery, as well as the sustainability of the financial markets recovery, continues to be uncertain.

20

Table of Contents
The U.S. and global equity markets increased in value in 2020, as evidenced by increases in major indices as noted in the following table:
December 31,As of Change
Index20202019%
MSCI World Index2,690 2,358 14.1 %
Standard & Poor's 500 Index3,756 3,231 16.2 %
Russell 2000 Index1,975 1,668 18.4 %
MSCI Emerging Markets Index1,291 1,115 15.8 %
Bloomberg Barclays U.S. Aggregate Bond Index2,392 2,225 7.5 %
Standard & Poor's / LSTA Leveraged Loan Index2,338 2,273 2.9 %

Impact of COVID-19 to our Business

As a result of the challenging and volatile capital, equity and credit markets, our assets under management experienced a decrease during the first quarter of 2020, driven by market depreciation of $16.6 billion and net outflows of $1.3 billion. For the remainder of 2020, as financial markets recovered, our assets under management increased primarily driven by $35.8 billion in market appreciation and $6.4 billion in positive net flows.

Financial Highlights

Earnings per diluted share was $10.02 in 2020 compared with $11.74 per diluted share in 2019.
Total sales were $32.3 billion in 2020, an increase of $12.2 billion, or 60.5%, from $20.1 billion in 2019. Net flows were $5.1 billion in 2020 compared with $(0.8) billion in 2019.
Assets under management were $132.2 billion at December 31, 2020, an increase of $23.3 billion, or 21.4%, from $108.9 billion at December 31, 2019.

AllianzGI Strategic Partnership

On February 1, 2021, we completed actions necessary to finalize our agreement from July 2020 with Allianz Global Investors U.S. LLC and Allianz Global Investors Distributors LLC (collectively, "AllianzGI") pursuant to which we became the investment adviser, distributor and/or administrator of certain AllianzGI's open-end, closed-end and retail separate account assets.

Agreement with Westchester Capital Management

On February 1, 2021, we entered into an agreement to acquire all of the equity of Westchester Capital Management ("Westchester"). The transaction is expected to close in the second half of the 2021, subject to customary closing conditions and approvals by Westchester's Funds' Board and shareholders.

Assets Under Management

At December 31, 2020, total assets under management were $132.2 billion, representing an increase of $23.3 billion, or 21.4%, from December 31, 2019. The increase in total assets under management from December 31, 2019 included $19.2 billion of positive market performance and $5.1 billion of positive net flows.

Average long-term assets under management, which represent the majority of our fee-earning asset levels, were $108.2 billion for the twelve months ended December 31, 2020, an increase of $7.7 billion, or 7.7%, from $100.5 billion for the twelve months ended December 31, 2019. The year-over-year increase in long-term average assets under management was primarily due to market performance and positive net flows.

21

Table of Contents
Investment Performance - Open End Funds

The following table presents our open-end funds' three-year average annual return and corresponding benchmark index average annual return as of December 31, 2020. Also presented with each fund is its three-year ranking within its Morningstar Peer Group.
Three Year
Fund Type/Name
Assets
(in millions)
Average
Return (1)
Benchmark Index
Return (2)
Peer Group Percentile
Ranking (3)
%%%
U.S. Retail Funds
Equity
Virtus KAR Small-Cap Growth Fund$7,430 29.9116.2011
Virtus KAR Mid-Cap Growth Fund3,354 36.5320.504
Virtus Ceredex Mid-Cap Value Equity Fund3,226 6.625.3717
Virtus KAR Small-Cap Core Fund1,813 18.6110.2554
Virtus Zevenbergen Innovative Growth Stock Fund1,371 49.5322.501
Virtus Ceredex Large-Cap Value Equity Fund1,297 6.786.0735
Virtus KAR Small-Cap Value Fund1,144 10.403.7286
Virtus KAR Mid-Cap Core Fund964 16.5311.6168
Virtus KAR Capital Growth Fund780 24.4122.9919
Virtus KAR Small-Mid Cap Core Fund710  N/A  N/A  N/A
Virtus Ceredex Small-Cap Value Equity Fund481 1.293.7291
Virtus KAR Equity Income Fund136 8.595.6989
Virtus Silvant Large-Cap Growth Stock Fund126 21.7622.9939
Virtus Silvant Small-Cap Growth Stock Fund38 20.8616.2036
Fixed Income
Virtus Newfleet Multi-Sector Short Term Bond Fund6,133 3.443.7931
Virtus Seix Floating Rate High Income Fund1,725 2.373.9974
Virtus Newfleet Low Duration Core Plus Bond Fund553 3.403.6934
Virtus Seix Total Return Bond Fund427 5.865.3431
Virtus Newfleet Multi-Sector Intermediate Bond Fund416 4.595.3452
Virtus Seix High Yield Fund384 6.856.227
Virtus Seix Investment Grade Tax-Exempt Bond Fund295 4.394.2324
Virtus Seix High Income Fund232 5.306.2442
Virtus Newfleet Senior Floating Rate Fund200 2.673.9963
Virtus Seix Core Bond Fund197 5.475.3428
Virtus Newfleet Tax-Exempt Bond Fund112 4.004.3252
Virtus Newfleet Core Plus Bond Fund111 5.515.3445
Virtus Seix Corporate Bond Fund111 8.497.061
Virtus Seix High Grade Municipal Bond Fund81 5.124.6427
Virtus Newfleet High Yield Fund61 5.906.2118



