Virtus KAR Small-Cap Growth Value Fund Q4 2025 Commentary

The Virtus KAR Small-Cap Value Fund posted a -2.80% return in Q4 2025, underperforming the Russell 2000 Value Index’s 3.26% gain, reflecting broader small-cap value sector struggles. AI-driven tech stocks dominated Q4 market attention, with investors questioning the sustainability of their rally and the long-term viability of massive capital expenditures in artificial intelligence infrastructure. The fund added Alliance Laundry Holdings to its portfolio during the quarter, marking its sole acquisition, while no positions were sold, signaling a cautious but selective investment approach. Growing skepticism emerged over whether AI’s rapid expansion justifies its escalating costs, as market participants weighed potential overvaluation against transformative growth promises in the sector. The commentary highlights a divergence between high-flying AI equities and traditional small-cap value stocks, underscoring shifting investor priorities in late 2025’s volatile economic landscape.