Sterling Capital North Carolina Intermediate Tax Free Fund Cl A A · NASDAQ:BNCAX
Sterling Capital North Carolina Intermediate Tax Free Fund Cl A A — Sterling Capital Management — Q2 2022 Earnings Presentation
54 slides from Sterling Capital North Carolina Intermediate Tax Free Fund Cl A A's earnings presentation, Aug 4, 2022
Slide 1: 2nd Quarter 2022 Market Review: Focus Equity
2nd Quarter 2022 Market Review: Focus Equity
Slide 2: Sterling Capital Management LLC Risks & Disclosures
Sterling Capital Management LLC Risks & Disclosures This webcast is being recorded. The material presented in this presentation is as of 06.30.2022, unless otherwise stated. The opinions contained in this presentation reflect those of Sterling Capital Management LLC and are for general informa
Slide 3: Meet Your Speakers & Agenda
Meet Your Speakers & Agenda WebEx Agenda: Equity market and macro environment Focus Equity philosophy and process Focus Equity Q2.2022 performance, activity and positioning Q&A Colin R. Ducharme, CFA® Jeremy M. Lopez, CFA® Whitney L. Stewart, CFA® Executive Director Executive Director Execut
Slide 4: Cash is King in Q2, Commodities Outperformed in First Half
Cash is King in Q2, Commodities Outperformed in First Half Source: Ned Davis Research. The volatility of an index varies greatly. All indices are unmanaged and investments cannot be made directly in an index. The views expressed represent the opinions of Sterling Capital Management. Any type of inve
Slide 5: Elevated Inflation Is Forcing the Fed to Raise Rates, Leading to Market Volatility
Elevated Inflation Is Forcing the Fed to Raise Rates, Leading to Market Volatility CPI = Consumer Price Index. Source: Ned Davis Research (top chart); Credit Suisse, Federal Reserve Board (bottom chart) with current date as of 08.01.2022. The views expressed represent the opinions of Sterling Capita
Slide 6: Durable Goods Inflation and Housing Data May Have Peaked
Durable Goods Inflation and Housing Data May Have Peaked . Source: Ned Davis Research (top chart); Redfin analysis of MLS data (bottom chart). The views expressed represent the opinions of Sterling Capital Management. Any type of investing involves risk and there are no guarantees that these methods
Slide 7: Faster Hiking Cycles Generated Lower Equity Returns Than Slower Cycles
Faster Hiking Cycles Generated Lower Equity Returns Than Slower Cycles . Source: Ned Davis Research. For illustrative purposes only. The views expressed represent the opinions of Sterling Capital Management. Any type of investing involves risk and there are no guarantees that these methods will be s
Slide 8: Will the Fed Slow or Reverse Tightening Cycle if the U.S. Has a Hard Landing?
Will the Fed Slow or Reverse Tightening Cycle if the U.S. Has a Hard Landing? Source: Edward Jones. The views expressed represent the opinions of Sterling Capital Management. Any type of investing involves risk and there are no guarantees that these methods will be successful. 8
Slide 9: Global Profit Optimism At All-Time Low, Previous Lows Have Been Attractive Entry Points
Global Profit Optimism At All-Time Low, Previous Lows Have Been Attractive Entry Points Source: Bank of America Global Fund Manager Survey. The views expressed represent the opinions of Sterling Capital Management. Any type of investing involves risk and there are no guarantees that these methods wi
Slide 10: What To Do In A Recession? Attractive Entry Point for Stocks?
