Stock Analysis & Valuation Virtus Equity & Convertible Income Fund (NIE)

• Previous Close: $25.45
• Sector Valuation Confidence Level: High

Valuation method	Value, $	Upside, %
Artificial intelligence (AI)	642.37	2424
Intrinsic value (DCF)	8.46	-67
Graham-Dodd Method	44.30	74
Graham Formula		n/a

Strategic Investment Analysis

Company Overview

Virtus Equity & Convertible Income Fund (NIE) is a closed-end mutual fund managed by Allianz Global Investors, focusing on U.S. public equity markets. The fund targets growth stocks and income-producing convertible securities across diversified sectors, employing fundamental analysis to identify companies with strong earnings growth, high return on capital, and competitive advantages. Formerly known as AGIC Equity & Convertible Income Fund, NIE was established in 2007 and is designed to provide investors with a blend of capital appreciation and income through convertible securities. With a market cap of approximately $637 million, NIE operates in the Financial Services sector, specifically within Asset Management - Income, appealing to investors seeking diversified exposure to U.S. equities with an income component. The fund’s strategy emphasizes innovation and financial health, making it a relevant option for growth-oriented income investors.

Investment Summary

Virtus Equity & Convertible Income Fund (NIE) offers a unique investment proposition by combining growth equity exposure with income-generating convertible securities. The fund’s focus on high-quality companies with strong fundamentals and competitive advantages provides a balanced risk-reward profile. With a beta of 1.07, NIE exhibits slightly higher volatility than the market, which may appeal to investors seeking growth potential. The fund’s $2.00 annual dividend per share and solid net income of $130.3 million (FY 2025) underscore its income-generating capability. However, as a closed-end fund, NIE may trade at premiums or discounts to NAV, introducing additional risk. Investors should weigh the fund’s sector diversification and management expertise against potential interest rate sensitivity, given its convertible securities holdings.

Competitive Analysis

Virtus Equity & Convertible Income Fund (NIE) differentiates itself through a hybrid strategy of growth equity and convertible securities, offering both capital appreciation and income. Its competitive advantage lies in Allianz Global Investors’ robust fundamental analysis framework, targeting companies with sustainable growth and strong balance sheets. The fund’s convertible securities allocation provides downside protection and income, appealing to risk-averse growth investors. However, NIE faces competition from other closed-end and open-end funds with similar strategies, as well as ETFs offering lower fees. Its closed-end structure may limit liquidity compared to open-end alternatives, though it allows for leveraged strategies. NIE’s performance hinges on the managers’ stock-picking acumen, particularly in identifying undervalued growth stocks and optimally structured convertible securities. The fund’s niche positioning in convertible securities may mitigate equity market volatility but could underperform in rising interest rate environments.

Major Competitors

• Eaton Vance Tax-Managed Global Buy-Write Opportunities Fund (ETW): ETW employs a buy-write strategy on global equities, offering income through options premiums. It competes with NIE in the income-generating space but lacks convertible securities exposure. ETW’s tax efficiency is a strength, but its global focus may introduce currency risk absent in NIE’s U.S.-centric portfolio.
• BlackRock Health Sciences Trust (BME): BME focuses on healthcare equities, providing sector-specific exposure compared to NIE’s diversified approach. Its concentrated portfolio offers higher growth potential in healthcare but lacks the convertible securities buffer. BME’s performance is tied to healthcare sector trends, introducing different risks than NIE’s broader strategy.
• Cohen & Steers Infrastructure Fund (UTF): UTF invests in infrastructure equities and debt, appealing to income-focused investors. Unlike NIE, UTF emphasizes utilities and transportation, offering lower growth but higher yield stability. UTF’s sector focus reduces diversification but may outperform in low-growth environments where NIE’s growth holdings could lag.