22

Table of Contents
Three Year
Fund Type/Name
Assets
(in millions)
Average
Return (1)
Benchmark Index Return (2)Peer Group Percentile
Ranking (3)
%%%
International/Global
Virtus Vontobel Emerging Markets Opportunities Fund6,454 5.476.1748
Virtus KAR International Small-Cap Fund2,519 13.944.5922
Virtus Vontobel Foreign Opportunities Fund1,120 8.904.8867
Virtus Vontobel Global Opportunities Fund410 13.0710.0624
Virtus KAR Emerging Markets Small-Cap Fund296 15.832.693
Virtus SGA Global Growth Fund150 19.2310.069
Virtus SGA International Growth Fund48 13.504.8817
Virtus KAR Global Quality Dividend Fund38 2.593.8989
Virtus KAR International Small-Mid Cap Fund34 N/AN/AN/A
Alternatives
Virtus Duff & Phelps Real Estate Securities Fund473 5.373.4032
Virtus Duff & Phelps International Real Estate Securities Fund273 5.951.6918
Virtus KAR Long/Short Equity Fund129 N/AN/AN/A
Virtus Duff & Phelps Global Infrastructure Fund86 6.204.7122
Virtus Aviva Multi-Strategy Target Return Fund38 2.901.4950
Virtus Duff & Phelps Global Real Estate Securities Fund29 7.001.5210
Multi-Asset
Virtus Tactical Allocation Fund966 16.1913.661
Global Funds
Virtus GF SGA Global Growth Fund796 18.1810.0613
Virtus GF U.S. Small Cap Focus Fund259 19.0810.2517
Virtus GF Multi-Sector Short Duration Bond Fund57 3.314.377
Virtus GF Multi-Sector Income Fund29 4.525.3419
Virtus GF Select High Yield Fund27 N/AN/AN/A
Variable Insurance Funds
Virtus KAR Capital Growth Series315 24.9122.9916
Virtus SGA International Growth Series165 6.894.8812
Virtus KAR Small-Cap Growth Series137 30.4116.209
Virtus Newfleet Multi-Sector Intermediate Bond Series119 4.635.3450
Virtus KAR Equity Income Series99 8.815.6988
Virtus KAR Small-Cap Value Series89 10.773.7293
Virtus Strategic Allocation Series89 16.6913.661
Virtus Duff & Phelps Real Estate Securities Series76 5.453.4030
Other Funds293 
$49,521 
(1)Represents the average annual total return performance of the largest share class as measured by net assets for which performance data is available. Performance shown does not include the effect of applicable sales charges, if any. Had any applicable sales charges been reflected, performance would be lower than shown above.
(2)Represents the average annual total return of the benchmark index. Benchmark indices are unmanaged, their returns do not reflect any fees, expenses or sales charges, and they are not available for direct investment. The Benchmark Index for each fund can be found in the respective fund's fact sheet on our website at https://www.virtus.com/our-products/individual-investors/mutual-funds.
(3)Represents the peer ranking of the fund's average annual total return according to Morningstar. The Morningstar Peer Group for each fund can be found in the respective fund's fact sheet on our website at https://www.virtus.com/our-products/individual-investors/mutual-funds. Fund returns are reported net of fees.
23

Table of Contents
Past performance does not guarantee future results. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost.

