Neuberger Berman, a private, independent, employee-owned investment manager, has unveiled a new collateralised loan obligation (CLO) debt strategy to capitalise on the group’s CLO platform.
The Neuberger Berman Investment Grade CLO Debt Fund is managed by Pim van Schie, Joseph Lynch, and Stephen Casey, senior portfolio managers, with support from an experienced team of more than 50 investment professionals across various portfolio management, research and trading functions.
The new fund is expected to focus on BBB-rated CLO debt, and complements Neuberger Berman’s existing CLO Income Fund which is focused on non-investment grade CLO debt (UCITS, $685mn total AUM as of October 1, 2024).
Neuberger Berman’s $25bn integrated CLO platform which invests in 3rd party CLO debt and has managed CLOs for two decades across all credit cycles, follows a fundamental credit philosophy and focuses on achieving strong risk-adjusted returns through downside risk mitigation.
CLO debt typically offers a meaningful yield premium over comparably rated corporates, whereas historical default rates have been significantly lower , as CLO debt is typically issued with significant credit enhancement to absorb any credit losses. Neuberger Berman is an active investor in both the US and European CLO markets.
Structured as a Qualified Investor Alternative Investment Fund (QIAIF), the Neuberger Berman Investment Grade CLO Debt Fund is designated as Article 8 under the EU Sustainable Finance Disclosure Regulation (SFDR).
Van Schie said: “We believe our expertise and rigorous approach to credit analysis and portfolio construction position us to deliver attractive risk-adjusted returns in this space. CLO debt can offer economic and fundamental advantages over other asset classes and help meet the demands of institutional investors that seek exposure to a broad range of higher quality floating rate instruments.”
Fekko Ebbens, head of institutional business EMEA at Neuberger Berman, added: “We believe CLOs have many attributes that investors look for within their bond portfolios, including attractive yield and diversification. As the adoption of CLOs by a broad cross-section of investors continues to expand, we are pleased to be able to extend our offering with this QIAIF fund designed for sophisticated investors.”
