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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.

Proud Winner of a 2022 Lipper Fund Award

The Equity Income Fund R6 Share Class (ticker: STREX) won in the three-year performance category, from a peer group of 390 equity income funds. Lipper Fund Awards are presented to one fund in each Lipper classification for achieving the strongest trend of consistent risk-adjusted performance against its classification peers over a three-, five- or ten-year period. This year’s awards were based on performance for the three respective time periods ended November 30, 2022.

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 12.31.2023

Term QTR YTD 1 Year 3 Years 5 Years 10 Years Since Inception
A Shares with 5.75% Sales Charge 5.70% 5.65% 5.65% 9.23% 12.05% 9.38% 10.02%
A Shares without Sales Charge 12.15% 12.11% 12.11% 11.42% 13.38% 10.03% 10.35%
Institutional Shares 12.21% 12.37% 12.37% 11.69% 13.67% 10.30% 10.63%
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 12.31.2023

# Company Name Value
1 Microsoft 5.36%
2 Ferguson PLC 4.83%
3 Discover Financial Services 4.37%
4 Charles Schwab 4.21%
5 Anthem 4.15%
6 Accenture PLC 4.13%
7 Ameriprise Financial 4.02%
8 Avery Dennison 4.00%
9 Home Depot 3.92%
10 Abbott Laboratories 3.83%

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

Sector Allocation as of 12.31.2023

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 12.31.2023

The Growth of $10,000 is hypothetical based upon the performance of net A Shares at NAV for the period ended 12.31.2023. It includes the reinvestment of dividends and capital gains.

Lipper Equity Income Category Based on Total Return as of 12.31.2022

Term 1 Year 3 Years 5 Years 10 Years
Lipper Ranking / Number of Funds in Category 119 / 466 10 / 442 4 / 420 45 / 279
Lipper Quartile (Percentile) 2nd (26%) 1st (3%) 1st (1%) 1st (17%)

Statistics

Risk/Return Statistics vs. Russell 1000® Value Index 3 as of 12.31.2023

Term Value
Alpha 1.99
Beta 0.94
R-Squared 93.64
Standard Deviation 14.90
Sharpe Ratio 0.59

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 12.31.2023

Term Value
Weighted Median P/E 26.06
Weighted Average P/B 4.36
Weighted Average Market Cap $258.76B
Annual Turnover 41%

Equity Funds

Insights

02.06.2024 • Charles Wittmann, CFA®

The Lead - "Actively Aware"

- By utilizing our investment process and our investment team, we believe we can build portfolios different from the benchmark and provide an opportunity to generate returns above the benchmark over time. - Ironically, many passive indexes make active bets themselves. In 2023, the S&P 500 Dividend Aristocrats suffered its worst performance relative to the S&P 500® Index since 1999. - We’ve believed for over 20 years that portfolio managers with material amounts of their net worth invested alongside clients incentivizes portfolio diversification and active adjustments, rather than a static index where there is no vested interest. Our mission is to generate above-average returns with below-average risk over time.

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02.02.2024

Sterling Capital Management LLC to be acquired by Guardian Capital Group Limited

We are delighted to announce that Guardian Capital Group Limited has reached an agreement under which Guardian’s wholly-owned subsidiary Guardian Capital LLC will acquire Sterling Capital from Truist. Post-closing, Sterling Capital will become an independently-operated subsidiary of Guardian.

01.22.2024 • Whitney Stewart, CFA®

Are the S&P 493 and Small Caps Well-Positioned for Attractive Performance?

During the calendar year of 2023, the “Magnificent Seven” (M7) of Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla rallied 111% on average, outperforming the S&P 500® Equal Weight Index (+14% total return for 2024) by 97%, leading to an all-time high concentration for the seven largest stocks in the S&P 500® Index. Based on the factors below, some investors believe the rest of the S&P 493 and small-cap stocks are positioned for attractive returns in 2024 and beyond.

01.04.2024 • Charles Wittmann, CFA®

The Lead - "Seeking Dividend Advantage"

- We believe we can position clients in an advantageous spot by owning stocks whose companies have a track record of paying cash dividends on a regular basis and growing that corporate dividend throughout the year. - Perhaps this higher certainty of receiving dividends that contribute to an investor’s total return is why dividend growth stocks have performed well in the later stages of a Federal Reserve interest rate tightening cycle. - Looking back over time, the return of the S&P 500® Index without dividends is roughly 60% of the return with dividends.

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12.14.2023 • Andrew Richman, CTFA

Fed Preps for Pivot

A bond market that had just come off its strongest month in nearly 40 years in November continued to rally as the Federal Reserve’s (Fed’s) final meeting of 2023 supported the notion that the next move by the Fed will likely be rate cuts.

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12.01.2023

Sterling Capital Announces Liquidation of the Diverse Multi-Manager Active ETF

Sterling Capital Announces Liquidation of the Diverse Multi-Manager Active ETF

Contact

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