Operating Results

In 2020, total revenues increased 7.2%, or $40.7 million, to $603.9 million from $563.2 million in 2019 primarily due to higher revenues from an increase in average assets under management in our open-end funds, retail separate and institutional accounts. Operating income increased by 14.8%, or $18.5 million, to $143.2 million in 2020 from $124.7 million in 2019, due to increased revenues.

Assets Under Management by Product

The following table summarizes our assets under management by product:  
As of December 31,As of Change
(in millions)202020192020 vs.
2019
%
Open-End Funds (1)$49,521 $42,870 $6,651 15.5 %
Closed-End Funds5,914 6,748 (834)(12.4)%
Exchange Traded Funds837 1,156 (319)(27.6)%
Retail Separate Accounts29,751 20,414 9,337 45.7 %
Institutional Accounts40,623 32,635 7,988 24.5 %
Structured Products4,060 3,903 157 4.0 %
Total Long-Term$130,706 $107,726 $22,980 21.3 %
Liquidity (2)1,488 1,178 310 26.3 %
Total Assets Under Management$132,194 $108,904 $23,290 21.4 %
Average Long-Term Assets Under Management (3)$108,172 $100,472 $7,700 7.7 %
Average Assets Under Management (3)$109,512 $102,072 $7,440 7.3 %

(1)Represents assets under management of U.S. retail funds, offshore funds and variable insurance funds.
(2)Represents assets under management in liquidity strategies, including certain open-end funds and institutional accounts.
(3)Averages are calculated as follows:
Funds - average daily or weekly balances
Retail Separate Accounts - prior-quarter ending balances
Institutional Accounts and Structured Products - average of month-end balances

24

Table of Contents
The following table summarizes asset flows by product:
Asset Flows by Product
Years Ended December 31,
(in millions)20202019
Open-End Funds (1)
Beginning balance$42,870 $37,710 
Inflows15,954 10,835 
Outflows(16,067)(13,029)
Net flows(113)(2,194)
Market performance7,210 7,536 
Other (2)(446)(182)
Ending balance$49,521 $42,870 
Closed-End Funds
Beginning balance$6,748 $5,956 
Inflows25 44 
Outflows— — 
Net flows25 44 
Market performance(387)1,116 
Other (2)(472)(368)
Ending balance$5,914 $6,748 
Exchange Traded Funds
Beginning balance$1,156 $668 
Inflows438 784 
Outflows(448)(279)
Net flows(10)505 
Market performance(254)90 
Other (2)(55)(107)
Ending balance$837 $1,156 
Retail Separate Accounts
Beginning balance$20,414 $14,998 
Inflows6,452 3,315 
Outflows(2,960)(1,790)
Net flows3,492 1,525 
Market performance5,868 4,045 
Other (2)(23)(154)
Ending balance$29,751 $20,414 
Institutional Accounts
Beginning balance$32,635 $27,445 
Inflows8,967 4,777 
Outflows(7,513)(5,720)
Net flows1,454 (943)
Market performance6,681 6,377 
Other (2)(147)(244)
Ending balance$40,623 $32,635 
Structured Products
Beginning balance$3,903 $3,640 
Inflows491 389 
Outflows(265)(98)
Net flows226 291 
Market performance91 173 
Other (2)(160)(201)
Ending balance$4,060 $3,903 
25

Table of Contents
Total Long-Term
Beginning balance$107,726 $90,417 
Inflows32,327 20,144 
Outflows(27,253)(20,916)
Net flows5,074 (772)
Market performance19,209 19,337 
Other (2)(1,303)(1,256)
Ending balance$130,706 $107,726 
Liquidity (3)
Beginning balance$1,178 $1,613 
Other (2)310 (435)
Ending balance$1,488 $1,178 
Total
Beginning balance$108,904 $92,030 
Inflows32,327 20,144 
Outflows(27,253)(20,916)
Net flows5,074 (772)
Market performance19,209 19,337 
Other (2)(993)(1,691)
Ending balance$132,194 $108,904 

(1)Represents assets under management of U.S. retail funds, offshore funds and variable insurance funds.
(2)Represents open-end and closed-end fund distributions net of reinvestments, the net change in assets from liquidity strategies and the effect on net flows from non-sales related activities such as asset acquisitions/(dispositions), seed capital investments/(withdrawals), structured products reset transactions and the use of leverage.
(3)Represents assets under management in liquidity strategies, including in certain open-end funds and institutional accounts.

