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Quality Income Fund

Mutual Funds

Quality Income Fund


Fund Managers

Photo of Michael  Sun

Michael Sun, CFA®

Photo of Jeffrey  Ormsby

Jeffrey Ormsby, CFA®

Photo of Byron  Mims

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.

Fund Facts

Term Class A Shares Class C Shares Class I Shares
Ticker SCSSXSCSTXSCSPX
Inception Date 02.01.201302.01.201302.01.2013
Investment Min. $1,000$1,000$1,000,000
Subsequent Investment Min.2 N/AN/AN/A
Max. Up Front Sales Charge 2%N/AN/A
Max. Deferred Sales Charge N/A1%N/A

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

Quality Income Fund

Management

View professional designations disclosures

Photo of Michael  Sun

Michael Sun, CFA®

Co-Portfolio Manager

Photo of Jeffrey  Ormsby

Jeffrey Ormsby, CFA®

Co-Portfolio Manager

Photo of Byron  Mims

Byron Mims, CFA®

Co-Portfolio Manager

Performance

Fund Performance as of 06.30.2024

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 N/A N/A N/A N/A N/A N/A 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 03.31.2024

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.

Effective Duration Breakdown as of 03.31.2024

Name Value
0-1 Yr. 7.10
1-2 Yr. 5.70
2-3 Yr. 14.10
3-5 Yr. 20.90
5-10 Yr. 45.20
10+ Yr. 7.00

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

Summary Statistics as of 03.31.2024

Name Value
Number of Holdings 219
Average Life 7.12 Years
Effective Duration 5.20 Years
Annual Turnover 17%

Portfolio Composition as of 03.31.2024

Composition Fund Index
Securitized 94.7% 100.0%
     MBS 0.5% 0.0%
     ABS 14.4% 0.0%
     CMBS 18.2% 0.0%
     CMO 24.7% 0.0%
     MBS Passthrough 36.9% 100.0%
Treasury 4.8% 0.0%
     Treasury 4.8% 0.0%
Cash 0.5% 0.0%
     Cash 0.5% 0.0%

Top Ten Holdings as of 03.31.2024

# Company Name Value
1 U.S. Treasury 2.375% 15-Feb-2042 1.88%
2 Fnma 30Yr Pool 6616 6.000% 01-Jun-2053 1.54%
3 Fhlmc 30Yr Pool 3223 6.000% 01-Jul-2053 1.49%
4 Fnma, Series 2017-42, Class Hl 1.48%
5 Onemain Direct Auto Receivables Trust 2023-1 5.41% 14-Nov-2029 1.48%
6 Fnma 30Yr Pool 6097 3.500% 01-Jun-2050 1.48%
7 Fhlmc 30Yr Pool 5921 2.500% 01-Sep-2051 1.45%
8 Avis Budget Rental Car Funding (Aesop) Llc 5.49% 20-Jun-2029 1.41%
9 Fhlmc 30Yr Pool 2952 4.500% 01-May-2053 1.33%
10 Hertz Vehicle Financing Iii Series 2021-2 1.68% 25-Dec-2027 1.33%

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

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.

Distribution

Monthly Dividend Distribution as of 06.30.2024

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

30-Day SEC Yield as of 05.31.2024

Share Class Without Waivers With Waivers
Class A 3.41% 3.46%
Class C 2.73% 2.77%
Class I 3.74% 3.79%

Fixed Income Funds

Insights

07.03.2024 • Charles Wittmann, CFA®

The Lead - "Going for Gold"

- 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

preview of document

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%.

preview of document

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.

Contact

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