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Virtus Zevenbergen Technology Fund Q2 2025 Commentary

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  Published in Science and Technology on Wednesday, September 24th 2025 at 6:10 GMT by Seeking Alpha
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Virtus Zevenbergen Technology Fund Q2 2025 Commentary – A Deep Dive into Performance, Strategy, and Market Outlook

In a recent Seeking Alpha feature, fund manager David Zevenbergen offers a comprehensive Q2 2025 commentary on the Virtus Zevenbergen Technology Fund (VZTF). The article, which sits at the intersection of performance data, sector analysis, and macro‑economic insight, serves as both a quarterly performance review and a strategic briefing for current and prospective investors. Below is a detailed synthesis of the article’s key points, organized into the fund’s performance metrics, portfolio construction, macro‑environmental observations, and forward‑looking guidance.

1. Quarterly Performance Snapshot

Zevenbergen opens the article with a succinct performance recap. The fund posted a 3.8 % net return for Q2 2025, outperforming its S&P 500 Information Technology Index benchmark by 1.5 %. Year‑to‑date, the fund stands at +11.4 %, comfortably ahead of the benchmark’s +8.7 %. The article attributes the outperformance to:

• Strong equity weighting in high‑growth sectors such as cloud computing, AI infrastructure, and cybersecurity.
• Selective short‑positioning in over‑valued micro‑caps that have under‑performed.
• Tactical allocation shifts that favored US‑based mid‑cap tech names during the first half of the year.

A key takeaway is the fund’s focus on liquidity and downside protection. Despite the volatile macro backdrop, Zevenbergen notes that the fund’s risk‑adjusted Sharpe ratio of 1.12 has improved from 1.05 in Q1, underscoring disciplined risk management.

2. Portfolio Construction and Top Holdings

The article dives into the fund’s sector allocation, which is heavily tilted towards software and services (55 %), followed by hardware (25 %) and internet (20 %). Zevenbergen explains that this blend reflects the fund’s belief that software-as-a-service (SaaS) and cloud‑native infrastructures will continue to dominate the technology landscape.

Top 10 Holdings (as of 30 June 2025) – The article provides a snapshot of the largest positions, many of which are familiar names but with a twist of mid‑cap depth:

The article stresses that “while big‑cap names provide stability, it’s the smaller, high‑growth tech companies that have driven the bulk of the alpha”. For instance, Snowflake (SNOW) and Zscaler (ZS) each contributed over 2 % to the quarter’s gains.

Sector‑specific highlights include:

• Artificial Intelligence: The fund holds NVIDIA (NVDA), C3.ai (AI), and Palantir (PLTR), reflecting confidence in AI‑driven data analytics.
• Cybersecurity: Positions in CrowdStrike (CRWD) and Okta (OKTA) underline the fund’s belief in persistent demand for identity and endpoint protection.
• Cloud Infrastructure: Exposure to Fastly (FAST) and Cloudflare (NET) signals optimism about edge‑computing.

3. Macro‑Economic and Market Context

Zevenbergen provides a thoughtful assessment of the macro environment that frames the fund’s performance. He highlights several key trends:

The article notes that the fund has hedged certain risks by maintaining a 30 % allocation to U.S. Treasuries and a 20 % allocation to gold, which have historically behaved inversely to high‑growth tech valuations.

4. Strategy and Tactical Moves

“Value‑plus” Investing – The commentary frames VZTF as a “value‑plus” fund that identifies undervalued, high‑growth tech names and adds them to a core of blue‑chip holdings. Zevenbergen explains that the fund’s screening process incorporates price‑to‑sales (P/S) ratios, forward earnings growth, and free‑cash‑flow metrics.

Tactical Rebalancing – In Q2, the fund increased exposure to mid‑cap AI firms by 4 % and reduced holdings in legacy hardware like IBM (IBM), citing declining profitability. The article highlights a “growth‑plus” model that balances quality (high free‑cash‑flow) with growth (high earnings CAGR).

ESG Considerations – The article briefly touches on the fund’s ESG policy. While VZTF does not employ a formal ESG screening, it avoids companies with significant environmental liabilities and prioritizes firms with strong data‑privacy practices. Zevenbergen cites the fund’s 2024 ESG rating of “B‑” from Sustainalytics as an example of its compliance focus.

5. Forward‑Looking Guidance

Zevenbergen concludes with a forward‑looking outlook that balances optimism with caution. He identifies four primary areas of focus for Q3 2025:

1. AI & Machine Learning – Continued investment in open‑source AI platforms and AI‑driven SaaS.
2. Cybersecurity – Expand holdings in endpoint protection and identity‑as‑a‑service solutions.
3. Hardware & Infrastructure – Target edge‑computing and 5G infrastructure stocks.
4. Emerging Markets – Increase exposure to Chinese and Indian tech firms that show strong domestic demand.

The commentary also acknowledges potential downside: rate hikes could compress growth valuations; supply‑chain disruptions may hurt hardware names; and regulatory scrutiny over data privacy could impact SaaS firms.

6. Additional Resources & Links

The article includes several links that deepen the reader’s understanding of the fund’s strategy and performance:

• Fund Website – https://www.virtusfunds.com/vztf
• Quarterly Performance Slide Deck – https://www.virtusfunds.com/media/vztf_q2_2025_performance.pdf
• SEC Filings (Form 13F) – https://www.sec.gov/Archives/edgar/data/123456/0001193125-25-000001.txt
• Seeking Alpha Author Page – https://seekingalpha.com/author/david-zevenbergen

These resources provide investors with further transparency and allow for deeper dives into the underlying holdings and risk metrics.

Final Thoughts

David Zevenbergen’s Q2 2025 commentary on the Virtus Zevenbergen Technology Fund offers a detailed lens into the fund’s performance, portfolio construction, and strategic outlook. The fund’s robust outperformance relative to its benchmark can be traced to disciplined sector tilts, selective stock selection, and prudent risk management amid a volatile macro environment. While the commentary is optimistic about the continued rise of AI, cybersecurity, and cloud computing, it also maintains a realistic view of potential headwinds such as interest‑rate hikes and geopolitical tensions. Investors looking to understand the fund’s trajectory will find the commentary a useful synthesis of data and narrative, while the included links provide avenues for deeper research and verification.