Virtus Artificial Intelligence & Technology Opportunities Fund Announces Distributions and Discloses Sources of Distribution - Section 19(a) Notice
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Insights
The announcement by Virtus Artificial Intelligence & Technology Opportunities Fund (AIO) regarding its monthly distributions of $0.15 per share is a significant event for investors and market participants. The consistency of the distribution amount suggests a stable cash flow, which is a key indicator of the fund's operational health. Investors typically look for such regular income streams, especially in a market where volatility can be a concern.
It's crucial to analyze the source of these distributions. If they are primarily derived from net investment income and realized capital gains, it indicates the fund's investments are performing well and generating sufficient returns. However, if the distributions are significantly supplemented by the fund's assets, it could signal a potential depletion of capital over time, which might not be sustainable in the long run. This is a critical consideration for investors focused on capital preservation.
Furthermore, the Managed Distribution Plan aims to provide shareholders with a predictable income, which could make the fund an attractive option for income-focused investors. The implications of such a plan should be closely monitored, as it may affect the fund's share price and yield, especially if the market conditions change and impact the fund's ability to maintain its distribution levels without eroding capital.
From a market perspective, the distributions announced by AIO could influence investor sentiment towards the fund. A consistent distribution policy can be a strong signal to the market, potentially attracting more investors looking for reliable dividend-paying funds. This, in turn, could boost the fund's liquidity and possibly its market capitalization.
However, it's important to consider the broader economic context. In a rising interest rate environment, for example, the attractiveness of fixed income distributions might be offset by higher yields available elsewhere. This could lead to a reevaluation of such funds by investors, as they balance the desire for income with the potential for higher returns in other asset classes.
Moreover, the technology sector, which is a focus of the AIO fund, is known for its volatility. The fund's performance and, by extension, its ability to maintain its distributions could be impacted by market trends, regulatory changes and technological advancements. Investors will likely monitor the fund's portfolio composition and performance closely to assess the sustainability of its distributions in the context of the sector's dynamics.
Examining the economic implications, the distribution strategy of the Virtus AI & Technology Opportunities Fund can be indicative of broader economic trends. Regular distributions may reflect confidence in the technology sector's growth prospects and the overall economy's stability. This is particularly relevant given that the technology sector is often seen as a bellwether for economic health.
However, should the fund's distributions come at the cost of asset depletion, it might suggest an underlying weakness in investment strategy or market conditions. An economist would scrutinize the fund's performance in relation to economic indicators such as GDP growth, inflation rates and employment figures. A mismatch between the fund's distribution levels and economic performance could prompt a reevaluation of the fund's risk profile.
It's also worth noting that the fund's distribution policy might affect the broader investment landscape by influencing investor behavior and expectations. If other funds adopt similar distribution policies to remain competitive, it could lead to changes in the investment fund industry, such as a shift towards prioritizing regular income distributions over long-term capital growth.
Amount of Distribution |
Ex-Date |
Record Date |
Payable Date |
|
March 8, 2024 |
March 11, 2024 |
March 28, 2024 |
|
April 10, 2024 |
April 11, 2024 |
April 29, 2024 |
|
May 10, 2024 |
May 13, 2024 |
May 30, 2024 |
|
June 13, 2024 |
June 13, 2024 |
June 27, 2024 |
Under the terms of its Managed Distribution Plan, the Fund will seek to maintain a consistent distribution level that may be paid, in part or in full, from net investment income and realized capital gains, or a combination thereof. Shareholders should note, however, that if the Fund's aggregate net investment income and net realized capital gains are less than the amount of the distribution level, the difference will be distributed from the Fund's assets and will constitute a return of the shareholder's capital. You should not draw any conclusions about the Fund’s investment performance from the amount of this distribution or from the terms of the Fund’s Managed Distribution Plan.
The Fund estimates that it has distributed more than its income and capital gains; therefore, a portion of your distribution may be a return of capital. A return of capital may occur, for example, when some or all of the money that you invested in the Fund is paid back to you. A return of capital distribution does not necessarily reflect the Fund’s investment performance and should not be confused with ‘yield’ or ‘income’.
The Fund provided this estimate of the sources of the distributions:
Distribution Estimates |
February 2024 (MTD) |
Fiscal Year-to-Date (YTD) (1) |
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(Sources) |
Per Share Amount |
Percentage of Current Distribution |
Per Share Amount |
Percentage of Current Distribution |
|||||
Net Investment Income |
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|
|
|
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Net Realized Short-Term Capital Gains |
- |
|
- |
|
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Net Realized Long-Term Capital Gains |
- |
|
- |
|
|||||
Return of Capital (or other Capital Source) |
0.147 |
|
0.147 |
|
|||||
Total Distribution |
|
|
|
|
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| (1) Fiscal year started February 1, 2024. | |||||||||
Information regarding the Fund’s performance and distribution rates is set forth below. Please note that all performance figures are based on the Fund’s net asset value (NAV) and not the market price of the Fund’s shares. Performance figures are not meant to represent individual shareholder performance.
January 31, 2024 |
|
Average Annual Total Return on NAV for the 5-year period (2) |
|
Annualized Current Distribution Rate (3) |
|
Fiscal YTD Cumulative Total Return on NAV (4) |
|
Fiscal YTD Cumulative Distribution Rate (5) |
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(2) Average Annual Total Return on NAV is the annual compound return for the five-year period. It reflects the change in the Fund’s NAV and reinvestment of all distributions. AIO incepted October 31, 2019, and thus returns represent inception to date returns. |
|
(3) Annualized Current Distribution Rate is the current distribution rate annualized as a percentage of the Fund's NAV at month end. |
|
(4) Fiscal YTD Cumulative Total Return on NAV is the percentage change in the Fund's NAV from the first day of the fiscal year to this month end, including distributions paid and assuming reinvestment of those distributions. |
|
(5) Fiscal YTD Cumulative Distribution Rate is the dollar value of distributions from the first day of the fiscal year to this month end as a percentage of the Fund's NAV at month end. |
The amounts and sources of distributions reported in this notice are estimates only and are not being provided for tax reporting purposes. The actual amounts and sources of the distributions for tax purposes will depend on the Fund’s investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The Fund or your broker will send you a Form 1099-DIV for the calendar year that will tell you what distributions to report for federal income tax purposes.
About the Fund
Virtus Artificial Intelligence & Technology Opportunities Fund is a diversified closed-end fund that seeks to provide total return through a combination of current income, current gains, and long-term capital appreciation. A multi-asset approach based on fundamental research is employed, dynamically allocating to attractive segments of a company's debt and equity in order to offer an attractive risk/reward profile. The Fund has a limited term and will terminate on or around October 29, 2031, absent approval by the Fund’s Board of Trustees to extend the Fund’s term by up to 18 months. Virtus Investment Advisers, Inc. is the investment adviser to the Fund and Voya Investment Management is its subadviser.
For more information on the Fund, contact shareholder services at (866) 270-7788, by email at closedendfunds@virtus.com, or through the Closed-End Funds section of 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 NAV. 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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240301917753/en/
For Further Information:
Shareholder Services
(866) 270-7788
closedendfunds@virtus.com
Source: Virtus Investment Partners, Inc.
FAQ
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