The following table summarizes our assets under management by asset class: 
December 31,Change
(in millions)202020192020 vs.
2019
%
Asset Class
Equity$95,590 $70,720 $24,870 35.2 %
Fixed income30,310 31,186 (876)(2.8)%
Alternatives (1)4,806 5,820 (1,014)(17.4)%
Total Long-term130,706 107,726 22,980 21.3 %
Liquidity (2)1,488 1,178 310 26.3 %
Total$132,194 $108,904 $23,290 21.4 %
 
(1)Consists of real estate securities, mid-stream energy securities and master limited partnerships, options strategies and other.
(2)Represents assets under management in liquidity strategies, including in certain open-end funds and institutional accounts.
26

Table of Contents
Average Assets Under Management and Average Fees Earned

The following table summarizes the average management fees earned in basis points and average assets under management: 
 Years Ended December 31,
Average Fee Earned
(expressed in basis points)
Average Assets Under Management
(in millions) (2)
 2020201920202019
Products
Open-End Funds (1)59.256.1$41,819 $40,917 
Closed-End Funds62.264.75,920 6,524 
Exchange Traded Funds15.322.1687 1,012 
Retail Separate Accounts49.547.921,214 17,311 
Institutional Accounts31.931.334,359 30,834 
Structured Products31.536.94,173 3,874 
All Long-Term Products47.446.6108,172 100,472 
Liquidity (3)11.210.11,340 1,600 
All Products47.046.0$109,512 $102,072 
 
(1)Represents assets under management of U.S. retail funds, offshore funds and variable insurance funds.
(2)Averages are calculated as follows:
Funds - average daily or weekly balances
Retail Separate Accounts - prior-quarter ending balances
Institutional Accounts and Structured Products - average of month-end balances
(3)Represents assets under management in liquidity strategies, including in certain open-end funds and institutional accounts.

Average fees earned represent investment management fees before the impact of consolidation of investment products ("CIP"), divided by average net assets. Fund fees are calculated based on average daily or weekly net assets. Retail separate account fees are calculated based on the end of the preceding or current quarter's asset values or on an average of month-end balances. Institutional account fees are calculated based on an average of month-end balances or current quarter's asset values. Structured product fees are calculated based on a combination of the underlying cash flows and the principal value of the product. Average fees earned will vary based on several factors, including the asset mix and expense reimbursements to funds.

The average fee rate earned on long-term products for 2020 increased by 0.8 basis points compared to the prior year, primarily due to changes in the underlying asset mix to higher fee earnings strategies in open-end funds and retail separate accounts during the current year, as well as higher performance-related fees.


27

Table of Contents
Results of Operations
Summary Financial Data 
 Years Ended December 31,Change
(in thousands)202020192020 vs. 
2019
%
Investment management fees$505,338 $461,477 $43,861 9.5 %
Other revenue98,558 101,769 (3,211)(3.2)%
Total revenues603,896 563,246 40,650 7.2 %
Total operating expenses460,732 438,536 22,196 5.1 %
Operating income (loss)143,164 124,710 18,454 14.8 %
Other income (expense), net7,050 8,253 (1,203)(14.6)%
Interest income (expense), net13,684 7,722 5,962 77.2 %
Income (loss) before income taxes163,898 140,685 23,213 16.5 %
Income tax expense (benefit)43,935 35,177 8,758 24.9 %
Net income (loss)119,963 105,508 14,455 13.7 %
Noncontrolling interests(40,006)(9,859)(30,147)305.8 %
Net Income (Loss) Attributable to Stockholders79,957 95,649 (15,692)(16.4)%
Preferred stockholder dividends— (8,337)8,337 (100.0)%
Net Income (Loss) Attributable to Common Stockholders$79,957 $87,312 $(7,355)(8.4)%
Earnings (loss) per share-diluted$10.02 $11.74 $(1.72)(14.7)%

