Mutual Funds
Quality Income Fund
Fund Managers
Michael Sun, CFA®
Jeffrey Ormsby, CFA®
Byron Mims, CFA®
Overview
A
Shares
SCSSX
Inception
Date
02.01.2013
Investment
Min.
$1,000
Subsequent
Investment Min.1
N/A
Max. Up Front
Sales Charge
2%
Max. Deferred
Sales Charge
N/A
1If subsequent investments are made as part of an AIP, the minimum is $25.
Philosophy & Process
In managing the fund, the portfolio management team employs a multi-faceted approach to generate excess return and uses a combination of top-down and bottom-up analysis, quantitative vs. qualitative analysis and fundamentals vs. valuation. There is a strong emphasis on risk management and an adherence to certain core investment beliefs:
- "If you cannot measure it, you cannot manage it."
- Avoid unintended exposures
- Average duration around 2 to 5 years with focus on high quality and risk management
- Participate in longer term trends - don't buy on short-term trends or try to time what is going on in the market
- Attempts to achieve risk-adjusted performance over time
Investment Considerations
The fund is subject to the same risks as the underlying bonds in the portfolio such as credit, prepayment, call and interest rate risk. As interest rates rise the value of bond prices will decline. The fund may invest in more aggressive investments such as foreign securities which may expose the fund to currency and exchange rate fluctuations; derivatives (futures and swaps); mortgage backed securities sensitive to interest rates and high yield debt (also known as junk bonds), all of which may cause greater volatility and less liquidity. Derivatives may be more sensitive to changes in market conditions and may amplify risks.
| Term | Class A Shares | Class C Shares | Class I Shares |
|---|---|---|---|
| Ticker | SCSSX | SCSTX | SCSPX |
| Inception Date | 02.01.2013 | 02.01.2013 | 02.01.2013 |
| Investment Min. | $1,000 | $1,000 | $1,000,000 |
| Subsequent Investment Min.2 | N/A | N/A | N/A |
| Max. Up Front Sales Charge | 2% | N/A | N/A |
| Max. Deferred Sales Charge | N/A | 1% | N/A |
2If subsequent investments are made as part of an AIP, the minimum is $25.
Co-Portfolio Manager
Co-Portfolio Manager
Co-Portfolio Manager
Performance
| Term | QTR | YTD | 1 Year | 3 Years | 5 Years | 10 Years | Since Inception |
|---|---|---|---|---|---|---|---|
| A Shares with 2.00% Sales Charge | -1.50% | -1.67% | 1.52% | -2.49% | -0.45% | 1.15% | 1.60% |
| A Shares without Sales Charge | 0.50% | 0.30% | 3.59% | -1.82% | -0.06% | 1.35% | 1.76% |
| Institutional Shares | 0.45% | 0.31% | 3.73% | -1.61% | 0.17% | 1.59% | 1.98% |
| Lipper U.S. Mortgage Median | 0.32% | -0.21% | 2.62% | -2.97% | -0.72% | 0.78% | N/A |
The gross expense ratios for Class A, C and I Shares are 0.88%, 1.63% and 0.63%, respectively. The net expense ratios for Class A, C and I Shares are 0.84%, 1.59% and 0.59%, respectively.
The Advisor has contractually agreed to limit certain fees paid by the Fund from 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 Securitized Opportunities 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 02.01.2013. The inception date for Class C Shares is 02.01.2013. The inception date for Class Inst'l Shares is 02.01.2013. Performance for Class A Shares, Class C Shares and Institutional Shares for periods prior to inception on February 1, 2013 is based on performance of Class S Shares of the Fund which were re-designated as Institutional Shares as of February 1, 2013. Class A Shares, Class C Shares and Institutional Shares of the Fund would have substantially similar performance because the Shares are invested in the same portfolio of securities and the performance would differ only to the extent that the Classes have different expenses. The performance shown reflects the reinvestment of all dividend and capital gains distributions.
Characteristics
Quality Breakdown as of 06.30.2024
Credit quality ratings using Moody's rating symbols reflect the credit quality of the underlying bonds in the fund portfolio and not of the Fund itself. Moody's assigns a range of ratings from AAA being the highest quality to C being the lowest rated class of bonds. Securities not rated by Moody's may be rated by S&P, Fitch or if no agency rating is available, the Fund will assign a rating of not rated. Bond quality ratings are subject to change.
| Name | Value |
|---|---|
| 0-1 Yr. | 8.50 |
| 1-2 Yr. | 5.20 |
| 2-3 Yr. | 12.00 |
| 3-5 Yr. | 19.40 |
| 5-10 Yr. | 47.30 |
| 10+ Yr. | 7.60 |
Current and future portfolio holdings are subject to change and risk. Based on Market Value of securities.
