Good morning. My name is Tony and I will be your conference operator today. I would like to welcome everyone to the Virtus Investment Partners’ Quarter Investment Call. The slide presentation for this call is available in the Investor Relations section of the Virtus website, www.virtus.com. This call is also being recorded and will be available for replay on the Virtus website. At this time, all participants are in a listen-only mode. After the speakers’ remarks, there will be a question-and-answer period and instructions will follow at that time. I will now turn the conference over to your host, Jeanne Hess.

Thank you and good morning everyone. On behalf of Virtus Investment Partners, I would like to welcome you to the discussion of our operating and financial results for the fourth quarter and full year of 2014. Before we begin, I direct your attention to the important disclosures on Page 2 of the slide presentation that accompanies this webcast. Certain matters discussed on this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not statements of facts or guarantees of future performance and are subject to risks, uncertainties and other factors that may cause actual results to differ materially from those discussed in the statements. These statements may be identified by such words as expect, anticipate, believe, outlook, may and similar terms. For a discussion of these risks and uncertainties, please see the Risk Factors and Management Discussion and Analysis sections of our periodic reports that are filed with the SEC as well as our other recent filings, which are available in the Investor Relations section of our website, virtus.com. In addition to results presented on a GAAP basis, Virtus uses certain non-GAAP measures to evaluate its financial results. Our non-GAAP financial measures are not substitutes for GAAP financial results and should be read in conjunction with GAAP results. Reconciliations of these non-GAAP financial measures to the applicable GAAP measures are included in our earnings press release, which is available on our website. For this call, we have a presentation, including an appendix that is accessible with the webcast through the Investor Relations section of virtus.com. Today, we will begin with remarks from President and Chief Executive Officer, George Aylward, who will review our operating results and accomplishments for the quarter and the full year. Mike Angerthal, Executive Vice President and Chief Financial Officer, will then discuss our financial results in further detail and will also review the balance sheet and capital position. We will conclude by opening the call to your questions. Now I would like to turn the call over to George Aylward. George?

Thank you Jeanne and good morning to everyone. We appreciate having you on our call with us today to review our fourth quarter and full year 2014 financial and operating results. By financial measures both the quarter and the full year were strong. However, we were disappointed to report overall net outflows due to elevated mutual fund redemptions in the fourth quarter that led to our first quarter of mutual net outflows since the first quarter of 2009. So let me start by reviewing assets under management sales inflows. Assets under management ended the year at $56.7 billion, an increase of 1% over the prior year excluding money market assets, which were liquidated in October of 2014. Total sales of $3.4 billion in the fourth quarter were consistent with third quarter sales of $3.5 billion and the sales rate was relatively unchanged from the third quarter at 22%. Fourth quarter mutual fund sales were $2.8 billion representing a sales rate of 28%. Total sales for the full year were $15.2 billion of which $12.7 billion were attributable to open end mutual fund sales. Open end fund sales were once again diversified by asset class with international equity at 35%, fixed income at 29%, and domestic equity at 27%. Our full year sales rate was at 34.8, which is above industry averages. Net outflows were $2.2 billion in the quarter and were primarily attributable to $2 billion in net outflows in our domestic equity and alternative strategies. While this is generally consistent with net outflows in the industry, the outflows in our funds were elevated in the quarter. To provide more detail, starting with the domestic equity net flows were negative $1.4 billion in the quarter. Our two largest domestic equity funds are the AlphaSector Rotation and the Premium AlphaSector funds.…

