| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 54.77 | 96 |
| Intrinsic value (DCF) | 24.85 | -11 |
| Graham-Dodd Method | 14.21 | -49 |
| Graham Formula | n/a |
Virtus Diversified Income & Convertible Fund (NYSE: ACV) is a closed-end balanced mutual fund managed by Allianz Global Investors, specializing in a diversified portfolio of convertible securities, income-producing equities, and debt instruments. Launched in 2015, ACV employs a fundamental, bottom-up investment approach to generate income and capital appreciation. The fund operates in the Financial Services sector, specifically within Asset Management - Income, catering to investors seeking diversified exposure to both equity and fixed-income markets. With a market cap of approximately $224 million, ACV offers a compelling yield, underscored by its $2.16 annual dividend per share. Its strategy of blending convertible securities with income-generating assets positions it uniquely in a low-yield environment, appealing to risk-averse investors looking for steady returns. The fund’s lack of leverage (zero total debt) and disciplined cash management further enhance its stability.
Virtus Diversified Income & Convertible Fund (ACV) presents a niche opportunity for income-focused investors, combining convertible securities with traditional income assets. Its 4.62 diluted EPS and $2.16 dividend yield (approximately 4.8% based on current pricing) are attractive, though its high beta (1.43) suggests sensitivity to market volatility. The fund’s zero-debt structure and $6.96 million cash reserve mitigate liquidity risks, but its small size ($224 million market cap) may limit scalability. Performance hinges on Allianz’s active management, particularly in navigating interest rate fluctuations impacting convertible bonds. While the dividend is sustainable given current earnings, reliance on market conditions for convertible arbitrage introduces cyclical risks. ACV is best suited for investors seeking hybrid exposure with moderate risk tolerance.
ACV’s competitive edge lies in its hybrid strategy, blending convertible securities (offering equity upside with bond-like protection) with high-yield debt and dividend stocks. This diversification reduces sector-specific risks compared to pure fixed-income or equity funds. However, its small AUM ($224 million) limits economies of scale versus larger peers like PIMCO or BlackRock funds. Allianz’s expertise in convertible arbitrage adds value, but the fund’s 1.43 beta indicates higher volatility than traditional income funds. Its zero leverage is a strength in rising-rate environments, but the lack of debt also caps potential returns. ACV’s niche focus on convertibles differentiates it from broader income funds, though it faces competition from ETFs offering similar exposure at lower fees. The fund’s closed-end structure may trade at premiums/discounts to NAV, adding complexity for retail investors.