Revenues

Revenues by source were as follows: 
 Years Ended December 31,Change
(in thousands)202020192020 vs. 
2019
%
Investment management fees
Open-end funds $247,519 $229,637 $17,882 7.8 %
Closed-end funds36,833 42,199 (5,366)(12.7)%
Retail separate accounts104,932 82,999 21,933 26.4 %
Institutional accounts109,531 96,429 13,102 13.6 %
Structured products4,012 6,381 (2,369)(37.1)%
Other products2,511 3,832 (1,321)(34.5)%
Total investment management fees505,338 461,477 43,861 9.5 %
Distribution and service fees38,425 40,898 (2,473)(6.0)%
Administration and shareholder service fees59,463 59,884 (421)(0.7)%
Other income and fees670 987 (317)(32.1)%
Total revenues$603,896 $563,246 $40,650 7.2 %
 
A discussion of our results of operations for the year ended December 31, 2019 compared to the year ended December 31, 2018 may be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Form 10-K for the fiscal year ended December 31, 2019, which specific discussion is incorporated herein by reference.

Investment Management Fees

Investment management fees are earned based on a percentage of assets under management and are paid pursuant to the terms of the respective investment management contracts, which generally require monthly or quarterly payments. Investment management fees increased by $43.9 million, or 9.5%, for the year ended December 31, 2020 due to a 7.3%, or $7.4 billion, increase in average assets under management and an increase in the total average fee rate of 1.0 basis points.

28

Table of Contents
Distribution and Service Fees

Distribution and service fees are sales- and asset-based fees earned from open-end funds for marketing and distribution services. Distribution and service fees decreased by $2.5 million, or 6.0%, for the year ended December 31, 2020, primarily due to lower average assets for open-end funds in share classes that have distribution and service fees.

Administration and Shareholder Service Fees

Administration and shareholder service fees represent fees earned for fund administration and shareholder services from our open-end mutual funds, ETFs and certain of our closed-end funds. Fund administration and shareholder service fees decreased $0.4 million, or 0.7%, for the year ended December 31, 2020, primarily due to the decrease in average assets under management for our closed-end funds.

Other Income and Fees

Other income and fees primarily represent contingent sales charges earned from investor redemptions of certain shares sold without a front-end sales charge. Other income and fees decreased for the year ended December 31, 2020 compared to December 31, 2019 due to lower redemption and referral fees.

Operating Expenses

Operating expenses by category were as follows: 
 Years Ended December 31,Change
(in thousands)202020192020 vs. 
2019
%
Operating expenses
Employment expenses$267,299 $240,521 $26,778 11.1 %
Distribution and other asset-based expenses77,010 82,099 (5,089)(6.2)%
Other operating expenses69,896 74,363 (4,467)(6.0)%
Other operating expenses of CIP10,585 4,015 6,570 163.6 %
Restructuring and severance1,155 2,302 (1,147)(49.8)%
Depreciation expense4,660 4,992 (332)(6.7)%
Amortization expense30,127 30,244 (117)(0.4)%
Total operating expenses$460,732 $438,536 $22,196 5.1 %

Employment Expenses

Employment expenses consist of fixed and variable compensation and related employee benefit costs. Employment expenses of $267.3 million increased $26.8 million, or 11.1%, from the prior year ended December 31, 2019. The increase from the prior year was primarily due to increased profit- and sales-based compensation.

Distribution and Other Asset-Based Expenses

Distribution and other asset-based expenses consist primarily of payments to third-party client intermediaries for providing services to investors in sponsored investment products. These payments are primarily based on assets under management or on a percentage of sales. These expenses also include the amortization of deferred sales commissions related to up-front commissions on shares sold without a front-end sales charge to shareholders. The deferred sales commissions are amortized on a straight-line basis over the periods in which commissions are generally recovered from distribution fee revenues and contingent sales charges received from shareholders of the funds upon redemption of their shares. Distribution and other asset-based expenses decreased $5.1 million, or 6.2%, from the prior year due primarily to a lower percentage of sales and assets under management in share classes that have distribution and other asset-based expenses.

