Strategic Income Fund - A Flexible Diversified Income Strategy
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A Flexible Diversified Income Strategy
NEUBERGER BERMAN STRATEGIC INCOME FUND
Morningstar Analyst Report
Now Available: A Changing Landscape for Multi-Sector Fixed Income Investing
Low rates, tight spreads and relatively high correlations will challenge multi-sector fixed income managers going forward. Download PDF
Why Invest in Neuberger Berman Strategic Income Fund?
A Fixed Income Fund Designed for All Markets
The Fund's ability to utilize a broad array of fixed income sectors along with its duration flexibility can allow for greater risk-adjusted total return and the potential to mitigate the risks associated with a rising rate environment.
The Fund Uses a Multi-Sector Approach to Investing in Changing Markets
Multi-Sector Bond Fund Can Invest Across Entire Fixed Income Opportunity Set
Portfolio Managers allocate where they find the most attractive investment opportunities.
Source: Neuberger Berman. Data as of 9/30/18. See below for index definitions.
Neuberger Berman Manages $135bn in Fixed Income Assets Globally
The Fund leverages the expertise of each of our dedicated sector teams.
Source: Neuberger Berman. Data as of 9/30/18.
Portfolio Managers Utilize a Tactical Approach
The Fund's dynamic approach to duration and sector allocations gives the team flexibility to invest in opportunities across fixed income with no persistent biases or tilts.
Source: Neuberger Berman. Sector information is as of the dates indicated and subject to change without notice. The chart does not reflect the net unsettled positions (as described below) of -25.03% as of September 30, 2018 and consequently, aggregate sector allocations may not add up to 100%. Negative cash position on a trade date basis is due to pending settlement of certain forward mortgage-backed securities purchases. Net unsettled positions reflect the Fund's mortgage-backed to-be-announced (TBA) transactions and other trades pending settlement. Pending settlement means a transaction traded on or before the reporting date that is anticipated to settle in the following period.
Designed to Generate Income with the Flexibility to Adjust to Different Market Environments
Source: Morningstar. Data through 9/30/18. This chart is not indicative of the Fund's performance during all periods—for this information, please see standard performance below.
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Multi-Sector Investing at Neuberger Berman
"Our philosophy with respect to multisector investing is really simple, which is to bring the best of the 150 plus people working at Neuberger Berman in fixed income together in single portfolios." In this short video, Brad Tank, Chief Investment Officer - Fixed Income, and senior portfolio managers describe our approach to Multi-Sector Fixed Income investing and the collaborative process that allows them to build dynamic portfolios to meet clients' needs.
Neuberger Berman Strategic Income Fund - Total Returns
FOR PERIODS ENDED SEPTEMBER 30, 2018
Average Anualized
Expense Ratios3
At NAV Quarter YTD 1 year 3 years 5 years 10 years Since Inception^ Gross Expense Total (Net) Expense4
NB Strategic Income Fund Institutional Class1 1.37 -0.36 0.36 4.12 3.44 6.53 6.42 0.63 0.59
NB Strategic Income Fund Class A1 1.27 -0.66 -0.04 3.70 3.03 6.11 6.12 1.02 1.00
NB Strategic Income Fund Class C1 1.09 -1.18 -0.74 2.98 2.31 5.35 5.59 1.76 1.70
NB Strategic Income Fund Class R61 1.48 -0.22 0.52 4.19 3.51 6.57 6.45 0.56 0.52
NB Strategic Income Fund Trust Class1 1.28 -0.62 0.10 3.75 3.08 6.17 6.15 1.01 0.95
With Sales Charge
NB Strategic Income Fund Class A1 -3.06 -4.91 -4.32 2.23 2.14 5.64 5.82
NB Strategic Income Fund Class C1 0.09 -2.14 -1.70 2.98 2.31 5.35 5.59
Bloomberg Barclays U.S. Aggregate Bond Index2 0.02 -1.60 -1.22 1.31 2.16 3.77 3.73
Morningstar Multi-Sector Bond Category / Number of Funds in Category 0.89 / 332
Funds -0.10 / 324
Funds 0.59 / 319
Source: Morningstar, Neuberger Berman. Gross and net expenses include acquired fund fees and expenses in the amount of 0.05%.
Performance data quoted represent past performance, which is no guarantee of future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. For performance data current to the most recent month-end, please visit www. nb.com/performance. Average Annual Total Returns with sales charge reflect deduction of current maximum initial sales charge of 4.25% for Class A shares and applicable contingent deferred sales charges (CDSC) for Class C shares. The maximum CDSC for Class C shares is 1%, which is reduced to 0% after 1 year.
