Neuberger Berman Introduces Risk Balanced Commodity Strategy Mutual Fund
NEW YORK, Sept. 11, 2012 /PRNewswire/ -- Neuberger Berman Group LLC, one of the world's leading employee-owned money managers, has introduced the Neuberger Berman Risk Balanced Commodity Strategy Fund (tickers: NRBAX, NRBCX, NRBIX), offering an active, diversified commodity investment strategy designed to generate attractive risk-adjusted returns with low correlation to traditional asset classes.
The Neuberger Berman Risk Balanced Commodity Strategy Fund ("the Fund") employs an active, risk-managed approach to providing commodities exposure based on extensive research to create a portfolio that delivers the benefits of the asset class in a more diversified way than typical commodity index investments. The Fund's investment team seeks to limit the impact of any individual commodity on total portfolio risk, provide downside protection, and commodities exposure with reduced volatility. The Fund's diversified approach includes exposure across 25-30 commodities across six industry sectors.
The Fund's lead portfolio managers are Wai Lee, Ph.D., managing director, Chief Investment Officer, Director of Research, Quantitative Investment Group, and Hakan Kaya, Ph.D., vice president. Dr. Lee is the winner of the Bernstein Fabozzi/Jacobs Levy Award for Best Article, "Risk Based Asset Allocation: A New Answer to an Old Question?," The Journal of Portfolio Management, Summer 2011. The team's award-winning research on risk-based investing and asset allocation underpins portfolio construction for the Fund. The Fund's investment team has been employing similar strategies in managing commodity portfolios for institutional investors since 2007.
"We believe commodities can play a role in most long-term investors' portfolios," said Hakan Kaya, co-portfolio manager. "In the long run, the return potential through different parts of the business cycle, coupled with the potential inflation hedging properties and the ability to track economic growth, make them a good portfolio diversifier for traditional equity and fixed income investments.''
"Neuberger Berman provides investors—from institutions to advisors to individual clients—with access to alternative investments that seek to be effective in helping to dampen portfolio volatility while contributing to overall portfolio performance," said Joseph Amato, president and chief investment officer of Neuberger Berman. "This fund is the fourth in our series of mutual funds that invest in nontraditional or alternative strategies and represents a new solution to the familiar challenges of effective return generation and diversification."
In the last 18 months, Neuberger Berman has expanded its offerings to include the Neuberger Berman Global Allocation Fund, Neuberger Berman Long Short Fund and Neuberger Berman Absolute Return Multi-Manager Fund.
About Neuberger Berman
Neuberger Berman is a private, independent, employee-controlled investment manager. It partners with institutions, advisors and individuals throughout the world to customize solutions that address their needs for income, growth and capital preservation. With more than 1,700 professionals focused exclusively on asset management, it offers an investment culture of independent thinking. Founded in 1939, the company provides solutions across equities, fixed income, hedge funds and private equity, and had $194 billion in assets under management as of June 30, 2012. For more information, please visit our website at www.nb.com.
An investor should consider each fund's investment objectives, risks and fees and expenses carefully before investing. This and other important information can be found in each fund's prospectus or summary prospectus, which you can obtain by calling 877.628.2583. Please read the prospectus or summary prospectus carefully before making an investment.
Most of the Fund's performance depends on what happens in the commodity and fixed income markets. The Fund's use of derivative instruments will also affect its performance and may amplify the risks that are associated with these markets. The markets' behavior is unpredictable, particularly in the short term. There can be no guarantee that the Fund will achieve its goal. The Fund is a mutual fund, not a bank deposit, and is not guaranteed or insured by the Federal Deposit Insurance Corporation or any other government agency. The value of your investment may fall, sometimes sharply, and you could lose money by investing in the Fund.
For Neuberger Berman Risk Balanced Commodity Strategy Fund
Commodity Risk. The Fund's and the Subsidiary's significant investment exposure to the commodities markets and/or a particular sector of the commodities markets, may subject the Fund and the Subsidiary to greater volatility than investments in traditional securities. The commodities markets may fluctuate widely based on a variety of factors, including changes in overall market movements, domestic and foreign political and economic events and policies, war, acts of terrorism, changes in domestic or foreign interest rates and/or investor expectations concerning interest rates, domestic and foreign inflation rates and investment and trading activities in commodities. Prices of various commodities may also be affected by factors such as drought, floods, weather, livestock disease, embargoes, tariffs and other regulatory developments. The prices of commodities can also fluctuate widely due to supply and demand disruptions in major producing or consuming regions. To the extent the Fund focuses its investments in a particular commodity in the commodities market, the Fund will be more susceptible to risks associated with the particular commodity. No active trading market may exist for certain commodities investments. Because the Fund's and the Subsidiary's performance is linked to the performance of potentially volatile commodities, investors should be willing to assume the risks of significant fluctuations in the value of the Fund's shares.
