Virtus Stone Harbor Emerging Markets High Yield Bond ETF (VEMY US) – Portfolio Construction Methodology

The investment process guiding the actively managed Virtus Stone Harbor Emerging Markets High Yield Bond ETF targets total return from a concentrated portfolio of below-investment-grade debt economically tied to emerging markets. Under normal conditions the fund keeps ≥80% of net assets in high yield bonds and related instruments linked to emerging countries, with broad discretion to define the investable universe and a bias to USD issues while retaining flexibility to hold local-currency exposures. Stone Harbor combines top-down country allocation, based on macro variables such as inflation, growth, debt-market liquidity, fiscal stance, and political risk, with bottom-up fundamental credit analysis across corporate, sovereign, quasi-sovereign, securitized, and loan structures. Portfolio duration is generally managed in a 2–7-year band, but may move outside it, and active use of derivatives, currency positioning, and non-diversified issuer weights drives ongoing rebalancing and risk management.

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