Other Operating Expenses

Other operating expenses primarily consist of investment research and technology costs, professional fees, travel and distribution related costs, rent and occupancy expenses, and other business costs. Other operating expenses decreased $4.5
29

Table of Contents
million, or 6.0%, to $69.9 million for the year ended December 31, 2020 from the prior year primarily due to decreased travel and related expenses primarily as a result of the impact of COVID-19 on the current operating environment.

Other Operating Expenses of CIP

Other operating expenses of CIP increased $6.6 million, or 163.6%, to $10.6 million for the year ended December 31, 2020 from the prior year primarily due to costs associated with the issuance of a new CLO as well as the refinancing of debt for two CLOs in the current year.

Restructuring and Severance

During the year ended December 31, 2020, we incurred $1.2 million in restructuring and severance costs, a decrease of $1.1 million, or 49.8%, from the prior year primarily due to lower staff reductions in the current year.

Depreciation Expense

Depreciation expense consists primarily of the straight-line depreciation of furniture, equipment and leasehold improvements. Depreciation expense decreased $0.3 million, or 6.7%, to $4.7 million for the year ended December 31, 2020 primarily due to a higher level of equipment being fully depreciated in the current year period.

Amortization Expense

Amortization expense consists of the amortization of definite-lived intangible assets over their estimated useful lives. Amortization expense remained consistent for the year ended December 31, 2020 compared to the prior year.

Other Income (Expense), net

Other Income (Expense), net by category were as follows:
 Years Ended December 31,Change
(in thousands)202020192020 vs. 
2019
%
Other Income (Expense)
Realized and unrealized gain (loss) on investments, net$7,139 $7,044 $95 1.3 %
Realized and unrealized gain (loss) of CIP, net(1,965)(1,202)(763)63.5 %
Other income (expense), net1,876 2,411 (535)(22.2)%
Total Other Income (Expense), net$7,050 $8,253 $(1,203)(14.6)%

Realized and Unrealized Gain (Loss) on Investments, net

Realized and unrealized gain (loss) on investments, net remained consistent for the year ended December 31, 2020 compared to the prior year.

Realized and Unrealized Gain (Loss) of CIP, net

Realized and unrealized gain (loss) of CIP, net increased $0.8 million from the prior year. The increase for the current year consisted primarily of net realized and unrealized losses of $32.4 million due to declines in market values of leveraged loans, partially offset by unrealized gains of $31.6 million related to the changes in value of the notes payable.

Other Income (Expense), net

Other income (expense), net decreased during the year ended December 31, 2020 by $0.5 million, or 22.2%, as compared to the prior year primarily due to lower profits from equity method investments during the current year.

30

Table of Contents
Interest Income (Expense), net

Interest Income (Expense), net by category were as follows:
 Years Ended December 31,Change
(in thousands)202020192020 vs. 
2019
%
Interest Income (Expense)
Interest expense$(11,894)$(19,473)$7,579 (38.9)%
Interest and dividend income1,367 3,844 (2,477)(64.4)%
Interest and dividend income of investments of CIP109,648 115,356 (5,708)(4.9)%
Interest expense of CIP(85,437)(92,005)6,568 (7.1)%
Total Interest Income, net$13,684 $7,722 $5,962 77.2 %

Interest Expense

Interest expense decreased $7.6 million, or 38.9%, for the year ended December 31, 2020 compared to the prior year primarily due to a decrease in the average debt outstanding and a lower average interest rate compared to the prior year. Also contributing to the decrease was a $0.7 million gain recognized on the early extinguishment of debt.

Interest and Dividend Income
    
Interest and dividend income is earned on cash and cash equivalents and our marketable securities. Interest and dividend income decreased $2.5 million, or 64.4%, in 2020 compared to the prior year primarily due to lower interest rates earned on cash and cash equivalents and lower dividends received from our investments as compared to the prior year.
    
Interest and Dividend Income of Investments of CIP
    
Interest and dividend income of investments of CIP decreased $5.7 million, or 4.9%, compared to the prior year primarily due to a decrease in interest rates partially offset by increased investments of CIP.
    