^ The inception dates for Neuberger Berman Strategic Income Fund Institutional Class and Trust Class are 7/11/03 and 4/2/07, respectively. The inception date for the Class A and C shares is 12/20/07. The inception date for Class R6 shares is March 15, 2013. Performance prior to the inception date of the Trust, Class A, Class C and Class R6 is that of the Institutional Class, adjusted to reflect applicable sales charges but not class-specific operating expenses. The date used to calculate benchmark performance and 30-day yield is that of the Institutional Class.
1 Total return includes reinvestment of dividends and capital gain distributions. Because the Fund had a different goal and strategy, which included managing assets by an asset allocation committee, prior to February 28, 2008, its performance during that time might have been different if current policies had been in effect. Past performance is no guarantee of future results.
2 Bloomberg Barclays U.S. Aggregate Index: Represents securities that are SEC-registered, taxable, and dollar-denominated. The index covers the U.S. investment grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities. Please note that indices do not take into account any fees and expenses of investing in the individual securities that they track, and that individuals cannot invest directly in any index. Data about the performance of this index are prepared or obtained by Neuberger Berman and include reinvestment of all dividends and capital gain distributions. The Fund may invest in many securities not included in the above-described index.
3 Total (net) expense represents the total annual operating expenses that shareholders pay (after the effect of fee waivers and/or expense reimbursement). The Fund's investment manager has contractually undertaken to waive and/or reimburse certain fees and expenses of the Fund so that the total annual operating expenses (excluding interest, taxes, brokerage commissions, acquired fund fees and expenses, dividend and interest expenses relating to short sales, and extraordinary expenses, if any; consequently, total (net) expenses may exceed the contractual cap) through 10/31/2021 for Institutional Class at 0.59%, Class A at 0.99%, Class C at 1.69% and through 10/31/2021 for Trust Class at 0.94% and Class R6 at 0.52% (each of average net assets). Absent such arrangements, which cannot be changed without Board approval, the returns may have been lower. Information as of the most recent prospectus dated February 28, 2018, as amended and supplemented.
An investor should consider Neuberger Berman Strategic 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 and, if available, summary prospectus, which you can obtain by calling 877.628.2583. Please read the prospectus and, if available, the summary prospectus, carefully before making an investment. Investments could result in loss of principal.
Shares in the Fund may fluctuate, sometimes significantly, based on interest rates, market condition, credit quality and other factors. In a rising interest rate environment, the value of an income fund is likely to fall. The market's behavior is unpredictable and there can be no guarantee that the Fund will achieve its goal. To the extent the Fund invests more heavily in particular bond market sectors, its performance will be especially sensitive to developments that significantly affect those sectors. Lower rated debt securities (also known as "junk bonds") involve greater risks and may fluctuate more widely in price and yield, and carry a greater risk of default, than investment grade debt securities. They may fall in price during times when the economy is weak or is expected to become weak. Foreign securities involve risks in addition to those associated with comparable U.S. securities, including exposure to less developed or less efficient trading markets; social, political or economic instability; fluctuations in foreign currencies; nationalization or expropriation of assets; settlement, custodial or other operational risks; and less stringent auditing and legal standards. These risks may be more pronounced for emerging market securities, which involve additional risks and may be more volatile and less liquid than foreign securities tied to more developed economies. The Fund's performance could be affected if borrowers pay back principal on certain debt securities, such as mortgage- or asset-backed securities, before or after the market anticipates, shortening or lengthening their duration and could magnify the effect of rate increases on the security's price. When-issued/delayed-delivery securities can have a leverage-like effect on the Fund, which may increase fluctuations in the Fund's share price and may cause the Fund to liquidate positions when it may not be advantageous to do so. Derivatives can be highly complex, can create investment leverage and may be highly volatile, and the Fund could lose more than the amount it invests. Derivatives may be difficult to value and may at times be highly illiquid, and the Fund may not be able to close out or sell a derivative position at a particular time or at an anticipated price. The Fund's investments in derivatives create counterparty risk. The Fund may also invest in senior loans, which also may be rated below investment grade. No active trading market may exist for many loans, loans may be difficult to value and many are subject to restrictions on resale, which may result in extended trade settlement periods and may prevent the Fund from obtaining the full value of a loan when sold. The Fund normally executes an above-average amount of trading and has a high portfolio turnover rate, which may increase the Fund's transaction costs and may adversely affect performance. The Fund may invest in underlying funds, including in the Neuberger Berman fund family, and a portion of the Fund's performance will be directly related to the performance, risks and expenses of such underlying funds, which could result in the duplication of certain fees, including management and administration fees.