What To Do In A Recession? Attractive Entry Point for Stocks? NBER = National Bureau of Economic Research Source: Market Watch. The views expressed represent the opinions of Sterling Capital Management. Any type of investing involves risk and there are no guarantees that these methods will be succes
Slide 11: S&P 500 Return Needed to Reach January Peak is 28.5% in 1 Year
S&P 500 Return Needed to Reach January Peak is 28.5% in 1 Year The S&P 500® Index needs only a 28.5% return in one year to reach the January 2022 peak level. The average bull market has historically generated 162% cumulative return over 51 months. The views expressed represent the opinions of Sterli
Slide 12: Historically, Bear Markets Are Followed by Bull Markets (167% Avg. Return)
Historically, Bear Markets Are Followed by Bull Markets (167% Avg. Return) Since 1946, the average bear market fell 32% and took an average of 12 months to find a bottom, while fully recoupling losses within an average of 23 months, according to CFRA data and Forbes. There have been five past bear m
Slide 13: Shopify's Price Declined As Macro Shifted Away From High-Growth/Valuation
Shopify’s Price Declined As Macro Shifted Away From High-Growth/Valuation Shopify fell 80% from the 2021 peak of $162.87 (11.25.2021) to $31.24 (06.30.2022), which is below the March 2020 low of $33.25 (03.19.2020), as the macro environment shifted from favoring high growth/high valuation stocks tha
Slide 14: Reflection on Mastercard's Historical Returns
Reflection on Mastercard’s Historical Returns Mastercard stock fell 61% from the 2008 peak of $30.62 (06.05.2008) to $11.92 (01.20.2009) Mastercard stock rose 955% (18% annualized) from $30.62 (06.05.2008) to $323 (07.08.2022) Mastercard stock rose 2,610% (28% annualized) from $11.92 (01.20.20
Slide 15: Equity Opportunities Group Philosophy of Investing
Equity Opportunities Group Philosophy of Investing Seek Capital Appreciation and Risk Reduction by Constructing Portfolios with Attractive Valuations Price over Earnings (P/E), Robust Operating Growth (Earnings per Share (EPS) Growth/Stability), High Profitability (Return on Equity (ROE)) and Strong
Slide 16: Focus Equity Performance History
Focus Equity Performance History Sterling Focus Equity (Gross) Sterling Focus Equity (Net) Russell 1000® Growth Index 20.00 10.00 0.00 -10.00 -20.00 -30.00 -40.00 Since Performance QTR YTD 1 Year 3 Years 5 Years Inception1 Sterling (Gross) -24.28% -34.51% -30.80% 3.81% 12.56% 13.58% Sterling (Net) -
Slide 17: Q2 Top Five Contributors/Bottom Five Detractors
Q2 Top Five Contributors/Bottom Five Detractors Since Performance QTR YTD 1 Year 3 Years 5 Years Inception1 Sterling (Gross) -24.28% -34.51% -30.80% 3.81% 12.56% 13.58% Sterling (Net) -24.32% -34.61% -31.01% 3.53% 12.30% 13.34% Russell 1000® Growth -20.92% -28.07% -18.77% 12.58% 14.29% 14.28% Russel
Slide 18: 1H22: Historically Challenging Market Conditions
1H22: Historically Challenging Market Conditions Sources: Bloomberg L.P.; Sterling Capital. The views expressed represent the opinions of Sterling Capital Management. Any type of investing involves risk and there are no guarantees that these methods will be successful. 18
Slide 19: Oil Up, Despite All Major Global Markets Down
Oil Up, Despite All Major Global Markets Down Sources: Financial Times; Deutsche Bank; Sterling Capital. The views expressed represent the opinions of Sterling Capital Management. Any type of investing involves risk and there are no guarantees that these methods will be successful. 19
Slide 20: Focus Emphasizes Quality Factors, Which Are Down YTD, But Can Drive Long Term Success
Focus Emphasizes Quality Factors, Which Are Down YTD, But Can Drive Long Term Success Sources: J.P. Morgan; Sterling Capital. The views expressed represent the opinions of Sterling Capital Management. Any type of investing involves risk and there are no guarantees that these methods will be successf
Slide 21: Historically Profitable to Buy Into, Instead of Run From, Market Dips
