Neuberger Berman Introduces Muni High Income Fund, Responding To Investor Demand For High-Yielding, Tax-Efficient Investments
NEW YORK, June 24, 2015 /PRNewswire/ -- Neuberger Berman, one of the world's leading private, employee-owned investment managers, is pleased to announce the launch of its Neuberger Berman Municipal High Income Fund (tickers: NMHAX, NMHCX, NMHIX) (the "Fund"), offering investors a strategy that may serve as a complement to holdings in investment grade municipals and taxable high yield.
Against a backdrop of aging populations globally, continued easy money bias by central banks, and deflation threats, Neuberger Berman's Municipal Bond Group believes the trend to low interest rates will persist, supporting the case for the new Fund. Additionally, the team concludes, in its view:
- The value of the municipal bond tax-exemption has increased significantly as a result of the expiration of tax cuts in 2013. It is possible that taxes may move even higher in coming years, as politicians avoid entitlement reform
- Demand for high yielding, tax-efficient investments should grow, especially among baby boomers who may have difficulty achieving their income objectives in high quality fixed income
- Municipal bonds have lower historical default rates than similarly rated taxable bonds1
- Adding municipal higher yielding investments to a traditional investment grade municipal allocation can enhance return potential2
The Fund's experienced management team includes Jamie Iselin, head of Neuberger Berman's Municipal Fixed Income Group, co-managers Blake Miller and Eric Pelio, six research analysts and two traders. As of March 31, 2015 the team invests over $9 billion in assets for individuals and institutions.
"We believe that individual security selection, backed by our rigorous proprietary credit research, drives the performance potential for this Fund," Iselin said.
About Neuberger Berman
Neuberger Berman, founded in 1939, is a private, independent, employee-owned investment manager. The firm manages equities, fixed income, private equity and hedge fund portfolios for institutions and advisors worldwide. With offices in 18 countries, Neuberger Berman's team is more than 2,100 professionals and the company was named by Pensions & Investments as a 2013 and 2014 Best Place to Work in Money Management. Tenured, stable and long-term in focus, the firm fosters an investment culture of fundamental research and independent thinking. It manages $251 billion in client assets as of March 31, 2015. For more information, please visit our website at www.nb.com.
An investor should consider Neuberger Berman Municipal High Income Fund's investment objectives, risks and fees and expenses carefully before investing. This and other important information can be found in the Fund's prospectus, which can be obtained by calling 877.628.2583. Please read it carefully before making an investment. The prospectus contains a more complete discussion of the risk of investing in the Fund.
Market Volatility. Markets are volatile and values of individual securities and other investments can decline significantly in response to adverse issuer, political, regulatory, market, economic or other developments that may cause broad changes in market value.
Issuer-Specific Risk. An individual security or particular type of security may be more volatile, and may perform differently, than the market as a whole.
Interest Rate Risk. The Fund's yield and share price will fluctuate in response to interest rates changes. In general, the value of investments with interest rate risk will move in the direction opposite to movements in interest rates and the longer the maturity or duration of a fixed income security, the greater the effect a change in interest rates could have on the security's price.
Call Risk. When interest rates are low, issuers will often repay the obligation underlying a "callable security" early and the Fund may have to reinvest the proceeds in a lower yield investment and may not benefit from any increase in value from declining interest rates.
Credit Risk. A downgrade or default affecting any of the Fund's securities could affect performance.
U.S. Government Securities Risk. U.S. government guarantees do not extend to Fund shares and do not guarantee the market prices of the securities. Not all securities issued by the U.S. government , its agencies and instrumentalities are backed by the full faith and credit of the U.S. Treasury.
Lower-Rated Debt Securities Risk. Lower-rated debt securities (commonly known as "junk bonds") involve greater risks and may fluctuate more widely in price and yield than investment-grade debt securities, may be considered speculative and may fall in price during times when the economy is/is expected to become weak. These securities carry a greater risk that the issuer will default in the timely payment of principal and interest in which case the Fund may lose its entire investment.