Thank you, George. Good morning everyone. Let’s start today on Slide 8, assets under management. We ended the quarter with assets of $56.7 billion, which represents an increase of 1% from the prior year excluding money market assets and a 5% decline from the prior quarter. As we discussed last quarter, we liquidated our three money market funds, which represents that a non-core component of our business. From an earnings perspective, the liquidation had no impact on run rate investment management fees. The $0.6 billion year-over-year increase in assets under management is attributable to $2.8 billion of market appreciation offset by $1.2 billion of net outflows and a total of $1 billion from dividends distributed net of reinvestments and changes in leverage. On a sequential basis, the $2.8 billion decrease in assets again excluding money markets reflects 9% decline in open-end mutual fund assets, which, as George discussed, experienced elevated net outflows. Changes in leverage also had an impact on AUM, specifically the long-short equity product dynamic AlphaSector sector, employs leverage as part of its strategy. The maximum level of leverage occurs when the strategy is at least defensive and at most to zero when it’s positioned most defensively. During the quarter, the fund took a defensive of position and reduced leverage by approximately $0.8 billion, contributing 21% in the sequential decline in open end fund mutual assets under management. We earned management fees on total managed assets, so the reduction in leverage does impact our investment management fees. From a reporting standpoint, we report changes in leverage as well as mutual fund distributions, net of reinvestments in the other row - in the asset going forward included in the earnings release. Closed-end fund assets ended the quarter at $7.6 billion, an increase of $1.1 billion or 17% over the…

Thank you, Mike. That concludes our prepared remarks. Now let’s take some questions. Tony, can you open up the lines please?

[Operator Instructions] Your first question comes from the line of Mr. Tom Whitehead of Morgan Stanley. Please proceed.

Hi, guys. Good morning and thanks for taking my questions. Just wanted to touch on the partnerships and the acquisitions you’ve announced. So on Aviva can you elaborate on any plans you may have beyond the multi targeted return product and sort of how their capabilities measure well with holes you may have? And then on ETFis they’re known as a white label ETF issuer so are there any other strategies beyond the multi-sector bond strategy that you think you can replicate in an ETF wrapper.

Yes, great question. So I’ll start with Aviva and we are very excited about the opportunity I would like to work with Aviva Investors. You know, we have all been just incredibly impressed with just the sheer breadth and depth of the capabilities that they have and in particular as we sort of look at the types of capabilities that we could bring to market, we would argue that one of the very small number of firms that have that much capability particularly in a multi strategy global tactical asset allocation type of an offering. So we’re excited to be working with them and the arrangement we have is that we will work collaboratively together to develop several new products, the first of which is in filing so I can’t speak directly about that, but generally it will be employing, their outcome oriented multi asset class driven by their views in terms of opportunities in the market. So we’re excited to work with them. We think that they have incredible capabilities and a breadth that few others we would be able to partner with would have. We also think this is great to have this - an offering in this category. We have not traditionally had something that would fill that need sometimes financials have for what they consider a very highly tactical of strategy that can move in and out of a lot of different asset classes. So this is really and as I indicated in the prepared remarks, the first time we’re going to have an offering of that and the people at Aviva and we referenced [indiscernible] and his long history and in at least our personal view is really a pioneer in this space and has a very long track record of successfully dealing with these…

Okay, that’s great. Thanks for the color on both those, George. Those are very helpful. And then my follow-up question is just a little bit switching gears a little bit looking at capital returns. So, Mike talked about how you guys have sort of stepped up year-over-year and now are returning sort of two-thirds of economic earnings to shareholders and you’ve done a ton on the growth and the seed capital side. But if I just look where the stock is today, how - it seems awfully attractive just in terms of historical evaluation and evaluation versus peer so. How should I think about the buy back going forward and how tactical do you guys planned to get in terms of executing on that buy back when the stock has a little bit of stress as it has now.