Historically Profitable to Buy Into, Instead of Run From, Market Dips Sources: The Hartford; Sterling Capital. The views expressed represent the opinions of Sterling Capital Management. Any type of investing involves risk and there are no guarantees that these methods will be successful. 21
Slide 22: Historic Market Returns Much Better When Sentiment is Low
Historic Market Returns Much Better When Sentiment is Low Sources: JP Morgan; Sterling Capital. The views expressed represent the opinions of Sterling Capital Management. Any type of investing involves risk and there are no guarantees that these methods will be successful. 22
Slide 23: Treasury Rate Volatility (MOVE Index) Historically High as Market Searches for New Level
Treasury Rate Volatility (MOVE Index) Historically High as Market Searches for New Level Sources: Bloomberg L.P.; Sterling Capital. The views expressed represent the opinions of Sterling Capital Management. Any type of investing involves risk and there are no guarantees that these methods will be su
Slide 24: Yield Curve Flat and Near Top of Ten-Year Range
Yield Curve Flat and Near Top of Ten-Year Range Sources: JP Morgan; Sterling Capital. The views expressed represent the opinions of Sterling Capital Management. Any type of investing involves risk and there are no guarantees that these methods will be successful. 24
Slide 25: Inflation Expectations Have Fallen for Market and Consumers
Inflation Expectations Have Fallen for Market and Consumers1 Sources: Bloomberg L.P.; University of Michigan; Sterling Capital. The views expressed represent the opinions of Sterling Capital Management. Any type of investing involves risk and there are no guarantees that these methods will be succes
Slide 26: Actual Inflation in the Fed's Preferred Metric (PCE) Also Cooling Down
Actual Inflation in the Fed’s Preferred Metric (PCE) Also Cooling Down2 Sources: U.S. BEA; Sterling Capital. The views expressed represent the opinions of Sterling Capital Management. Any type of investing involves risk and there are no guarantees that these methods will be successful. References to
Slide 27: History Would Imply Equity Market Bottom Occurs in Advance of Potential 2024 Policy Rate Cuts
History Would Imply Equity Market Bottom Occurs in Advance of Potential 2024 Policy Rate Cuts3 Sources: Strategas; U.S. Federal Reserve Bank; Sterling Capital. The views expressed represent the opinions of Sterling Capital Management. Any type of investing involves risk and there are no guarantees t
Slide 28: Equity Market Valuation is Below Long-Term Average
Equity Market Valuation is Below Long-Term Average4 Sources: JP Morgan; Sterling Capital. The views expressed represent the opinions of Sterling Capital Management. Any type of investing involves risk and there are no guarantees that these methods will be successful. References to footnotes can be f
Slide 29: Current Valuation Levels Imply Attractive Forward Returns
Current Valuation Levels Imply Attractive Forward Returns Sources: JP Morgan; Sterling Capital. The views expressed represent the opinions of Sterling Capital Management. Any type of investing involves risk and there are no guarantees that these methods will be successful. 29
Slide 30: We See Value Outside Concentrated Mega Cap Names
We See Value Outside Concentrated Mega Cap Names Sources: JP Morgan; Sterling Capital. The views expressed represent the opinions of Sterling Capital Management. Any type of investing involves risk and there are no guarantees that these methods will be successful. 30
Slide 31: Seek to Buy the Dip, Quality, Smaller, and Out-of-Favor
Seek to Buy the Dip, Quality, Smaller, and Out-of-Favor Sources: Morningstar; Sterling Capital. The views expressed represent the opinions of Sterling Capital Management. Any type of investing involves risk and there are no guarantees that these methods will be successful. 31
Slide 32: Focus Equity Characteristics and Top Ten Holdings
