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Equity Income Fund

Mutual Funds

Equity Income Fund


Fund Managers

Photo of Charles  Wittmann

Charles Wittmann, CFA®

Photo of Jeremy  Lopez

Jeremy Lopez, CFA®

Overview

R6
Shares

STREX

Inception
Date

02.01.2018

Investment
Min.

N/A

Subsequent
Investment Min.1

N/A

Max. Up Front
Sales Charge

N/A

Max. Deferred
Sales Charge

N/A

1If subsequent investments are made as part of an AIP, the minimum is $25.

Philosophy & Process

The fund’s management team utilizes fundamental analysis to construct a portfolio of high-quality, dividend growth equities. They look for the best ideas that include companies with strong balance sheets that are reasonably valued and have shown market/sales gain over time with a credible plan to continue such growth in the future. The fund represents a concentrated portfolio utilizing "best ideas" with the typical number of core holdings between 30 and 35. Dividends matter to the management team and they only purchase companies that have raised their dividends for the last three consecutive years or for six years of the last ten. They target stocks with dividend yields greater than the yield of the S&P 500® Index.

Investment Considerations

The fund invests primarily in dividend-paying securities but also in convertible securities in search of yield. These securities may be undervalued not performing as anticipated and its value could be negatively affected by a rise in interest rates. The fund may engage in writing covered call options. By selling covered call options, the fund limits its opportunity to profit from an increase in the price of the underlying stock above the exercise price, but continues to bear the risk of a decline in the stock. While the fund receives premiums for writing the call options, the price it realizes from the exercise of an option could be substantially below a stock’s current market price.

Fund Facts

Term Class A Shares Class C Shares Class I Shares Class R6 Shares
Ticker BAEIXBCEGXBEGIXSTREX
Inception Date 06.30.200406.30.200406.30.200402.01.2018
Investment Min. $1,000$1,000$1,000,000N/A
Subsequent Investment Min.2 N/AN/AN/AN/A
Max. Up Front Sales Charge 5.75%N/AN/AN/A
Max. Deferred Sales Charge N/A1%N/AN/A

2If subsequent investments are made as part of an AIP, the minimum is $25.

Equity Income Fund

Management

View professional designations disclosures

Photo of Charles  Wittmann

Charles Wittmann, CFA®

Co-Portfolio Manager

Photo of Jeremy  Lopez

Jeremy Lopez, CFA®

Co-Portfolio Manager

Performance

Fund Performance as of 03.31.2024

Term QTR YTD 1 Year 3 Years 5 Years 10 Years Since Inception
A Shares with 5.75% Sales Charge 0.86% 0.86% 13.42% 8.83% 11.40% 10.15% 10.27%
A Shares without Sales Charge 7.02% 7.02% 20.35% 11.01% 12.74% 10.81% 10.60%
Institutional Shares 7.09% 7.09% 20.64% 11.28% 13.02% 11.08% 10.87%
Lipper Equity Income Median 9.80% 10.65% 10.65% 8.79% 11.09% 8.42% N/A

The total expense ratios for Class A, C and I Shares are 1.04%, 1.79% and 0.79%, respectively. The gross expense ratio for Class R6 Shares is 0.79%. The net expense ratio for Class R6 Shares is 0.69%.

The Fund Administrator, Sterling Capital Management LLC, has contractually agreed to waive its administrative fees, pay Fund operating expenses, and/or reimburse the Fund .10% of the Class R6 average daily net assets for the period February 1, 2021 through January 31, 2022. Performance would have been lower without limitations in effect.

Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. To obtain performance information current to the most recent month end, please visit the performance summary.

The performance of the Equity Income Fund reflects the deduction of fees for value-added services associated with a mutual fund, such as investment management and fund accounting fees. The inception date for Class A Shares is 06.30.2004. The inception date for Class C Shares is 06.30.2004. The inception date for Class Inst'l Shares is 06.30.2004. The inception date for Class R6 Shares is 02.01.2018. The performance shown reflects the reinvestment of all dividend and capital gains distributions.

