General Description of Advisory Firm
Sterling Capital Management LLC (“Sterling,” “we,” or “us”) is a registered investment adviser with the SEC under
the Investment Advisers Act of 1940 (the “Advisers Act”). The firm was founded in 1970 and is organized as a North
Carolina limited liability company. Sterling is an independently operated subsidiary of Truist Financial Corporation
(NYSE: TFC), one of the nation’s largest financial services holding companies. Sterling has over 175 employees
and is headquartered in Charlotte, NC, with additional offices in Raleigh, NC; Virginia Beach, VA; King of Prussia,
PA; Jupiter, FL and San Francisco, CA.
Assets Under Management
As of December 31, 2023, Sterling’s assets under management (“AUM”) totaled $66,746,472,114. Of that total, we
managed, on a discretionary basis, $66,623,362,646 in client assets. Non-discretionary client assets totaled
$123,109,468.
Description of Advisory Services
As a registered investment adviser, Sterling has a fiduciary obligation to our clients in providing investment
management services. As a fiduciary, we will act in our clients’ best interests and will endeavor to ensure that clients
are informed about and have access to material facts and information related to Sterling’s services. This Brochure
is a key element in meeting this disclosure obligation. The fiduciary standards we aim to follow are established
under the Advisers Act and state laws, where applicable.
Sterling provides discretionary investment management services and has the authority to select securities or other
investment vehicles (all collectively referred to in this Brochure as “securities”) consistent with clients’ investment
guidelines. However, certain clients may limit or prohibit investment in certain sectors, instruments, and securities
as further described in Item 16 – Investment Discretion. Sterling also provides discretionary investment services
and non-discretionary investment advice to separately managed account programs and platforms sponsored by
affiliated and unaffiliated investment advisers, broker-dealers, and other financial service firms. Sterling offers the
following services:
Institutional and Individual Separate Account Management
Sterling provides investment management services to a broad range of institutional and individual clients pursuant
to the terms of individually negotiated investment management agreements. Sterling provides our services in an
array of fixed income, equity or other investment strategies including in the broad categories of municipal bonds,
taxable fixed income, value, growth and core equities and asset allocation.
Sterling’s separate account management services include the development of investment strategies, evaluation
and appraisal of securities held as well as securities considered for purchase, construction of investment portfolios,
execution of securities purchase and sale transactions, and portfolio administration, including the tracking of and
reporting on portfolio performance and investment results.
Wrap and Model Programs
Sterling provides investment management services to separately managed account (“SMA”) or “wrap fee” programs
and platforms (each, a “Wrap Program”) sponsored by investment advisers, broker-dealers and other financial
services firms (each, a “Program Sponsor”). Sterling provides these services pursuant to an advisory agreement
either directly with the Program Sponsor (e.g., a “single contract SMA”) or with the Program Sponsor and the
underlying end investor (e.g., “dual contract SMA”) depending on the program. Sterling also provides discretionary
and non-discretionary investment services and advice to Program Sponsors and/or overlay managers through
model investment portfolios (collectively referred to as “Model Programs”).
In a Wrap Program, Sterling is appointed to act as an investment adviser through a process administered or assisted
by the Program Sponsor. Clients participating in a Wrap Program, generally with assistance from the Program
Sponsor, may select Sterling to provide investment management services for their account (or a portion thereof) for
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a particular strategy. Sterling provides investment management services in accordance with one or more of our
investment strategies. In a typical Wrap Program clients enter into an agreement with the applicable Program
Sponsor that provides or arranges for the provision of an array of services to the clients — which may include but
not be limited to: assistance with establishing investment goals and objectives, asset allocation analysis, security
selection and other portfolio management services, selection of investment advisers, sub-advisers, custodians
and/or broker-dealers, trade execution and providing ongoing monitoring, reporting and client support — all of
which may be covered by a single “wrap” fee to the client.
There are certain differences between how we manage accounts in a Wrap Program versus how we manage other
client portfolios. For example, in Wrap Programs the Program Sponsor is generally responsible for determining the
suitability of the Wrap Program, including the use of a Sterling investment strategy for the client. Sterling is typically
only responsible for managing the client’s assets in accordance with the selected investment strategy and any
reasonable restrictions imposed by the client and agreed upon by Sterling. In certain Wrap Programs, the Program
Sponsor may limit the information available to us. In addition, Program Sponsors may restrict us from
communicating directly with Wrap Program clients.
Sterling may make available through Wrap Programs the same or similar strategies that are available to other
Sterling clients. However, not all of Sterling’s strategies are available through Wrap Programs and not every Sterling
strategy is available through a particular Wrap Program. The performance of a strategy available through a Wrap
Program may differ from the performance of the same or similar strategy executed through another Wrap Program,
client, or platform.