Municipal Securities Risk. Municipal securities could be significantly affected by adverse political, market and legislative changes, tax uncertainties or the rights of municipal security holders and changes in the financial health of a municipality, all of which may directly impact the liquidity and valuation of municipal securities and may adversely affect the yield and value of the Fund's investments. In recent periods an increasing number of municipal issuers have defaulted on obligations, been downgraded, or commenced insolvency proceedings. Financial difficulties of municipal issuers may continue or get worse. Because many municipal securities are issued to finance similar projects (e.g., education, health care, housing, transportation, and utilities) conditions in those sectors can affect the overall municipal securities market. Municipal securities backed by current or anticipated revenues from a specific project or specific asset (so-called "private activity bonds") may be adversely impacted by declines in revenue from the project or asset. Investments in private activity bonds could cause a portion of the Fund's dividends to be an item of tax preference for purposes of the federal alternative minimum tax.
Sector Risk. To the extent the Fund invests more heavily in particular sectors, its performance will be especially sensitive to developments that significantly affect those sectors.
Prepayment and Extension Risk. The Fund's performance could be affected if borrowers pay back principal on debt securities before or after the market anticipates such payments. Higher interest rates generally result in slower payoffs, which effectively increase duration, heighten interest rate risk, and increase the magnitude of resulting price declines. Decreases in interest rates would likely cause a debt security to be called earlier.
Restricted Securities Risk. Restricted securities may not be listed on an exchange and may have no active trading market. Restricted securities may be illiquid, and the Fund may be unable to sell them at a favorable time or price. Transaction costs may be higher for restricted securities. In addition, the Fund may get only limited information about the issuer of a restricted security.
Tender Option Bonds and Related Securities Risk. The Fund's use of tender option bonds may reduce the Fund's return and/or increase volatility and such investments expose the Fund to counterparty risk and leverage risk and involve greater risk than a municipal fixed rate security, including the risk of loss of principal. Certain tender option bonds may be illiquid.
Inflation-Linked Debt Securities Risk. The value of inflation-indexed debt securities' principal or the interest income paid on the security is adjusted to track changes in an official inflation measure and as such changes in response to interest rate changes. Repayment of the original principal upon maturity (as adjusted for inflation) is guaranteed in the case of U.S. Treasury inflation-indexed debt securities. For securities that do not provide a similar guarantee, the adjusted principal value of the securities repaid at maturity may be less than the original principal value.
Illiquid Investments Risk. Illiquid investments may be more difficult to purchase or sell at an advantageous price or time, and there is a greater risk that the investments may not be sold for the price at which the Fund is carrying them.
High Portfolio Turnover. The Fund may engage in active and frequent trading and may have a high portfolio turnover rate, which may increase the Fund's transaction costs, may adversely affect the Fund's performance and/or may generate a greater amount of capital gain distributions to shareholders than if the Fund had a low portfolio turnover rate.
Derivatives Risk. Derivatives can be highly complex, volatile, illiquid and difficult to value; they may create investment leverage and result in losses that exceed the amount originally invested. The Fund's investments in derivatives create counterparty risk related to the risk that a futures commission merchant would default on its obligations. Additionally, legislative changes could limit the Fund's ability to pursue its investment strategies.
Leverage Risk. Leverage amplifies changes in the Fund's net asset value. Derivatives and when-issued and forward-settling securities may create leverage and can result in losses to the Fund that exceed the amount originally invested and may accelerate the rate of losses..
ETF Risk. An ETF, which is an investment company, may trade in the secondary market at a price below the value of its underlying portfolio and may not be liquid. An actively managed ETF's performance will reflect its adviser's ability to make investment decisions and a passively managed ETF may not replicate the performance of the index it tracks.
Risks of Investing in Affiliated Underlying Funds. The Fund may invest in affiliated Underlying Funds and the performance of those Underlying Funds will directly impact the investment performance of the Fund. The Fund is exposed to the same principal risks as the affiliated Underlying Funds as well as to its proportionate share of the affiliated Underlying Funds' expenses, which could result in the duplication of certain fees, including the advisory and administration fees. However, this conflict of interest is reduced because Neuberger Berman Management LLC will waive a portion of the Fund's advisory fee equal to the advisory fee it receives from affiliated Underlying Funds in which the Fund invests.
