RAC Investment Advisors, the predecessor of DeRoy & Devereaux, was established in 1979 by Arthur DeRoy
Rodecker to provide investment management services to the DeRoy Testamentary Foundation. In May of 2002,
Gregg Devereaux Watkins joined Arthur Rodecker at RAC Advisors, acquired an ownership interest in the firm,
and renamed the firm DeRoy & Devereaux (the “Advisor” or “D&D”). D&D is an employee-owned S-Corporation
whose principal owners are Sean A. Metrose and Jeffrey W. Wardlow.
Individually Managed Separate Accounts
D&D provides investment advisory services for individuals, families, foundations, pension plans and other
institutional investors (“Clients”) on a discretionary basis. The Advisor actively manages diversified portfolios of
publicly traded equities and debt securities for investors whose objectives are long-term capital appreciation
and income growth. The Advisor recommends all types of equity and debt securities including, but not limited
to: common stocks, preferred stocks, corporate bonds, U.S. Government securities, mortgage-backed securities,
convertible securities, warrants, foreign securities, American Depositary Receipts, master limited partnerships,
shares of investment companies including exchange-traded funds, and commercial paper. Client’s may also have
legacy positions from prior investments that D&D will retain as an accommodation to the Client. The portfolios
of Clients are managed individually, and no representations regarding uniformity of management or results are
made. Please see Item 13 – Review of Accounts for more information. Clients can impose reasonable restrictions
on investing in certain securities or security types.
Services are limited to investment management and do not encompass financial or estate planning, custody, or
brokerage. D&D manages portfolios consisting primarily of equity and fixed income securities, so advice is
limited to these types of investments. D&D does not undertake to vote corporate proxies on behalf of our
Clients, except when specified by our investment management agreement, or similar Client agreement. Proxy
voting services (performed by an unaffiliated third party) are negotiable. Please see Item 17 – Voting Client
Securities.
Assets under management total over $1,966,000,000 as of December 31, 2023, all of which are managed on a
discretionary basis. The Firm also had non-discretionary assets of over $503,591,000 as of December 31, 2023.
Non-discretionary assets include assets in Unified Managed Accounts (“UMA”) and other model-based
strategies. The asset values reported for these non-discretionary assets reflect values one to three months prior
to December 31, 2023, depending on when the sponsors provide us with the information.
Wrap & Dual Contract (“SMA”) Account Programs
D&D participates in wrap fee advisory programs sponsored by unaffiliated advisors, broker-dealers, or banks
(collectively, the “Sponsors”). Under these programs, the Sponsors are responsible for selecting or facilitating
the selection of advisors, pre-screening client suitability, most aspects of direct client services, and operations.
Clients of the Sponsors are provided separate account advisory services. Trades are placed with brokers
specified by the Sponsors. In determining whether to establish
a wrap fee program account, a client should be
aware that the overall cost to a client in a wrap fee program can be higher or lower than the client might incur
by purchasing the strategies available in the wrap fee program directly from D&D. This depends on what the
Sponsor would charge for each service if services were unbundled and charged separately. Clients of the
Sponsors would need to obtain this unbundled information directly from the Sponsors in order to make this
comparison.
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Additionally, D&D provides investment advisory services to SMAs through dual contract managed account
programs. In a dual contract program, D&D provides its advisory services pursuant to an advisory agreement
directly with the client. A client separately arranges with one or more third parties for custody, financial
advisory, and certain trading services to be provided on a partially-bundled or unbundled basis. In a partially-
bundled program, some of these services (typically custody, financial advisory, and certain trading) are provided
for under a bundled fee arrangement. In an unbundled arrangement, such services are contracted, provided,
and paid for separately.
Under these Programs, the investment product/strategy/style is specified in the Sponsors contract with D&D.
See Item 5 - Fees and Compensation for details on fees D&D receives for services under these types of Programs.
Model Portfolio Account Programs
D&D provides certain clients who are investment advisors (“Model Clients”) with one or more model portfolio(s)
for discrete asset classes. Each of these Model Clients uses the model portfolio(s) created by D&D as the basis
for investment strategies that they offer to their clients. D&D does not create the model portfolio based upon
the individual or particular needs of clients in the program, or any other person, but based upon what D&D
believes is an appropriate allocation and weight of securities for each strategy. D&D Model Clients have
discretion to determine how and when to act upon the recommended changes to the model portfolio provided
by D&D. D&D has limited or no trading authority in such arrangements.
Under these Model Portfolio Account Programs, the investment product/strategy/style is specified in the Model
Clients contract with D&D. See Item 5 - Fees and Compensation for details on fees D&D receives for services
under these types of Model Portfolio Account Programs.
Donor-Advised Program
A Donor-Advised Fund (“DAF”) is a charitable giving vehicle sponsored by a public charity that allows Clients to
not only contribute to charity and be eligible for an immediate tax deduction, but also recommend grants over
time to any IRS-qualified public charity. D&D participates as an investment adviser on a donor-advised program
administered by an unaffiliated third party. An account holder who meets minimum thresholds, as determined
by the DAF, can nominate D&D to actively manage the portion of the assets contributed to the DAF. The
Trustees of the charity contract with D&D. See Item 5 - Fees and Compensation for details on fees D&D receives
for services under the Donor-Advised Program.
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