Yes, great question and we’re fully aware of the stock price and I can’t give any specific indications of what we may or may not do in terms of share repurchases. Couple of things, I would point to, as you know - as you may have noted we had announced the increase in the optimization of the repurchase program by an additional 500,000 shares. So that is something that we announced. As Mike sort of little bit too earlier we’ve actually sort of discussed on earlier calls. We do look at targeting meaningful - a meaningful percentage of our net economic income to return to shareholders. And Mike gave some of the stats and sort of where that is so we look at total return of shareholders and in general we have been below industry averages on that and as we were a smaller, growing company that was more appropriate. I think it was just sort of indicating moving closer to the industry averages would be a logical development. So we look at that total percentage of economic net income which again is currently slightly below averages and then we look at the two vehicles that we currently have, which is the dividend which we initiated just last year as well as the repurchases. And while our repurchase program generally seeks to offset the dilution that’s caused by the issuance of equity obviously we have the ability in the flexibility to opportunistically utilize that when we obviously think it’s in the best interest of the company to do that. And I think as Mike pointed out, our fourth quarter was our highest level of stock repurchases in both numbers of shares or dollars. So I would just put all those things together and determine your thoughts from there.

Yes. I would just add some of the ratios that I mentioned Tom, this is Mike. We look at that over sort of an annual basis. So you might see in any given quarter the above or below that depending on some of the factors George indicated. So we look at many factors going into how we think about return of capital and I think we’re trying to provide that transparency into how we think about it from an economic earnings perspective, which is somewhat consistent with how we’re starting to move to this new non-GAAP metric that I had indicated in the prepared remarks and it will be forth coming later in the year. So we will continue to provide that transparency and we think about it over a given year, but hopefully that provides color to help you with how we think about it.

It absolutely does. Thanks for taking my questions, guys.

Your next question comes from the line of Mr. Steven Schwartz of Raymond James & Associates. Please proceed.

Hi, good morning, everybody.

Good morning.

Hi Steve.

I want to touch on F-Squared AlphaSector funds and basically what is going - maybe you can update us on what is going on there? There’s something obviously with the SEC in this present resign, but what are you doing, what is F-Squared doing with regards to getting that back on shelves and getting sales going again?

Yes. And we’re not going to answer any questions related to the sub advisor or any regulatory matter. So talking about the funds and the strategies, so we really to a few things in the prepared remarks. So basically, what we saw in the fourth was obviously elevated redemptions and I did attribute it to those categories of items that I did mention and individually and collectively because really there was sort of all three of the things that contributed to that. What’s interesting sort of is that the impact obviously was most pro announced and primarily seen on the outflow side. Actually on the growth sale side it was impacted, but significantly less, so I think, for example, premium, I think, sales quarter-over-quarter were down about 13%. So while the outflows were definitely elevated in the premium fund that was not as much of a decline in the gross sales. I think as Mike alluded to for the AlphaSector Rotation fund sales actually increased quarter-over-quarter and it was slightly positive. So we always, you know, look at obviously things that are driving flows, look at the investment strategy, the performance and constantly just sort of evaluate, are there things that need to be done to address that. I mean the performance of these types of products in up markets is always going to be look less attractive than it should so we do look at these things over a longer time horizon, but clearly we are very mindful and we’re very focused on the strategy and the fund and the implications and the thoughts of our distribution partners and consider to look very closely at that.

Okay. So yes, a little bit of a bear market would probably not be a bad thing for them.

It would be - it would be a very good.

Just one other the thing on that - one of the things that you noted was the capital gain distribution and reaction to that. Could you get a little deeper into that, George, and what happens in that kind of instance with the phase.

Yes. Well, sometimes what you see, you now, when - capital gains distributions, you know, have an impact to people from a tax perspective. So over the years we frequently have seen where if there is a very large capital gains distribution and for some of these funds they were unusually large, but it was the result of literally accumulating a lot of capital gains which is generally considered a good thing. But then having a capital gains distribution and the strategy where you would normally just reinvest for tax planning purposes one of the many services that good financial advisors provide in addition to managing their portfolio of allocation is trying to do in a tax efficient way. So there are frequent instance where a financial advisor may choose not to be - to stay in a fund that may report a large capital gains distribution which will then have a tax implications and sometimes they reallocate. And so from what we have seen over the years we have seen this before. These were very large capital gains distribution as a percentage of the fund and they were definitely we received a lot of calls and lot of discussions related to that. So it’s one of the factors that I cited.

Okay so selling in front of this I guess is what you’re explaining?