Typically, the investment management services Sterling provides in connection with these Wrap Programs are
discretionary. Sterling is generally responsible for causing the portion of each discretionary Wrap Program account
managed by Sterling to engage in transactions that are appropriate for the selected strategy. Wrap Program
accounts within a particular strategy are generally managed similarly, subject to a Wrap Program client’s ability to
impose reasonable restrictions (such as a prohibition on holding the securities of a particular issuer). Because
Sterling’s advisory services to these accounts are strategy-dependent, Sterling will not accept a restriction that we
believe would be inconsistent with the investment strategy.
Sterling may participate in Wrap Programs sponsored by unaffiliated, third-party sponsors as well as Wrap
Programs sponsored by an affiliate of Sterling. Program Sponsors may apply different methods of analysis, use
different types of information, or apply different thresholds in determining whether to recommend an affiliated
manager; this method of analysis may be applied differently when recommending an unaffiliated manager. In the
case of Wrap Programs sponsored by Sterling’s affiliate, Truist Advisory Services, Inc. (TAS), Sterling’s participation
as an SMA investment manager creates conflicts of interest, which are more fully described in TAS’s Form ADV
Part 2 Brochures.
All Wrap Program clients and prospective clients should carefully review the terms of the agreement with the
Program Sponsor and the relevant Wrap Program Brochures and disclosure documents to understand the terms,
services, minimum account size and any additional fees or expenses that may be associated with a Wrap Program
account. In evaluating a Wrap Program arrangement, the client should consider the amount of portfolio activity and
the value attributed to monitoring, custodial and any other services provided.
In addition to the investment management services we provide for Wrap Programs, Sterling may also provide non-
discretionary Model Program services to the Program Sponsor who exercises investment discretion. In these Model
Programs, Sterling will typically provide a model portfolio to the Program Sponsor who will be responsible for
reviewing, implementing, and executing the orders for the client as the Program Sponsor determines. Where
Sterling participates in a Model Program, the Model Program Sponsor or overlay manager is generally responsible
for investment decisions and performing many other services and functions typically handled by Sterling in a
traditional discretionary managed account program. In these Model Programs, Sterling does not have an advisory
relationship with clients of the Program Sponsor or overlay manager of the Model Program, and Sterling generally
does not have any investment discretion or trading responsibilities. Similarly, in these Model Programs, Sterling
does not manage model portfolios based on the financial situation or investment objectives of individual clients. In
certain cases, Sterling provides model portfolios to an overlay manager, and Sterling affects the trades resulting
from the model portfolio changes.
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Sterling may make available through Model Programs the same or similar strategies that are available
to other
Sterling clients. However, not all of Sterling’s strategies are available through Model Programs and not every
Sterling strategy is available through a particular Model Program. The performance of a strategy available through
a Model Program may differ from the performance of the same or similar strategy executed through another Model
Program, client, or platform.
In a non-discretionary Model Program, Sterling does not consider itself to have an advisory relationship with clients
of the Program Sponsor or overlay manager. If Sterling’s Form ADV Part 2A is delivered to the Sponsor’s model-
based clients with whom Sterling does not have an advisory relationship, or where it is not legally required to be
delivered, it is provided for informational purposes only.
Outsourced Chief Investment Officer Services
For clients seeking comprehensive asset allocation and investment selection solutions, Sterling’s Advisory
Solutions team provides Outsourced Chief Investment Officer (“OCIO”) services by offering to clients an asset
allocation framework with a comprehensive investment manager search-and-selection methodology to create client-
specific portfolios. These open architecture, multi-asset class portfolios are constructed using specific investment
objectives, risk tolerance, and other considerations of the client with a goal of delivering consistent, long-term, risk-
adjusted performance.
While the asset allocation ranges included in a portfolio’s investment objectives will provide a guide for Sterling’s
asset allocation services, the portfolio’s actual asset allocation may, at any time, vary from the client’s investment
objectives for various reasons, including, but not limited to, fund flows into or out of the portfolio, market movements,
and asset allocation decisions.
Registered Investment Companies and Other Pooled Vehicles
Sterling may act as an investment adviser to a variety of pooled investment vehicles (collectively, “Affiliated Funds”),
including:
(i) Registered investment companies, registered under the Investment Company Act of 1940, including
open-end investment companies (mutual funds) and exchange-traded funds (“ETFs”);
(ii) Collective investment funds and trusts (“CIFs”), common trust funds (“CTFs”), common and collective
trusts; and
(iii) Private investment funds.
Sterling administers and serves as the investment adviser to the Sterling Capital Funds and serves as the
investment adviser for the Sterling ETF, CIF, and CTF. Sterling, where appropriate and consistent with client
guidelines, may purchase for client portfolios shares of the Affiliated Funds as part of the portfolio’s applicable
investment strategy. Clients should note that Sterling has a conflict of interest and financial incentive to choose
Affiliated Funds because Sterling receives investment management and other fees from the Affiliated Funds.
Sterling reduces our investment management fees with respect to investments in Affiliated Funds in client portfolios.
However, this reduction in fees does not eliminate the conflict of interest as there are other incentives such as
increasing Sterling’s AUM or providing support to the Affiliated Funds. Clients have the right, at any time, to prohibit
us from investing any of their managed assets in the Affiliated Funds.
