Virtus Convertible & Income Fund Announces Quarterly Distribution: 5.625% Series A Cumulative Preferred Shares
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Insights
The declaration of a cash distribution of $0.3515625 per share by Virtus Convertible & Income Fund (NCV) is a significant event for preferred shareholders, reflecting the fund's commitment to providing returns to its investors. The distribution aligns with the fund's annual dividend rate of $1.40625 per share, indicating a stable dividend policy. The fact that these shares are rated 'A' by Fitch Ratings suggests a strong credit quality, which could reassure investors about the fund's ability to meet its financial obligations.
From a financial perspective, the callable feature of the Series A Cumulative Preferred Shares at the liquidation value plus accrued dividends provides the fund with financial flexibility. This could be advantageous for the fund's management in terms of capital structure optimization, potentially leading to improved financial ratios and cost of capital. However, for investors, the callable nature introduces reinvestment risk, as the shares could be redeemed at the discretion of the fund, possibly forcing shareholders to reinvest at lower yields.
Investor sentiment towards closed-end funds like Virtus Convertible & Income Fund can be influenced by distribution announcements. The fund's ability to maintain its quarterly distribution payments suggests a level of operational stability and financial health that can be attractive to both current and prospective investors. Additionally, the 'A' rating by Fitch Ratings could be perceived as a positive indicator of the fund's market position and risk profile.
It is important to consider the broader market environment when evaluating the impact of such distributions. In a low-interest-rate environment, the yield provided by such preferred shares could be particularly attractive relative to other fixed-income instruments. Conversely, in a rising interest rate environment, the fixed distribution rate might become less competitive, potentially affecting the share price and demand for the fund's preferred shares.
The issuance of preferred shares is a common strategy for funds to secure capital with less impact on equity dilution compared to common shares. The predictable income stream from preferred dividends can be appealing to certain investors, especially in volatile or uncertain economic times. The cumulative feature of these preferred shares ensures that if any dividends are missed, they are accrued and paid out later, which provides an additional layer of security for investors.
Moreover, the callable feature of the Series A Cumulative Preferred Shares allows the fund to respond to changes in the interest rate environment. If rates decline, the fund might call the shares to refinance at a lower rate, which could save on interest expenses. Conversely, if rates increase, investors might benefit from the higher yield locked in by the existing terms. This dynamic can affect the fund's capital costs and investor returns, highlighting the interplay between monetary policy and investment strategies.
The Series A Cumulative Preferred Shares, which trade on the New York Stock Exchange under the symbol NCV PR A, are rated “A” by Fitch Ratings and have an annual dividend rate of
About the Fund
Virtus Convertible & Income Fund has an investment objective to provide total return through a combination of capital appreciation and high current income. Virtus Investment Advisers, Inc. is the investment adviser to the fund and Voya Investment Management is its subadviser.
For more information on this fund, contact shareholder services at (866) 270-7788, by email at closedendfunds@virtus.com, or through the Closed-End Funds section on the web at virtus.com.
Fund Risks
An investment in a fund is subject to risk, including the risk of possible loss of principal. A fund’s shares may be worth less upon their sale than what an investor paid for them. Shares of closed-end funds may trade at a premium or discount to their net asset value. For more information about the fund’s investment objective and risks, please see the fund’s annual report. A copy of the fund’s most recent annual report may be obtained free of charge by contacting “Shareholder Services” as set forth at the end of this press release.
About Virtus Investment Partners, Inc.
Virtus Investment Partners (NYSE: VRTS) is a distinctive partnership of boutique investment managers singularly committed to the long-term success of individual and institutional investors. We provide investment management products and services from our affiliated managers, each with a distinct investment style and autonomous investment process, as well as select subadvisers. Investment solutions are available across multiple disciplines and product types to meet a wide array of investor needs. Additional information about our firm, investment partners, and strategies is available at virtus.com.
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For Further Information:
Shareholder Services
(866) 270-7788
closedendfunds@virtus.com
Source: Virtus Convertible & Income Fund
FAQ
What is the cash distribution declared by Virtus Convertible & Income Fund for Series A cumulative preferred shareholders?
What is the annual dividend rate for the Series A Cumulative Preferred Shares?
When is the cash distribution payable to Series A cumulative preferred shareholders?
What is the liquidation value of the Series A Cumulative Preferred Shares?