Focus Equity Characteristics and Top Ten Holdings Sterling Focus Equity Portfolio Characteristics Top Ten Equity Holdings Sterling Index 1. S&P Global, Inc. 10.0% Wtd. Average Market Cap $293.5B $730.9B 2. Mastercard Inc. Class A 8.4% 3. CoStar Group, Inc. 7.9% Wtd. Median Market Cap $39.4B $270.6B
Slide 33: Focus Equity is Built to Differ from the Benchmark
Focus Equity is Built to Differ from the Benchmark Sterling Focus Equity 50% Sterling Focus Equity 44.4% 45% 43.6% Russell 1000® Growth Index 40% 35% 30% 24.7% 25% 20% 15.5% 15% 12.4% 12.3% 9.3% 10% 8.1% 7.1% 5.9% 5.0% 3.9% 5% 3.0% 1.5% 1.4% 1.8% 0.0% 0.0% 0.0% 0.0% 0.0%0.1% 0.3%0.0% 0% Comm Consume
Slide 34: Focus Equity Has >25% of assets Outside the R1000G Index
Focus Equity Has >25% of assets Outside the R1000G Index5 Sources: The Wall Street Journal; FTSE Russell. The views expressed represent the opinions of Sterling Capital Management. Any type of investing involves risk and there are no guarantees that these methods will be successful. As of 06.30.2022
Slide 35: Russell Also Sees Value in Focus - Over 37% Q2 Assets Now Included in R1000V Index
Russell Also Sees Value in Focus - Over 37% Q2 Assets Now Included in R1000V Index6 Existing Index Members New Index Members Sources: The Wall Street Journal; FTSE Russell. The views expressed represent the opinions of Sterling Capital Management. Any type of investing involves risk and there are no
Slide 36: Founders and Owners Remain in Focus
Founders and Owners Remain in Focus7 Source: Harvard Business Review. The views expressed represent the opinions of Sterling Capital Management. Any type of investing involves risk and there are no guarantees that these methods will be successful. Specific securities identified and described do not
Slide 37: Ownership Concentration and Control in the MSCI ACWI Index Has Increased
Ownership Concentration and Control in the MSCI ACWI Index Has Increased8 Source: MSCI ESG Research as of 02.01.2022. The views expressed represent the opinions of Sterling Capital Management. Any type of investing involves risk and there are no guarantees that these methods will be successful. Refe
Slide 38: More Than 2 Years after COVID-19, Office Occupancy Still Less Than 40% Full
More Than 2 Years after COVID-19, Office Occupancy Still Less Than 40% Full9 Source: Bloomberg L.P. The views expressed represent the opinions of Sterling Capital Management. Any type of investing involves risk and there are no guarantees that these methods will be successful. References to footnote
Slide 39: Recent Occupancy is Falling Again Since Flatlining for Several Prior Weeks
Recent Occupancy is Falling Again Since Flatlining for Several Prior Weeks Source: Bloomberg L.P. The views expressed represent the opinions of Sterling Capital Management. Any type of investing involves risk and there are no guarantees that these methods will be successful. 39
Slide 40: Below Average Multifamily Absorption Means Landlords Looking for More Tenants
Below Average Multifamily Absorption Means Landlords Looking for More Tenants10 Source: CoStar 06.2022. The views expressed represent the opinions of Sterling Capital Management. Any type of investing involves risk and there are no guarantees that these methods will be successful. References to foot
Slide 41: U.S. E-Commerce Sales Continue to Grow Off Much Higher Post-Pandemic Base
U.S. E-Commerce Sales Continue to Grow Off Much Higher Post- Pandemic Base Sources: Bloomberg L.P.; Sterling Capital. The views expressed represent the opinions of Sterling Capital Management. Any type of investing involves risk and there are no guarantees that these methods will be successful. 41
Slide 42: Not Just a COVID-19 Bump as Pet Products Resilient Through Recessions
Not Just a COVID-19 Bump as Pet Products Resilient Through Recessions and Growing Faster Than PCE PCE = personal consumption expenditures Sources: Raymond James Research; Bureau of Economic Analysis. The views expressed represent the opinions of Sterling Capital Management. Any type of investing inv