The Fund normally executes an above-average amount of fixed-income trading and has a high portfolio turnover rate, which may increase the Fund's transaction costs and may adversely affect the Fund's performance.
The Fund may invest in Underlying Funds, including funds in the Neuberger Berman fund family, and a portion of the Fund's investment performance will be directly related to the investment performance, risks and expenses of such Underlying Funds, which could result in the duplication of certain fees, including management and administration fees.
Standard Deviation (average 10-year shown) is a statistical measure of portfolio risk that describes the average deviation of portfolio returns from the mean portfolio return over a certain period of time to show how wide this range of returns typically is. The wider the typical range of returns, the higher the Standard Deviation, and the higher the portfolio risk.
A fund's 30-day SEC yield is similar to a yield to maturity for the entire portfolio. The formula is designated by the Securities and Exchange Commission (SEC). Past performance is no guarantee of future results. Absent any expense cap arrangement noted above, the SEC yields may have been lower. A negative 30-Day SEC yield results when a Fund's accrued expenses exceed its income for the relevant period. Please note, in such instances the 30-Day SEC yield may not equal the Fund's actual rate of income earned and distributed by the fund and therefore, a per share distribution may still be paid to shareholders. The unsubsidized 30-day SEC yields for the Institutional Class is 3.99.
For each retail mutual fund with at least a three-year history, Morningstar calculates a Morningstar Rating based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund's monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive five stars, the next 22.5% receive four stars, the next 35% receive three stars, the next 22.5% receive two stars and the bottom 10% receive one star. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.) The Overall Morningstar Rating for a retail mutual fund is derived from a weighted average of the performance figures associated with its three-, five- and 10-year (if applicable) Morningstar Rating metrics. Ratings are ©2018 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. The Morningstar ratings for the Neuberger Berman Strategic Income Fund – Institutional Class for the 3-, 5-, and 10-year periods ended September 30, 2018 were 3 stars (out of 278 multi-sector bond funds), 3 stars (out of 215 multi-sector bond funds), and 4 stars (out of 132 multi-sector bond funds), respectively.
The Morningstar Analyst Rating is the summary expression of Morningstar's forward-looking analysis of a fund. Morningstar analysts assign the ratings on a five-tier scale with three positive ratings of Gold, Silver, and Bronze, a Neutral rating, and a Negative rating. The Analyst Rating is based on the analyst's conviction in the fund's ability to outperform its peer group and/or relevant benchmark on a risk-adjusted basis over the long term. If a fund receives a positive rating of Gold, Silver, or Bronze, it means Morningstar analysts think highly of the fund and expect it to outperform over a full market cycle of at least five years. The Analyst Rating is not a market call, and it is not meant to replace investors' due-diligence process. It cannot assess whether a fund is the right fit for a particular portfolio and risk tolerance. It is intended to supplement investors' and advisors' own work on funds and, along with written analysis, provide forward-looking perspective into a fund's abilities. It picks up where commonly watched measures of the past leave off.
Morningstar US OE Intermediate-Term Bond Category invests primarily in corporate and other investment-grade U.S. fixed-income issues and typically have durations of 3.5 to 6.0 years. These portfolios are less sensitive to interest rates, and therefore less volatile, than portfolios that have longer durations. Morningstar Multi-Sector Bond Category seeks income by diversifying their assets among several fixed income sectors, usually U.S. government obligations, U.S. corporate bonds, foreign bonds, and high-yield U.S. debt securities. These portfolios typically hold 35% to 65% of bond assets in securities that are not rated or are rated by a major agency such as Standard & Poor's or Moody's at the level of BB (considered speculative for taxable bonds) and below.
