SCHEDULE: Morgan Stanley Discloses 5% Stake in Virtus Convertible Fund II

Morgan Stanley and its subsidiary, Morgan Stanley Smith Barney LLC, have reported a 5.0% beneficial ownership stake in Virtus Convertible & Income Fund II.

Summary

• Morgan Stanley and its wholly-owned subsidiary, Morgan Stanley Smith Barney LLC, have jointly filed a Schedule 13G, disclosing beneficial ownership of Common Shares of Beneficial Interest in Virtus Convertible & Income Fund II.
• The reporting entities collectively beneficially own 954,846 shares, representing 5.0% of the issuer's class of securities.
• The event requiring this filing occurred on September 30, 2025.
• Morgan Stanley and Morgan Stanley Smith Barney LLC each report 1.00 shared voting power and 954,846.00 shared dispositive power over the shares.
• The securities were acquired and are held in the ordinary course of business, not for the purpose of changing or influencing the control of Virtus Convertible & Income Fund II.

Sentiment

Score: 7

Explanation: The disclosure of a 5% beneficial ownership by a major financial institution like Morgan Stanley is generally viewed as a positive signal, indicating institutional confidence or a strategic investment in the issuer. This type of filing is routine for large investors and does not contain negative financial or operational news.

Positives

• A major financial institution like Morgan Stanley taking a 5.0% stake can be viewed as a positive signal of confidence in Virtus Convertible & Income Fund II.
• The filing confirms the investment is for ordinary course of business, not for control, which can reduce concerns about potential activist investor actions.

Future Outlook

No specific forward-looking statements or guidance were provided in this beneficial ownership disclosure.

Management Comments

• "By signing below I certify that, to the best of my knowledge and belief, the securities referred to above were acquired and are held in the ordinary course of business and were not acquired and are not held for the purpose of or with the effect of changing or influencing the control of the issuer of the securities and were not acquired and are not held in connection with or as a participant in any transaction having that purpose or effect, other than activities solely in connection with a nomination under §§ 240.14a-11."

Industry Context

This Schedule 13G filing indicates a significant passive investment by a large institutional investor in a closed-end fund. Such filings are common for institutional asset managers and broker-dealers who acquire more than 5% of a company's shares in the normal course of their investment activities, without intending to exert control over the issuer. It reflects a portfolio allocation decision rather than a strategic corporate action.

Related Party Transactions

• The securities reported by Morgan Stanley as a parent holding company are owned, or may be deemed to be beneficially owned, by Morgan Stanley Smith Barney LLC, which is a wholly-owned subsidiary of Morgan Stanley.

Stakeholder Impact

• Shareholders of Virtus Convertible & Income Fund II may perceive this significant institutional investment as a positive endorsement, potentially influencing market sentiment and share price.
• The filing clarifies that the investment is passive, which may reassure management and other stakeholders that no control-oriented actions are intended.

Key Dates

Keywords

Morgan Stanley, Virtus Convertible & Income Fund II, Schedule 13G, Beneficial Ownership, Institutional Investment, Closed-End Fund, Convertible Bonds, Income Fund