Equity Income SMA

SMA

Overview

Inception
Date

12.31.2000

Account
Minimum

$100,000

Philosophy

Seek Long-Term Appreciation by Identifying Companies with:

Consistent Dividend Growth and Above Average Yield
Attractive Valuation
Strong Balance Sheets
Skilled Management
Above Average Return on Capital

Process

Internal Screens and External Sources Used to Identify Investment Candidates
Team-Based Approach to Fundamental Research
Valuation Assessed Relative to Historical Range, Industry Peers, Growth Rate, and the Market

Equity Income SMA

Management

View professional designations disclosures

Charles Wittmann, CFA^®

Co-Portfolio Manager

Jeremy Lopez, CFA^®

Co-Portfolio Manager

Performance

All Performance as of 06.30.2024
Term	QTR	YTD	1 Year	3 Years	5 Years	10 Years	Since Inception¹
Equity Income SMA (Gross)	-2.28	4.85	15.98	8.63	11.82	10.42	10.31
Equity Income SMA (Net)	-3.01	3.31	12.63	5.48	8.59	7.22	7.11

The composite inception date is 12.31.2000. Effective 06.30.2023, the net of fee performance reflects the deduction of the maximum SMA bundled fee of 3.00% annually for all periods presented. Actual fees may vary by size and type of portfolio. Performance is preliminary and is annualized for periods longer than one year. Net of fees performance returns are presented net of the SMA bundled fee, which includes all charges for trading costs, advisory services, portfolio management, custody and other administrative fees. “Pure” Gross of fees performance returns do not reflect the deduction of any fees including trading costs: a client’s return will be reduced by the management fees and other expenses it may incur. Investment management fees are described in Sterling’s Form ADV 2A. Performance reflects the reinvestment of interest income and dividends and realized capital gains. The performance presented represents past performance and is no guarantee of future results. Performance is compared to an index: however, the volatility of an index varies greatly and investments cannot be made directly in an index. Market conditions vary from year to year and can result in a decline in market value due to material market or economic conditions. Sources: Russell Investments; Sterling Capital Management Analytics. Please refer to the GIPS Composite Report on the Fact Sheet linked above for additional disclosures.

Equity Income SMA

Materials

SMA

Insights

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.

08.27.2024 • Andrew DiZio, CFA^®

Higher Interest Rates & REITs - Looking Ahead at Lower New Supply

The market has spent much of the last two years fixated on the negative effects of rising rates on Real Estate Investment Trust (REIT) share prices. What has received less attention is the slowdown in new developments of commercial and multifamily real estate due to higher interest rates and the potential for higher rents in coming years should consistent demand growth be unmet by new supply. We believe publicly-traded REITs, which derive much of their earnings growth from existing real estate rather than new development, are overlooked future beneficiaries of this construction slowdown.

08.13.2024
James Kerin, CFA^®, Michael McVicker

Natural Gas Prepayment Bonds

Energy prepayment (prepay) bonds enable municipal utilities to lock into a discounted price on a long-term supply of energy, most commonly natural gas or electricity. Issued by special purpose authorities, bonds are structured with far-dated final maturities but shorter-dated mandatory tenders that are backed by the obligation of a bank or insurance company, known as the guarantor, to ensure that it occurs in order to return principal to bondholders. As a result, prepay bonds are ultimately a corporate credit exposure in the tax-exempt market. The final maturity matches the term of the energy supply contract and improves the bond’s market discount tax treatment, while the shorter-dated tender serves to optimize borrowing costs within the transaction.

08.01.2024 • Charles Wittmann, CFA^®

The Lead - Value in Stability

- Low quality and risk performed well in the first half of 2024.
- As a result of more tepid inflation data supporting a potential reduction in the federal funds rate, we believe the market began anticipating that lower rates may aid companies that need stress relief from the higher interest payments placed on their businesses.
- Evidence of this stress can be seen in how companies in the S&P 500 Index began reducing the growth rate of dividends they pay their shareholders as cash flows become more difficult to generate.
- We believe quality companies that increase rather than decrease their dividends and signal their financial strength through short- and long-term environments may be a formula for client success.