Characteristics

Top Ten Holdings as of 03.31.2024

# Company Name Value
1 Microsoft Corp. 5.61%
2 Ferguson Plc 4.58%
3 Anthem, Inc. 4.52%
4 Avery Dennison Corp. 4.47%
5 Ameriprise Financial, Inc. 4.34%
6 Hershey Co. (The) 4.31%
7 Charles Schwab Corp. (The) 4.14%
8 Pepsico, Inc. 3.96%
9 Abbvie, Inc. 3.91%
10 Nasdaq Omx Group, Inc. (The) 3.90%

Current and future portfolio holdings are subject to change and risk. Based on Market Value of securities.

Sector Allocation as of 03.31.2024

Allocations are based on the current weight to funds in the cited Sector. The composition of the fund's holdings is subject to change.

Growth of $10,000 as of 03.31.2024

The Growth of $10,000 is hypothetical based upon the performance of net A Shares at NAV for the period ended 03.31.2024. It includes the reinvestment of dividends and capital gains.

Lipper Equity Income Category Based on Total Return as of 03.31.2024

Term 1 Year 3 Years 5 Years 10 Years
Lipper Ranking / Number of Funds in Category 187/462 38/437 49/417 21/319
Lipper Quartile (Percentile) 2nd (41%) 1st (9%) 1st (12%) 1st (7%)

Statistics

Risk/Return Statistics vs. Russell 1000® Value Index 3 as of 03.31.2024

Term Value
Alpha 2.20
Beta 0.94
R-Squared 93.75
Standard Deviation 14.82
Sharpe Ratio 0.64

3The Funds composition is subject to change. Annual Turnover Ratio is 12 month rolling calculation. Alpha, Beta, R-Squared, Standard Deviation, and Sharpe Ratio are based on a 10-year calculation.

View a Glossary of Terms.

Summary Statistics as of 03.31.2024

Term Value
Weighted Median P/E 25.42
Weighted Average P/B 4.44
Weighted Average Market Cap $286.86B
Annual Turnover 41%

Equity Funds

Insights

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06.13.2024 • Andrew Richman, CTFA

When It Comes to Fed Policy, Follow the Data, Not the Dots

Andy Richman's update on the June Federal Open Market Committee meeting.

06.05.2024 • Charles Wittmann, CFA®

The Lead - "An Indicator of Business Confidence"

- Several notable companies have elected to inaugurate a quarterly dividend this year, while 47 companies in the U.S. stopped paying dividends during the COVID-19 crisis and have yet to reinstitute one. Why? - We would suggest it comes down to the ability to pay an ever-increasing dividend alongside their confidence in their business’s future. - In the current period of fewer dividend initiations, slower dividend growth in the market, and household names cutting their dividends, we believe there are several lessons to learn.

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05.31.2024

Equity Personnel Update

Today Sterling Capital announces the resignation of Shawn M. Gallagher, CFA®, Co-Portfolio Manager of the firm’s Mid Cap Relative Value and Real Estate strategies, effective immediately. Andrew T. DiZio, CFA®, who served as Co-Portfolio Manager on both strategies, will now serve as sole Portfolio Manager for both strategies, effective immediately.

05.07.2024 • Charles Wittmann, CFA®

The Lead - "Dividends for Offense and Defense"

- What could be a catalyst for dividend yielding equities in 2024? - We discuss three considerations: inexpensive valuations relative to history; valuations for dividend yield versus growth; and how both have a history of performing well after positive economic surprises. - Why do dividend payers perform well as the economy surprises to the upside? We provide several possible reasons.

04.04.2024 • Charles Wittmann, CFA®

The Lead - "Seeking Advantaged Economies of Scale"

- One important advantage we seek in large capitalization stocks is having dominant market shares that provide economies of scale. - Economies of scale may make a company more profitable and earn higher returns on its capital than its competitors. - We believe it is possible to identify companies that gain scale, market share, and returns at the expense of competitors. - As we have stated for close to two decades as part of our investment philosophy, we believe size usually translates into cost advantages in production, marketing, and research and development expenditures that can be re-invested back into the business, making such advantages sustainable.

03.05.2024 • Charles Wittmann, CFA®

The Lead - "Advantaged Market Share"

- What makes an advantaged company? - In our view, one notable characteristic of an advantaged company is growing its market share. - Simply put, we believe companies with greater market share are more profitable. - We seek to field a portfolio of advantaged companies with strong and potentially growing market shares to position our clients to win.

Contact

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