Virtus shares slide as $8.1bn quarterly outflows accelerate
Asset manager reports revenue beat but widening client departures pressure AUM and margins
Virtus Investment Partners shares faced pressure in Friday trading after the asset manager reported accelerating client withdrawals in the fourth quarter, overshadowing a revenue beat and highlighting challenges facing the broader active management industry.
The Hartford-based firm reported adjusted earnings per share of $6.50 for the fourth quarter of 2025, missing analyst expectations of $6.77 by 4%, despite revenue of $208 million exceeding estimates by 5.5%. The more concerning metric for investors was a doubling of net outflows to $8.1 billion, up from $3.9 billion in the prior quarter, driving a 6% sequential decline in assets under management to $159.5 billion from $169.3 billion.
The widening outflows reflect ongoing headwinds across Virtus's product lineup, with U.S. retail funds, institutional accounts, and retail separate accounts all experiencing client departures. Open-end funds recorded net outflows of $2.5 billion for the quarter, according to company disclosures. The only bright spot was the exchange-traded fund segment, which attracted $0.6 billion in positive net flows, partially offsetting broader withdrawals.
"The decline in AUM during the fourth quarter was attributed to a combination of market performance and net outflows across various product categories," the company stated in its earnings announcement.
The accelerating redemptions are compressing profitability. Virtus's adjusted operating margin narrowed to 32.4% from 33.0% in the previous quarter, reflecting lower fee-generating assets. The company did not provide explicit guidance for 2026, adding to investor uncertainty about the trajectory of outflows.
Analysts have adopted a cautious stance in response to the results. Virtus currently carries a consensus rating of "Reduce" or "Hold" across major brokerages, with five analysts issuing an average 12-month price target of $181.25. The breakdown shows a split sentiment: 50% recommend selling, 25% suggest holding, and 25% advise buying, according to MarketBeat data.
The performance challenges at Virtus mirror broader industry pressures on active managers, who have struggled to retain clients amid the sustained shift toward passive investments and ETFs. While Virtus has been building its ETF business—which doubled to $3.1 billion in AUM in early 2025 and now represents approximately 10% of total assets—the segment remains too small to fully offset outflows from traditional products.
Global ETF assets are projected to exceed $20 trillion in 2026, with active ETFs expected to drive significant industry growth. Virtus's positioning in this faster-growing segment may eventually stabilize flows, but the scale of outflows in traditional products suggests the transition will be measured.
Shares of Virtus were trading around $151 in Friday afternoon trading, well below the 52-week high of $206.47. The stock has underperformed broader markets over the past six months as investors have grown increasingly concerned about the sustainability of revenue growth in a declining AUM environment.
The company's market capitalization stands at approximately $1.1 billion, with a trailing price-to-earnings ratio of 8.52. Despite the modest valuation, analysts remain divided on whether current prices adequately reflect the challenges of reversing accelerating client departures in a competitive asset management landscape.