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The fourth quarter of 2025 witnessed a notable uptick in the financial markets, buoyed by the robust 4.3% GDP growth reported in the preceding quarter. This economic strength translated into favorable conditions for the high yield market, where fundamental indicators remained historically strong. Specifically, corporate leverage and interest coverage metrics showed encouraging improvements, underscoring the health of underlying businesses. Furthermore, the high yield default rate closed the year at a modest 1.88%, a figure that drops significantly to just 0.99% when excluding distressed exchanges, reflecting a resilient credit environment.

Against this backdrop, the Virtus Seix High Yield Fund's I shares recorded a positive return of 1.46% for the fourth quarter. This quarterly performance culminated in a commendable annual increase of 7.33% for the fund's I shares. The consistent performance highlights the efficacy of our investment approach, which is firmly rooted in rigorous credit analysis and a strategic focus on the more creditworthy segments of the high yield bond universe. We proactively navigate market dynamics, prioritizing stability and value creation for our investors.

Our investment philosophy continues to be anchored in disciplined credit analysis and a strategic allocation towards the higher-quality tiers within the high yield market. This involves a meticulous evaluation of potential investments to ensure they align with our stringent criteria for financial soundness and growth potential. By adhering to this selective strategy, we aim to mitigate risks and capitalize on opportunities that offer sustainable returns, maintaining a vigilant stance in an ever-evolving economic landscape.

In an investment world often swayed by fleeting trends and speculative ventures, a steadfast commitment to fundamental analysis and a focus on quality serve as the bedrock of sustainable success. Embracing prudence, conducting thorough due diligence, and prioritizing long-term value over short-term gains are essential for navigating market complexities. These principles not only foster robust financial health but also contribute to a resilient and prosperous economic future for all participants.