3 / 5 Stars
1 1 5 1 4
Zacks Investment Research
1 (Strong Buy)
Standard & Poor's
3 / 5 Stars
U.S. News evaluated 326 Large Value Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.
Note: Profile written for different share class.
The fund has returned 13.06 percent over the past year, 10.92 percent over the past three years, and 18.75 percent over the past five years.
|Trailing Returns||Updated 02.28.2014|
|Year to date||-2.4%|
|3 Years (Annualized)||10.9%|
|5 Years (Annualized)||18.8%|
|10 Years (Annualized)||N/A|
It all boils down to a get-rich-slowly, tortoise-wins-the-race philosophy for the Sterling Capital Equity Income fund. Dividends play a key role in this strategy, in which management favors established companies with a history of increasing dividend payments over time.
As of March 05, 2014, the fund has assets totaling almost $2.02 billion invested in 40 different holdings. Its portfolio primarily consists of large- and giant-cap domestic value stocks, with a smaller portion of international stocks.
Like most other funds, the BB&T Equity Income fund took a few hits in the 2008 market meltdown. However, the fund had relatively little exposure to the banking sector, says manager George Shipp, which insulated it somewhat from the heavy losses similar funds sustained in the market collapse. In 2009, the fund rebounded to post double-digit gains, and it finished in the top 19 percent of funds in its category in 2010.
An example of a company that Shipp likes is Illinois Tool Works, a manufacturer of engineered products and specialty systems. He bought it in late August 2010 based on the company's long history of raising dividends and its large and growing global footprint, especially in China. The fund has returned 13.06 percent over the past year and 10.92 percent over the past three years.
The fund's primary goal is capital appreciation and current income, which Shipp tries to achieve by investing in mature, dividend-producing companies. As of the end of the first quarter, the fund's five-year returns put it in the top 2 percent of the large value category. The fund has returned 18.75 percent over the past five years.
Shipp says the fund's strategy is fairly simple: "Dividends matter. In our business things run hot and cold in bull and bear markets, but dividends, and particularly dividend growth, have stood the test of time," he says.
When selecting stocks, management looks for companies with at least a 2 percent dividend that have consistently raised their dividend payouts. "The idea of buying companies that are able to pay and raise dividends [is that] inherently, you're buying more mature companies generating more cash than they need for their ongoing operation," Shipp says. "It tends to get you into higher-quality companies. They're already at the stage in their corporate lifecycle where they're throwing off cash to shareholders."
Shipp keeps the portfolio fairly compact at about 25 to 27 names and tends to hold picks for about two to three years, which keeps turnover relatively low (around 37 percent in late 2010). "We want good ideas to make a difference in the portfolio," he says.
Role in Portfolio
Morningstar has not assigned a role to this portfolio.
George Shipp, chief investment officer at Scott & Stringfellow, manages the fund with a team of 4 analysts. Shipp has been with the fund since its 2004 inception. He also manages BB&T's Special Opportunities Equity Fund.
Sterling Capital Equity Income Fund has an expense ratio of 1.45 percent.
Like all stock funds, market volatility can affect performance and returns.