The Bloomberg Barclays US Mortgage Backed Index represents the mortgage-backed pass-through securities of Ginnie Mae (GNMA), Fannie Mae (FNMA) and Freddie Mac (FHLMC). The MBS Index is formed by grouping the universe of over 600,000 individual fixed-rate MBS pools into approximately 3,500 generic aggregates. Securities must be fixed rate, and must have a weighted average maturity (WAM) of at least one year. This index is the U.S. MBS component of the U.S. Aggregate Index. The Bloomberg Barclays Intermediate US Treasury Index represents the securities in the Intermediate component of the U.S. Government index. Securities issued by the U.S. Government (i.e., securities in the Treasury and Agency indices). This includes public obligations of the U.S. Treasury with a remaining maturity of one year or more and publicly issued debt of U.S. Government agencies, quasi-federal corporations and corporate or foreign debt. ABS are represented by the ABS component of the Bloomberg Barclays U.S. Aggregate index. The index includes pass-through, bullet, and controlled amortization structures. The ABS Index includes only the senior class of each ABS issue and the ERISA-eligible B and C tranche. The Bloomberg Barclays Commercial Mortgage-Backed Securities (CMBS) Index family consists of four components: CMBS Investment-Grade Index, CMBS High-Yield Index, CMBS Interest-Only Index, and Commercial Conduit Whole Loan Index (all bond classes and interest-only classes). The CMBS Investment-Grade Index is further subdivided into two components: The U.S. Aggregate-eligible component that contains bonds that are ERISA eligible under the underwriter's exemption and the non-U.S. Aggregate-eligible component that consists of bonds that are not ERISA eligible. The Bloomberg Barclays U.S. Agency Bond Index measures the performance of the agency sector of the U.S. government bond market and is comprised of investment-grade native-currency U.S. dollar-denominated debentures issued by government and government-related agencies, including the Federal National Mortgage Association ("FNMA" or "Fannie-Mae'). The Index includes both callable and non-callable agency securities that are publicly issued by U.S. government agencies, quasi-federal corporations, and corporate and foreign debt guaranteed by the U.S. government. The EMBI Global Diversified limits the weights of the J.P. Morgan Emerging Markets Bond Index Global ("EMBI Global") index countries with larger debt stocks by only including a specified portion of these countries' eligible current face amounts of debt outstanding. The EMBI Global index tracks total returns for traded external debt instruments in the emerging markets, and is an expanded version of the JPMorgan EMBI+. As with the EMBI+, the EMBI Global includes U.S. dollar-denominated Brady bonds, loans, and Eurobonds with an outstanding face value of at least $500 million. It covers more of the eligible instruments than the EMBI+ by relaxing somewhat the strict EMBI+ limits on secondary market trading liquidity. The Bloomberg Barclays U.S. Treasury Inflation Protected Securities ("TIPS") Index measures the performance of intermediate (1-10 year) U.S. Treasury Inflation Protected Securities. The ICE BofA Merrill Lynch U.S. High Yield Master II Constrained Index is an unmanaged market value-weighted index of all domestic and Yankee high-yield bonds, including deferred interest bonds and payment-in-kind securities. Qualifying bonds must have at least one year remaining to maturity, a fixed coupon schedule and a minimum amount outstanding of $100 million. Qualifying bonds are capitalization weighted provided the total allocation to an individual issuer does not exceed 2%. The S&P/LSTA Leveraged Loan Index is a daily total return index that uses Loan Syndications and Trading Association (LSTA)/Loan Pricing Corporation (LPC) mark-to-market pricing to calculate market value change. On a real-time basis, the Index tracks the current outstanding balance and spread over LIBOR for fully funded term loans. The BofA Merrill Lynch 7–12 Year Municipal Index is a subset of the BofA Merrill Lynch Municipal Securities Index. Qualifying bonds must have up to (but not including) 12 years but no less than 7 years remaining term to maturity, a fixed coupon schedule, a minimum original maturity amount outstanding of $50 mn and an investment grade rating from Moody's. Non-Agency RMBS is sourced by Amherst Insight Labs.
This material is general in nature and is not directed to any category of investors and should not be regarded as individualized, a recommendation, investment advice or a suggestion to engage in or refrain from any investment-related course of action. Neuberger Berman is not providing this material in a fiduciary capacity and has a financial interest in the sale of its products and services. Investment decisions and the appropriateness of this material should be made based on an investor's individual objectives and circumstances and in consultation with his or her advisors. Accordingly, "retail" retirement investors are not the intended recipient of this material as they are expected to engage the services of an advisor in evaluating this material for any investment decision. If your understanding is different, we ask that you inform us immediately.
The "Neuberger Berman" name and logo and "Neuberger Berman Investment Advisers LLC" name are registered service marks of Neuberger Berman Group LLC. The individual fund names in this piece are either service marks or registered service marks of Neuberger Berman Investment Advisers LLC, an affiliate of Neuberger Berman BD LLC, distributor, member FINRA.
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