Slide 43: We Have Seen Strong Demand Continue for Over Two Years
We Have Seen Strong Demand Continue for Over Two Years11 Source: Adobe Analytics. The views expressed represent the opinions of Sterling Capital Management. Any type of investing involves risk and there are no guarantees that these methods will be successful. References to footnotes can be found on
Slide 44: We Think Animal Health Is an Attractive Market
We Think Animal Health Is an Attractive Market12 “Veterinary businesses carry less risk than traditional healthcare investments, which have attracted heavy private equity investment, often with terrible results. “From a legal perspective, there is a low reimbursement risk,” said Christopher Atkinson
Slide 45: Focus Equity Summary
Focus Equity Summary Growth of $1 Million History of Attractive Risk-Adjusted Returns Gross and Net of Fees, Since Inception (12.31.2015) Through a Variety of Market Environments $4,000,000 Focus Equity Gross Focus Equity Net $3,600,000 Russell 1000® Growth Russell 3000® $3,200,000 Diligent Port
Slide 46: Appendix
Appendix py STERLING
Slide 47: Intra-year Market Declines Are Typical, Nonetheless Markets Rise In Most Years
Intra-year Market Declines Are Typical, Nonetheless Markets Rise In Most Years Sources: JP Morgan; Sterling Capital. The views expressed represent the opinions of Sterling Capital Management. Any type of investing involves risk and there are no guarantees that these methods will be successful. 47
Slide 48: Time In the Market, Not Timing the Market is Critical
Time In the Market, Not “Timing the Market” is Critical Sources: The Hartford; Sterling Capital. The views expressed represent the opinions of Sterling Capital Management. Any type of investing involves risk and there are no guarantees that these methods will be successful. 48
Slide 49: Patient Capital Helps Avoid the Curse of the Average Investor
Patient Capital Helps Avoid the Curse of the “Average Investor” Sources: JP Morgan; Sterling Capital. The views expressed represent the opinions of Sterling Capital Management. Any type of investing involves risk and there are no guarantees that these methods will be successful. 49
Slide 50: Energy and Defensive Sectors Outperformed in the First Half, Growth Sectors Lagged
Energy and Defensive Sectors Outperformed in the First Half, Growth Sectors Lagged Source: Ned Davis Research. The volatility of an index varies greatly. All indices are unmanaged and investments cannot be made directly in an index. The views expressed represent the opinions of Sterling Capital Mana
Slide 51: Russia/Ukraine Conflict Contributed to Commodity Rally and Equity Volatility
Russia/Ukraine Conflict Contributed to Commodity Rally and Equity Volatility As of 2020. As of 11.2021. S&P 500 Total Return After Geopolitical Events Source: U.S. Energy Information Administration, Sky News (top left chart); International Energy Agency, Nikkei Asia (top right chart); Bloomberg, Mor
Slide 52: Important Information
Important Information Disclosures Reference List 1 http://www.sca.isr.umich.edu/files/tbcpx1px5.pdf 2 https://www.bea.gov/news/2022/personal-income-and-outlays-may-2022 3 https://www.federalreserve.gov/newsevents/pressreleases.html 4 https://am.jpmorgan.com/content/dam/jpm-am-aem/global/en/insights/
Slide 53: Important Information
Important Information Disclosures Performance Disclosure: Performance is preliminary and is annualized for periods longer than one year. Net of fees performance returns are presented net of the investment management fees and trading expenses. “Pure” Gross of fees performance returns do not reflect t
Slide 54: Sterling Capital Management- Focus Equity Composite
Sterling Capital Management- Focus Equity Composite January 1, 2016- December 31, 2021 Description: Consists of all discretionary separately managed Focus Equity portfolios. Sterling's Focus Equity portfolio investments are flexible and may span growth and value, large- and small-capitalization comp
Sterling Capital Management — Q2 2022 Earnings Presentation on 6ix