Neuberger Berman Launches First Interval Fund
The U.S. Securities and Exchange Commission has declared effective a new perpetual interval fund, NB Asset-Based Credit Fund. The fund’s investment objective is to seek to provide a high level of current income through an actively managed portfolio of asset-based credit investments.
This is the first interval fund for Neuberger Berman – a private, independent, employee-owned investment management firm with more than $500 billion of assets under management. The offering aims to have more than 80% of its investments in asset-based deals, which derive returns from interest incomes, recurring revenues, fees or other types of cash flows of underlying financial and physical assets.
It targets loans backed by assets including receivables, consumers and small businesses, and will focus on investments with a weighted average duration of approximately 18 months.
Neuberger Berman Investment Advisers LLC serves as investment adviser and has engaged NB Alternatives Advisers LLC as sub-adviser to assist with investment decisions with respect to the fund.
The fund may also invest in U.S. Treasury securities, corporate bonds, and other investment grade and below investment grade fixed income securities, including investment grade short term debt obligations, money market instruments, repurchase agreements, and restricted securities. The fund may hold an amount of liquid assets, including cash or cash equivalents, consistent with prudent liquidity management.
The fund offers three separate classes of shares designated as Institutional Class, Class A-1 and Class A-2; the fund may offer additional share classes in the future.
The minimum initial investment in the fund by any investor in Institutional Class, Class A-1 and Class A-2 shares is $2,500, and the minimum additional investment in each class of shares is $2,500. At its discretion, the fund may accept investments below these minimums.
Shares are offered on a continuous basis at an offering price equal to the fund’s then-current net asset value, plus any applicable sales load.
All investors will pay an annual management fee of 1.5% of NAV. Class A-1 and Class A-2 shares are subject to ongoing distribution and shareholder servicing fees at an annual rate of 0.75% based on the aggregate net assets of the fund attributable to each class. Institutional class shares are not subject to these fees.
Class A-1 shares, which are available to retail investors via broker-dealers and their commission-based registered representatives, may be subject to a sales load of up to 3.5% of the investment amount. The sales load payable by each shareholder depends upon the amount invested by such shareholder in Class A-1 shares.
Class A-2 shares will generally be distributed to retail investors through fee-based advisory platforms. As such, there is no front-end load.
Across all share classes, the management fee is 1%, and the interest payments on borrowed funds is 2.87%. The total annual expenses after fee waivers and expense reimbursements are 5.97% for the institutional class and 6.72% for Class A-1 and A-2, respectively.
Total annual fund operating expenses before fee waivers and expense reimbursements were reduced from 3.56% and 3.71% for Class I and Class II shares, respectively, to 2.93% and 3.08% for Class I and Class II shares, respectively.
As alternative asset managers look to raise more capital from retail investors, the company said the fund will have “limited quarterly liquidity opportunities” through repurchase offers between 5% and 25% of the fund’s outstanding shares at NAV.
The fund has adopted an “opt out” dividend reinvestment plan, or DRIP. Shareholders that wish to participate in the DRIP will not be required to take any action. A participating shareholder’s distribution amount will purchase shares at the NAV of the Fund. Shareholders that wish to receive their distributions in cash may do so by making a written election to not participate in the DRIP by contacting the plan administrator, SS&C GIDS, Inc. who serves as the fund’s transfer agent.
Founded in 1939 by Roy Neuberger and Robert Berman, Neuberger Berman has a long history of managing a wide range of investment portfolios for institutional investors, financial advisers, and high-net-worth individuals. The firm was acquired by Lehman Brothers in 2003. However, following the collapse and bankruptcy of Lehman Brothers in 2008, Neuberger Berman’s management led a successful buyout to regain its independence. This transaction was completed in 2009, re-establishing the firm as an employee-owned entity.
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