The group is launching three new fixed income strategies as UCITS funds – the Neuberger Berman Euro Short Term Enhanced Cash Fund, Euro Opportunistic Bond Fund and Euro Bond Absolute Return Fund.
All three portfolios will be managed by the six-strong team recently hired from BNP Paribas Asset Management. The Paris-based team is led by Patrick Barbe, who has 30 years of investment experience. At BNP Paribas, Barbe was the Chief Investment Officer of Euro Sovereign & Aggregate Fixed Income and responsible for the management of approximately €49bn in AUM.
The Neuberger Berman Euro Short Term Enhanced Cash Fund aims to outperform its cash benchmark by 1% over a one-year investment horizon with a volatility limit of 1%.
The Neuberger Berman Euro Opportunistic Bond Fund aims to outperform the BBG Euro Aggregate Index by 1% over the three-year horizon based on an high conviction approach – with interest rate duration positioning between +2 and +8 years and a volatility limit of 4%.
The Neuberger Berman Euro Bond Absolute Return Fund aims to outperform cash by 3.5% over a three-year horizon irrespective to market conditions– utilising interest rate duration positioning within a range ofshort by threeyears to long by six years, with a volatility limit of 6%.
Neuberger Berman has one of the industry’s largest fixed income platforms, with $135bn of assets under management and 176 investment professionals based across eight global locations. The European fixed income team, which consists of five portfolio managers and one quantitative analyst, are strongly aligned to Neuberger Berman’s research-led investment philosophy and complement the group’s existing suite of fixed income capabilities.
Barbe and his highly-experienced team combine both top-down and bottom-up considerations in constructing fixed income portfolios and will leverage the depth of insights from across the Neuberger Berman fixed income platform.
Patrick Barbe, Senior Portfolio Manager, comments: “At the global relative-value level, we consider recent market pessimism towards Europe to be overdone. Growth has disappointed this year relative to the unsustainable levels it reached in 2017, but it remains above trend. In addition, the euro is cheap against the dollar, financial conditions are still loose and the ECB leans toward the accommodative. By contrast, super-bullish risk premiums are priced into U.S. assets despite uncertainties around the strong dollar, the pace of rate hikes and the fiscal clean-up required once tax policy stimulus wears off.
“Within euro markets, we find it appealing to be short duration in core and semi-core rates by limiting exposure to the long end of yield curves, and we start to buy back credit since the phase-out of the QE program is anticipated. We also view tactical exposure to short term Italian bonds as attractive now; and, over the medium term, we believe concerns about a big rise in yields and a blowout in credit spreads as the ECB withdraws from these markets to be significantly overstated.”
Dik van Lomwel, Head of EMEA and Latin America at Neuberger Berman, added: “We are excited to launch these strategies managed by our new Euro fixed income team, further strengthening and complementing our integrated, global fixed income franchise, and looking to generate yield through a relative value approach.” The three new European fixed income portfolios are sub-funds of the Irish-domiciled UCITS fund umbrella, Neuberger Berman Investment Funds plc. The sub-funds are registered for sale in the UK and Europe.