Interest Expense of CIP

Interest expense of CIP represents interest expense on the notes payable of CIP. Interest expense of CIP decreased by $6.6 million, or 7.1%, compared to the prior year primarily due to lower variable interest rates partially offset by higher average debt balances of CIP during the current year.
    
Income Tax Expense

The provision for income taxes reflected U.S. federal, state and local taxes at an estimated effective tax rate of 26.8% and 25.0% for 2020 and 2019, respectively. The increase in the estimated effective tax rate for the current year was primarily due to a decrease in excess tax benefits associated with the Company's stock compensation deduction.

On March 27, 2020, the United States enacted the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"), which contains several income tax provisions. Certain of those tax provisions are expected to be effective retroactively for years ending before the date of enactment. The Company has evaluated the legislation and, at this time, does not anticipate the CARES Act to have a material impact on its consolidated financial statements.

Effects of Inflation

Inflationary pressures can result in increases to our costs, especially to the extent that large expense components such as compensation are impacted. To the degree that these expense increases are not recoverable or cannot be counterbalanced through pricing increases due to the competitive environment, our profitability could be negatively impacted. In addition, the value of the assets that we manage may be negatively impacted if inflationary expectations result in a rising interest rate environment. Declines in the values of these assets under management could lead to reduced revenues as management fees are generally earned as a percent of assets under management.
31

Table of Contents
Liquidity and Capital Resources
Certain Financial Data
The following tables summarize certain financial data relating to our liquidity and capital resources: 
 December 31,Change
(in thousands)202020192020 vs. 
2019
%
Balance Sheet Data
Cash and cash equivalents$246,511 $221,781 $24,730 11.2 %
Investments64,944 83,206 (18,262)(21.9)%
Debt201,212 277,839 (76,627)(27.6)%
Redeemable noncontrolling interests115,513 63,845 51,668 80.9 %
Total equity720,940 686,257 34,683 5.1 %

 
 Years Ended December 31,Change
(in thousands)202020192020 vs. 
2019
%
Cash Flow Data
Provided by (used in)
Operating activities$(226,103)$(36,723)$(189,380)515.7 %
Investing activities8,681 4,448 4,233 95.2 %
Financing activities235,332 99,558 135,774 136.4 %
 
Overview

At December 31, 2020, we had $246.5 million of cash and cash equivalents and $64.9 million of investments, which included $40.0 million of investment securities, compared to $221.8 million of cash and cash equivalents and $83.2 million of investments, which included $61.0 million of investment securities, at December 31, 2019.

At December 31, 2020, we had $205.7 million outstanding under our term loan maturing June 1, 2024 and no outstanding borrowings under our $100.0 million credit facility.

Uses of Capital

Our main uses of capital related to operating activities comprise employee compensation and related benefit costs including payment of annual incentive compensation, interest on our indebtedness, income taxes and other operating expenses, which primarily consist of investment research, technology costs, professional fees, distribution and occupancy costs. Annual incentive compensation, which is one of the largest annual operating cash expenditures, is typically paid in the first quarter of the year. In the first quarter of 2020 and 2019, we paid approximately $84.7 million and $76.2 million, respectively, in incentive compensation earned during the years ended December 31, 2019 and 2018, respectively.

In addition to operating activities, other uses of cash could include: (i) investments in organic growth, including expanding our distribution efforts; (ii) seeding or launching new products, including funds or sponsoring CLO issuances; (iii) principal payments on debt outstanding through scheduled amortization, excess cash flow payment requirements or additional paydowns; (iv) dividend payments to common stockholders; (v) repurchases of our common stock; (vi) investments in our infrastructure; (vii) investments in inorganic growth opportunities which may require upfront payments and/or contingent consideration; (viii) integration costs, including restructuring and severance, related to acquisitions, if any; and (ix) purchases of affiliate noncontrolling interests.

Capital and Reserve Requirements

We operate a broker-dealer subsidiary registered with the SEC that is subject to certain rules regarding minimum net capital. The broker-dealer is required to maintain a ratio of "aggregate indebtedness" to "net capital," as defined, which may not exceed 15 to 1 and must also maintain a minimum amount of net capital. Failure to meet these requirements could result in adverse consequences to us, including additional reporting requirements, a lower required ratio of a