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 | 2.37% | 2.70% | 8.62% | -1.04% | 0.11% | 1.56% | 1.54% |
| A Shares without Sales Charge | 4.44% | 4.76% | 10.77% | -0.39% | 0.52% | 1.77% | 1.72% |
| Institutional Shares | 4.62% | 4.95% | 11.04% | -0.13% | 0.77% | 2.02% | 2.29% |
| Lipper U.S. Mortgage Median | 8.26% | 13.22% | 20.80% | 17.16% | 5.70% | 5.31% | N/A |
The total expense ratios for Class A, C and I Shares are 0.82%, 1.57% and 0.57%, respectively.
The Advisor has contractually agreed to limit certain fees paid by the Fund from 02.01.2024-01.31.2025. 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 Sterling Capital Quality 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 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. The performance shown reflects the reinvestment of all dividend and capital gains distributions. Performance is annualized for periods greater than one year.
Performance for Class A Shares and Institutional Shares for periods prior to inception on 02.01.2013 is based on performance of Class S Shares of the Fund which were re-designated as Institutional Shares as of 02.01.2013. Class A 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.
Characteristics
Quality Breakdown as of 09.30.2024
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. | 5.81 |
| 1-2 Yr. | 7.87 |
| 2-3 Yr. | 5.78 |
| 3-4 Yr. | 15.97 |
| 4-5 Yr. | 10.07 |
| 5-6 Yr. | 17.53 |
| 6-7 Yr. | 16.66 |
| 7-8 Yr. | 4.59 |
| 8-9 Yr. | 5.42 |
| 9-10 Yr. | 0.49 |
| 10+ Yr. | 9.81 |
Current and future portfolio holdings are subject to change and risk. Based on Market Value of securities.
| Name | Value |
|---|---|
| Number of Holdings | 214 |
| Average Life | 6.86 Years |
| Effective Duration | 5.30 Years |
| Annual Turnover | 10% |
| Composition | Fund | Index |
|---|---|---|
| Government Related | 0.6% | 0.0% |
| Agency | 0.6% | 0.0% |
| Securitized | 92.6% | 100.0% |
| MBS | 39.1% | 0.0% |
| ABS | 10.6% | 0.0% |
| CMBS | 18.6% | 0.0% |
| CMO | 24.3% | 0.0% |
| Treasury | 3.9% | 0.0% |
| Treasury | 3.9% | 0.0% |
| Cash | 3.0% | 0.0% |
| Cash | 3.0% | 0.0% |
| # | Company Name | Value |
|---|---|---|
| 1 | U.S. Treasury 2.375% 15-Feb-2042 | 2.35% |
| 2 | Fhlmc 30yr Pool#zt0541 4.000% 01-jun-2048 | 1.93% |
| 3 | Fhlmc 30Yr Pool Zt0541 4.000% 01-Jun-2048 | 1.67% |
| 4 | Fannie Mae Remics | 1.56% |
| 5 | U.S. Treasury 1.875% 15-nov-2051 | 1.54% |
| 6 | Fnma 30Yr Pool Fs6616 6.000% 01-Jun-2053 | 1.50% |
| 7 | Fhlmc 30Yr Pool Sd3223 6.000% 01-Jul-2053 | 1.47% |
| 8 | Fnma 30Yr Pool Ca6097 3.500% 01-Jun-2050 | 1.47% |
| 9 | Avis Budget Rental Car Funding (Aesop) Llc 5.49% 20-Jun-2029 | 1.46% |
| 10 | Fhlmc 30yr PoolRa5921 2.500% 01-sep-2051 | 1.46% |
Current and future portfolio holdings are subject to change and risk. Based on Market Value of securities.
Growth of $10,000 as of 09.30.2024
The Growth of $10,000 is hypothetical based upon the performance of net A Shares at NAV for the period ended 09.30.2024. It includes the reinvestment of dividends and capital gains.
Distribution
| Month | Class A Shares | Class C Shares | Class Inst'l Shares |
|---|---|---|---|
| July 2024 | $0.0244 | $0.0195 | $0.0263 |
| 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 |
| Share Class | Without Waivers | With Waivers |
|---|---|---|
| Class A | 3.13% | 3.17% |
| Class C | 2.54% | 2.58% |
| Class I | 3.45% | 3.49% |
Quality Income Fund
Materials
Fixed Income Funds
Insights
10.01.2024 • Charles Wittmann, CFA®
- One of the most common mental shortcuts is regression to the mean, or the idea that outcomes far from average will revert to average over time. - Where did the idea come from, is it true in every case, and can it create a greater understanding and yield profitable insights? - Finally, if there are advantaged companies that challenge this assumption as the economy has evolved, what valuations will the market typically award them?
09.30.2024
Sterling Capital Equity Portfolio Management Updates
Sterling Capital announces the creation of the Insight Equity Group, combining the firm's Fundamental Equity and Relative Value teams, along with the April 2025 retirement of Patrick Rau, CFA®/.
09.18.2024 • Brandon Carl, CFA®
U.S. Equity Market Performance Following the First Fed Funds Rate Cut
After two and a half years of battling elevated inflation with aggressive monetary policy tightening measures, the Federal Reserve (Fed) finally reduced the federal funds target rate range (fed funds rate) by 50 basis points during its September 2024 meeting. With recent inflation indicators seemingly within the Fed’s comfort zone, coupled with an increasing emphasis on supporting the labor market, we believe it’s highly likely that additional rate cuts are forthcoming.
09.12.2024 • Will Smith, CFA®
Down but Not Out: Why Mid-Cap Value Appears Increasingly Attractive
For almost a decade, large-cap growth has been a dominant factor driving market returns. However, we see mounting evidence mid-cap value stocks are due for a comeback. We have long argued mid caps are a potential “sweet spot” for investors. We believe they boast better liquidity, stronger balance sheets, and more durable competitive advantages than small-cap peers and are often more nimble, focused, and less well covered by the sell side than large caps.
09.04.2024 • Charles Wittmann, CFA®
The Lead - Dividend Opportunities
- As we enter September, it appears the Federal Reserve is prepared to lower the federal funds rate at their September 18, 2024 meeting. - Historically, dividend payers have outperformed non-dividend payers after the first cut. - One may question if historically it has been better to own high yielders versus dividend growers, and if it has been better to own slower or faster dividend growers. We address these topics in this month’s piece.
08.29.2024
Guardian Capital buys Sterling Capital Management from Truist
(pionline.com) Guardian Capital, a wholly owned subsidiary of Guardian Capital Group, will acquire investment manager Sterling Capital Management from Truist Financial.
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