When-Issued and Forward-Settling Securities Risk. When-issued and forward-settling securities can have a leverage-like effect on the Fund, which can increase Fund share price fluctuations and may cause the Fund to liquidate positions at inopportune price or time. Furthermore, there is a risk that the security will not be issued or that the counterparty will fail to complete the purchase or sale.
Inverse Floater Risk. An inverse floater, a type of derivative, earns interest at rates that vary inversely to changes in short-term interest rates and produces less income and may decline in value when market rates and the rate payable on the floater rises. An inverse floater typically involves leverage, which may magnify the Fund's losses, and exhibits greater price and income volatility than a conventional fixed-rate bond with comparable credit quality and maturity. An investment in an inverse floater typically will involve greater risk than, and underperform the market when interest rates rise more than, an investment in a fixed rate municipal security.
Zero Coupon Bond Risk. These bonds do not make periodic interest payments, are sold at a discount from face value, can be redeemed at face value when they mature and their market value is generally more volatile than fixed income securities with similar maturities that make periodic interest payments.
Tobacco Related Bonds Risk. In 1998, the largest U.S. tobacco manufacturers reached an agreement, known as the Master Settlement Agreement ("MSA"), to settle claims against them by 46 states and six other U.S. jurisdictions; the manufacturers agreed to make annual payments to the government entities in exchange for the release of all litigation claims. Certain states have sold bonds that are backed by those future payments. Payments could be reduced if consumption decreases, if market share is lost to non-MSA manufacturers, or if there is a negative outcome in litigation regarding the MSA.
Redemption Risk. The Fund may experience periods of heavy redemptions that could cause the Fund to sell assets at inopportune times or at a loss or depressed value. Redemption risk is heightened during periods of declining or illiquid markets. Heavy redemptions could hurt the Fund's performance.
Risk Management. Risk is an essential part of investing. No risk management program can eliminate the Fund's exposure to adverse events; at best, it may only reduce the possibility that the Fund will be affected by such events.
Recent Market Conditions. The financial crisis that started in 2008 continues to affect the U.S. and many foreign economies. The crisis and its after-effects have resulted, and may continue to result, in an unusually high degree of volatility in the financial markets, both domestic and foreign.
Past performance is no guarantee of future results. It should not be assumed that an investment in the fund will be profitable or will equal the performance of securities referenced herein. Neuberger Berman products and services may not be available in all jurisdictions or to all client types. This material is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied on as such. Opinions expressed are as of the date herein and are subject to change without notice. This material is not intended to be a formal research report, is provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. Information presented may include estimates, outlooks, projections and other "forward-looking statements." Due to a variety of factors, actual events may differ significantly from those presented. Any views or opinions expressed may not reflect those of the firm as a whole.
All information is as of March 31, 2015 unless otherwise indicated and is subject to change without notice. Firm data, including employee and assets under management figures, reflects collective data for the various affiliated investment advisers that are subsidiaries of Neuberger Berman Group LLC. Firm history dates back to the 1939 founding of Neuberger & Berman (the predecessor to Neuberger Berman LLC).
The "Neuberger Berman" name and logo are registered service marks of Neuberger Berman Group LLC. "Neuberger Berman Management LLC" and the individual fund names in this piece are either service marks or registered service marks of Neuberger Berman Management LLC. Neuberger Berman Management LLC, distributor. Member FINRA.
©2015 Neuberger Berman Management LLC. All rights reserved.
Media Contact: Alex Samuelson, 212 476 5392, [email protected]
1 Source: Moody's Investor Services.
2 The portfolio composition, strategy, and fees and expenses, and accordingly the performance, of the Fund may differ from other traditional investment grade municipal strategy offerings.
Logo - http://photos.prnewswire.com/prnh/20121010/MM90850LOGO
SOURCE Neuberger Berman
Share this article