With regard to the Sterling ETF, CIF and CTF, Sterling serves as investment adviser to the applicable trust that is
administered by unaffiliated third-party trustees (e.g., Hand, Benefits & Trust Company (“Hand”) with regard to the
Sterling CIF and CTF and Northern Lights Fund Trust IV (“Northern Lights”) with regard to the Sterling ETF) pursuant
to a separate investment advisory agreement with the applicable trustee. Sterling, where appropriate and consistent
with client guidelines, may recommend and introduce clients to Hand to establish an investment in the Sterling CIF
and/or CTF and may recommend to or make investments of client accounts in Sterling Capital Funds and the
Sterling ETF. Sterling does not receive a referral fee for introducing clients to Hand or in connection with investments
in the Sterling Capital Funds and Sterling ETF. Sterling nevertheless has conflicts of interests in making such
introductions, recommendations, and investments because (i) we have a financial incentive to introduce the client
to Hand as Sterling will receive an increase in investment management fees should the client invest in the Sterling
CIF or CTF and (ii) we have a financial incentive to recommend and make client investments in the Sterling Capital
Funds and the Sterling ETF because Sterling receives investment management and other fees from the Sterling
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Capital Funds and the Sterling ETF. Sterling reduces our investment management fees with respect to investments
in the Sterling Capital Funds and the Sterling ETF in client portfolios. However, this reduction in fees does not
eliminate the conflict of interest, as there are other incentives such as increasing Sterling’s AUM or providing support
to the Sterling Capital Funds and the Sterling ETF. Clients have the right, at any time, to prohibit us from investing
any of their managed assets in the Sterling Capital Funds and the Sterling ETF.
The prospectus or offering document for each of the Affiliated Funds contains a complete description of the
compensation Sterling receives for our services to each of the Affiliated Funds. The fees (e.g., expenses and
advisory fees) payable by a client with respect to an Affiliated Fund may exceed the fees of an unaffiliated fund that
employs a similar investment strategy as the relevant Affiliated Fund.
Sterling may serve as investment subadvisor to funds sponsored by investment advisers, banks, and other third-
party financial institutions. Dependent on the duties described in the investment subadvisory agreement, Sterling
may provide one or more of the following services: day-to-day investment management services to the fund(s);
support the funds’ compliance with applicable investment restrictions and investment policies; periodic performance
and compliance reports to the funds’ adviser and its board; and assist the funds’ service providers in pricing certain
securities and preparing various fund-related materials to be included in fund registration statements, proxies, and
semi-annual and annual reports. Sterling may also provide investment-related content, fund communications, and
meeting support to the funds’ sponsors and their applicable affiliates.
Retirement Plan Services
Sterling provides investment management services to Retirement Plans (“Plans”) on a non-discretionary basis as
a “Co-Fiduciary” under Section 3(21) of the Employee Retirement Income Security Act of 1974 (“ERISA”) and on a
discretionary basis as an “Investment Manager” under Section 3(38) of ERISA. As a 3(21) Co-Fiduciary, Sterling
has a shared fiduciary arrangement with the Plan where Sterling provides ongoing investment advice to the Plan;
however, the Plan retains ultimate decision-making authority concerning the investments for Plan participants and
may accept or reject the non-discretionary investment recommendations provided by Sterling. As a 3(38)
Investment Manager, Sterling provides discretionary investment management services through a broad range of
investment solutions and support services for the Plans and their participants.
Direct Indexing and Ultra Tax Management Solutions
Sterling’s Direct Indexing and Tax Management business seeks to give clients broad US equity index exposure via
portfolios comprised of hundreds of individual securities. Utilizing individual securities affords clients the ability to
customize their index exposure, restrict individual securities, industries, or sectors, target preferred characteristics
(such as dividend yield or value) and effect a charitable gifting program in a tax-efficient manner. In addition,
management featuring continual monitoring for tax loss harvesting candidates is an extension of the service
capability available for Direct Indexing clients.
Client-Imposed Restrictions
Clients may impose reasonable investment restrictions (e.g., prohibiting investing in certain securities or types of
securities) or other specialized requirements on the management of their account. However, if the restrictions
prevent Sterling from properly servicing the client account, or if the restrictions would require Sterling to deviate
from our standard investment management services, Sterling may not accept a restriction and reserves the right to
request the client to modify the restriction or end the relationship.
In addition, clients should be aware that investment restrictions imposed on a client’s account can limit Sterling’s
ability to act and as a result the investment performance and diversification of the assets in a client’s account may
differ from a similar account in which no such restrictions have been imposed. Further, because of the timing and
processes required to satisfy the requirements and circumstances relevant to an investment restriction, there will
be circumstances where it is necessary for a client’s account with an investment restriction to trade after Affiliated
Funds that are invested in the same investment strategy and other Sterling managed accounts that do not contain
an applicable trading or account restriction or client preference.
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