The UCITS compliant offering will invest in a mix of fixed rate and floating rate debt securities. There will be “no persistent bias” in the fund, instead the management will shift its allocation as and when policy or economic signals change in a way it hopes will mean it can ride out the “heightened volatility” expected throughout 2017.
It will be co-managed by Andrew Johnson, head of global investment grade fixed income, Jon Jonsson, senior portfolio manager, Ugo Lancioni, head of currency Management, and Thanos Bardas, head of rates.
Jonsson said: “We believe it will be a year where it will be necessary to alter strategy several times on changing policy and economic signals. US treasury yields have already risen steeply on heightened inflation fears and may have further to go as President-elect Donald Trump’s policies become reality. In the US, our portfolio seeks a diversified spread exposure, with an emphasis on the US consumer through non-agency RMBS, reflecting comfort with the underlying fundamentals, and also a mix of high yield and bank loans on solid US growth, stronger corporate profits, and the likely pro-growth policy.
“In Europe, there are growing political concerns surrounding the forthcoming elections, while there are question marks over the durability of the ECB’s bond-buying program. We expect to have a short exposure to German sovereign yields as the long end of the yield curve could begin to look vulnerable as we see higher yields and a steeper curve in the Euro area against a backdrop of a gradually improving economic outlook.”
Neuberger Berman believe the strategy will mean the fund can exploit market mispricing across the globe, and it has secured results in the past. The fixed income team has used the strategy in segregated funds since October 2012, delivering annualised returns of 4.6% as of the end of 2016.