Yes, in other words people may choose because you want to give people any indication that you’re going to have capital gains impact and they may choose not to be in the fund on the X date.

I got it.

But that will happen basically in mid-November start in mid-November.

Okay, thank you guys.

Thank you, Steve.

Thank you.

Your next question comes from the line of Mr. Michael Kim of Sandler O’Neill. Please proceed.

Hey, guys. This is actually [indiscernible] sitting for Michael. And I apologize if some of my questions are redundant but we’ve had some phone issues here so bear with me. But I know it’s still early and just coming be back to the discussion on your liquid alt funds how will you characterize the up tick for those strategies in lights of where you stand and really as it relates to distribution and asset growth.

Yes, so on the alt funds meaning those are managed by Cliffwater, right specifically?

Yes.

Yes, again, we strongly believe that retail portfolios really need to utilize more non-traditional, non-core related types of approaches of which these would fit into that category and while people may struggle with doing that because there again also more of a risk managed type of approach. So as markets go up and up, you know, people may not see the need for it, but actually we would argue as more volatility and more uncertainty comes in this is when they should be making those decisions so we think fundamentally those types of strategies have a really important place in portfolios and I think most of if not all of the firms that we partner with the distribution strongly want their clients to do more of that. We think the way we’re approaching it is differentiated and we like the way we’re doing it by partnering with an institutional consultant who then is using their experience and expertise to make both the portfolio allocation decisions and manager selection. So we think we have a very differentiated approach. That being said, there’s a lot of entrance coming into this market, all of the firms have to do a lot of work to get comfortable with these firms which we fully agree with that they should do a lot of work and there is also lot of education that’s needs to be done with financial advisors because just like with any product you never want somebody to utilize the strategy for the wrong reason or without understanding when they will outperform and when they will, more importantly when they will under perform. So I think there’s been a lot of that process going on and we acknowledged earlier that while we had hoped that our funds would be available at some of the majors by the end of the year that did not occur. And literally just this week one of the funds, our total solutions fund, is becoming available. So I think the opportunity is there because they should have a meaningful part in a portfolio. I do believe though it will generally for us be driven more about what’s going on in the market and demand. So again, I think these strategies are important, I think our differentiated approach should be very compelling. So looking back to an earlier comment if the market just keeps going up, and up, and up, there’ll probably be less demand than otherwise, but if people start realizing that it can’t keep doing that and they start worrying about how heavily tied they are to traditional indices, I think, you could see a lot of demand and hopefully in our product, as well as, some of the other competitors that have come out.

Great. And then more broadly you remain pretty active on the product development side, so I was just wondering the outlook going forward and then any updates on potentially coming to market with other closed-end funds?

Yes. Again, fundamental, we believe a fundamental benefit of our business model, the multi-manager, and more importantly having a flexible approach. Again I went to the products that we mentioned, some of them are sub-advisors, some of them are minority interests like KBII, and some of them are our affiliates. By having that flexibility and access to that many types of firms, gives us the ability to be very prolific on introducing new product, which I think we have been very prolific. And a lot of these things take time to build up track records, sometimes you have early success, sometimes you don’t. So, we think that’s a good opportunity and we’re pleased when firms with caliber of Aviva, choose us to partner with. So, I think we continue to have probably more opportunities than we can take advantage of in terms of bringing offerings to market and so we do try to stay very focused and very disciplined, but as you see, we’ve done quite a bit just in the last few months that we’ve - that we’ve recently announced. In terms of closed-end funds, we’re strong believers in the closed-end fund structure. We think the closed-end fund structure allow to the execution of investment strategies where it doesn’t have to worry about the sensitivity of outflows, right, which just let some managers and strategies operate differently than an open-end fund. Mike gave you the stats. I mean our percentage of revenue that’s coming from closed-end funds, which again don’t have traditional redemptions, is about 17%, which is actually relatively high percent other than a couple of other our peer companies. Love closed-end funds. We continue to look for opportunities. It’s a very competitive market, and it tends to be very cyclical. So you’ve even seen it with us. I mean the three I think that we’ve done over the last few years. As we have the ability to either do it when the credit strategies are in favor or when the equity strategies are in favor, and our most recent moves in MLP. So we continue to have a pipeline of ideas that we think are compelling and continue to talk to potential underwriters for those strategies and I think we’ve demonstrated to the underwriters, our ability to raise assets. I mean we’ve had very respectable and decent raises in all of our funds. So with love and we look forward to continue to do more closed-end funds, which really is driven a lot by the cyclicality and what underwriters are looking for.