| Name | Value |
|---|---|
| Number of Holdings | 219 |
| Average Life | 7.12 Years |
| Effective Duration | 5.20 Years |
| Annual Turnover | 10% |
| Composition | Fund | Index |
|---|---|---|
| Government Related | 0.5% | 0.0% |
| Agency | 0.5% | 0.0% |
| Securitized | 94.2% | 100.0% |
| MBS | 0.5% | 0.0% |
| ABS | 14.1% | 0.0% |
| CMBS | 18.6% | 0.0% |
| CMO | 24.0% | 0.0% |
| MBS Passthrough | 37.0% | 100.0% |
| Treasury | 4.3% | 0.0% |
| Treasury | 4.3% | 0.0% |
| Cash | 1.0% | 0.0% |
| Cash | 1.0% | 0.0% |
| # | Company Name | Value |
|---|---|---|
| 1 | FHLMC 30Y Zt0541 4.000% 01-Jun-2048 | 1.86% |
| 2 | U.S. Treasury 2.375% 15-Feb-2042 | 1.84% |
| 3 | FNMA 30Y Fs6616 6.000% 01-Jun-2053 | 1.50% |
| 4 | Onemain Direct 2023-1 5.41% 14-Nov-2029 | 1.46% |
| 5 | FNMA, Series 2017-42, Class Hl | 1.46% |
| 6 | FHLMC 30Y Sd3223 6.000% 01-Jul-2053 | 1.44% |
| 7 | FNMA 30Y Ca6097 3.500% 01-Jun-2050 | 1.40% |
| 8 | Avis (Aesop) LLC 5.49% 20-Jun-2029 | 1.39% |
| 9 | FHLMC 30Y Ra5921 2.500% 01-Sep-2051 | 1.38% |
| 10 | Hertz Series 2021-2 1.68% 25-Dec-2027 | 1.31% |
Current and future portfolio holdings are subject to change and risk. Based on Market Value of securities.
Growth of $10,000 as of 06.30.2024
The Growth of $10,000 is hypothetical based upon the performance of net A Shares at NAV for the period ended 06.30.2024. It includes the reinvestment of dividends and capital gains.
Distribution
| Month | Class A Shares | Class C Shares | Class Inst'l Shares |
|---|---|---|---|
| June 2024 | $0.0246 | $0.0195 | $0.0263 |
| May 2024 | $0.0245 | $0.0192 | $0.0263 |
| April 2024 | $0.0243 | $0.0193 | $0.0260 |
| March 2024 | $0.0244 | $0.0192 | $0.0263 |
| February 2024 | $0.0242 | $0.0192 | $0.0259 |
| January 2024 | $0.0235 | $0.0182 | $0.0254 |
| December 2023 | $0.0232 | $0.0181 | $0.0251 |
| November 2023 | $0.0230 | $0.0183 | $0.0248 |
| October 2023 | $0.0229 | $0.0187 | $0.0247 |
| September 2023 | $0.0221 | $0.0173 | $0.0239 |
| August 2023 | $0.0220 | $0.0163 | $0.0239 |
| July 2023 | $0.0216 | $0.0158 | $0.0234 |
| Share Class | Without Waivers | With Waivers |
|---|---|---|
| Class A | 3.36% | 3.41% |
| Class C | 2.68% | 2.73% |
| Class I | 3.68% | 3.73% |
Quality Income Fund
Materials
Fixed Income Funds
Insights
07.03.2024 • Charles Wittmann, CFA®
- Economic indicators such as gross domestic product and the Institute for Supply Management Manufacturing Index recently showed slowing growth, while the Consumer Price Index remains stubbornly above the Federal Reserve’s target rate. Concerns over slowing economic growth amidst higher inflation, also known as stagflation, have emerged. - In such a scenario, we would note that quality and cash deployment (dividends and share buybacks) shine in a slow growth, higher inflation environment. - The problem recently is that the slowing economy has led to a slowdown in cash returned to shareholders in the form of dividends and share buybacks by the market. - We believe in the importance of preparation for potential uphill climbs as well as the value in finding investments that raise their cash returns to shareholders.
07.02.2024
Sterling Capital Management LLC joins Guardian Capital Group Limited
Sterling Capital Management LLC announced today the completion of its acquisition by Guardian Capital LLC, a wholly-owned subsidiary of global asset manager Guardian Capital Group Limited.
07.02.2024
Sterling Capital joins Guardian Capital Group Limited
“We are thrilled to announce the completion of Sterling’s acquisition by Guardian Capital Group, a global asset manager. We are also thankful to join an organization that shares our culture and values in protecting our clients’ assets - and we are truly excited for our bright future together!” – Scott Haenni, Sr. Managing Director & CEO at Sterling Capital Management
06.27.2024 • Jeffrey Ormsby, CFA®
Fixed Income and Federal Reserve Rate Cuts: How Should We Expect Fixed Income to Perform?
As one would expect, in most historical periods where interest rates were declining, fixed income total return has been good, with investors capturing the coupon income as well as benefiting from the increase in prices as rates fall. Looking at the history of the Bloomberg Aggregate Bond Index since 1988, in the previous five Federal Reserve (Fed) rate-cutting cycles, the index posted annualized returns averaging north of 8%.
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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