Neuberger Berman launches investment grade CLO debt fund
US investment behemoth Neuberger Berman has unveiled a 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 senior portfolio managers Pim van Schie, Joseph Lynch, and Stephen Casey, with support from 50 portfolio management, research and trading professionals.
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. It has $685m (£523m) total assets under management (AUM) as of 1 October 2024.
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Neuberger Berman’s $25bn integrated CLO platform, which invests in third 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.
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“We believe our expertise and rigorous approach to credit analysis and portfolio construction position us to deliver attractive risk-adjusted returns in this space,” said van Schie. “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.”
Neuberger Berman head of institutional business EMEA Fekko Ebbens 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 [Qualified Investor Alternative Investment Fund] designed for sophisticated investors.”
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