Great, thanks. I appreciate you taking the questions.

Okay. Thank you.

[Operator Instructions] Your next question comes from the line of Michael Carrier of Bank of America Merrill Lynch. Please proceed.

Thank you and good morning. This is Adam Udy in for Mike. Just turning to revenues and margins, you’ve mentioned earlier that continued revenue headwinds would probably have a similar effect on margins, absent to any change in the cost structure. I just want to ask about what levers there might be? Should you be so incline to - kind of to reduce cost and maybe protect the margin a little bit? You talked about the variability of incentive compensation, maybe that’s a primary one. And also your willingness to use those in the upcoming quarters or years, should revenue headwinds continue given your needs for gross investment and spending. Thanks.

As we sort of built the structure of the company, one of the main tenements was we wanted to make sure that we had a very flexible and variable cost structure and a lot of what we do is variable, a lot of it is outsourced. So there is a high level of variability in all aspects of our expense structure, both employment as well as maybe to a lesser extent on the other operating side where - maybe it’s not fully variable but it’s contractual. So I think Mike actually gave you a statistic on the employment expense earlier where he basically indicated of employment expense within the range of about 50% to 60% of it is variable. And then the variable is really based upon either profits or sales, which sometimes don’t move in the same direction. So there’s a big percentage of those expenses that are variable and then on the pure other operating expenses, which includes more things like trading systems and research. That’s a little less flexible, but another real large area of expenditures is distribution meetings, activities, G&E, due diligence where we have a lot more flexibility in terms of making decisions. We’re very focused on generating a high level of profitability. We currently added 50% in non-GAAP margin, which we think is very strong. And we will very carefully work with the pre-existing levers which are just a pure variability of the business and then obviously make any of the decisions we need to make just - because we feel that we have a commitment to try to maintain the highest levels of profitability that’s reasonable, given whatever the time period is if there were to be any decline in revenue. Mike, I’ll ask you to give some more.

Yes, I think George articulated very well and I point to some of the statistics of our historical incremental margin and our 2014 incremental margin of about 70%. And depending on some of - of how some of those revenue headwinds unfold will determine the impact of - on our margin, but we will carefully manage it. Clearly some of the assets under management of sub-advised business are at our higher level of incremental margin that we’ve talked about over the years. So we’ll carefully focus on that. But at this stage, I don’t think, there is any pending change in the cost structure for sure and we continue as George has outlined here, focus on growth areas for the company.

Thank you. That’s very helpful. And then just a question on the blended fee rate, which had some lift in the quarter, it looks like mainly from institutional and separate account. Were there money market assets in there that affected that? It looks like it’s been trending somewhat higher, so what were the drivers and what’s the outlook there do you expect a little bit of life to continue? Thanks.

Yes, I think I pointed out a couple of the drivers in the fee rate in the prepared remarks and the most significant is the loss of the money market assets and closed-end fund assets increased a bit without a launch of our closed-end funds. So, I think those are the primary drivers of the fee rate.

Sounds good, thanks for taking my questions.

Okay. Thank you.

This concludes our question-and-answer session. I’d like to turn the conference back over to Mr. Aylward for any closing remarks.

Well, thank you everyone and I appreciate you joining us today and certainly encourage any of you and if we didn’t get to everyone’s questions, just give us a call and we look forward to speaking with you in the future. Thanks and have a great day. Thank you.