Derivatives Risk. Derivatives involve risks different from, or greater than, those associated with more traditional investments. 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. Recent legislation calls for new regulation of the derivatives markets and could limit the Fund's ability to pursue its investment strategies.
Counterparty Risk. The Fund's investments in derivatives involve, in addition to the risks posed by the markets and individual issuers, the risks associated with the Fund's exposure to its counterparties. The Fund's investments in the futures markets also introduce the risk that its futures commission merchant ("FCM") could default on an obligation set forth in an agreement between the Fund and the FCM, including the FCM's obligation to return margin posted in connection with the Fund's futures contracts.
Leverage Risk. Leverage amplifies changes in the Fund's net asset value ("NAV"). Derivative instruments that the Fund may use create leverage and can result in losses to the Fund that exceed the amount originally invested. There can be no assurance that the Fund's use of any leverage will be successful.
Tax Risk. To qualify as a regulated investment company ("RIC"), the Fund must derive at least 90% of its gross income for each taxable year from sources treated as "qualifying income" under the Internal Revenue Code of 1986, as amended. Although qualifying income does not include income derived directly from commodities, including certain commodity-linked derivative instruments, the Internal Revenue Service ("Service") has issued a large number of private letter rulings (which the Fund may not cite as precedent) in recent years that income a RIC derives from a wholly owned foreign subsidiary (such as the Subsidiary) that earns income derived from commodities is qualifying income. The Service suspended the issuance of those rulings in July 2011. The Fund nevertheless has received an opinion of counsel, which is not binding on the Service or the courts, that income the Fund derives from the Subsidiary should constitute qualifying income.
The tax treatment of income from commodity-related investments and the Fund's income from the Subsidiary may be adversely affected by future legislation, Treasury Regulations, and/or guidance issued by the Service that could affect the character, timing, and/or amount of the Fund's taxable income or capital gains and distributions it makes. If the Service were to change its ruling position, such that the Fund's income from the Subsidiary was not qualifying income, the Fund could be unable to qualify as a RIC for one or more years. If the Fund failed to so qualify for any taxable year but was eligible to and did cure the failure, it would incur potentially significant additional federal income tax expense. If, on the other hand, the Fund failed to so qualify for any taxable year, and was ineligible to or otherwise did not cure the failure, it would be subject to federal income tax on its taxable income at corporate rates, with the consequence that its income available for distribution to shareholders would be reduced and all such distributions from earnings and profits would be taxable to them as dividend income. In that event, the Fund's Board of Trustees may authorize a significant change in investment strategy or the Fund's liquidation.
Regulatory Risk. Governments, agencies, or other regulatory bodies may adopt or change laws or regulations that could adversely affect the issuer, the market value of the security, or the Fund's performance. Under recent Commodity Futures Trading Commission ("CFTC") rule amendments, the Fund will need to comply with certain disclosure and operational regulations governing commodity pools, which will increase the Fund's regulatory compliance costs. To the extent additional regulations are adopted, the Fund may be compelled to consider significant changes, which could include substantially altering its principal investment strategies or, if deemed necessary, liquidating the Fund.
Subsidiary Risk. By investing in the Subsidiary, the Fund is indirectly exposed to the risks associated with the Subsidiary's investments. The commodity-linked derivative instruments and other investments held by the Subsidiary are similar to those that are permitted to be held by the Fund, and thus, are subject to the same risks whether or not they are held by the Fund or the Subsidiary. The Subsidiary is not registered under the Investment Company Act of 1940, as amended (the "1940 Act"), and, unless otherwise noted in this prospectus, is not subject to all the investor protections of the 1940 Act. Changes in the laws of the United States and/or the Cayman Islands, under which the Fund and the Subsidiary, respectively, are organized, could result in the inability of the Fund and/or the Subsidiary to operate as described in this prospectus and the Statement of Additional Information and could adversely affect the Fund and its shareholders.
Market Volatility. Markets are volatile and values of individual securities and other instruments can decline significantly in response to adverse issuer, political, regulatory, market or economic developments that may cause broad changes in market value. To the extent that the Fund sells a portfolio position before it reaches its market peak, it may miss out on opportunities for higher performance.
Issuer-Specific Risk. The value of an individual security or particular type of security can be more volatile than the market as a whole and can perform differently from the value of the market as a whole. In addition, the Fund is considered non-diversified. As such, the percentage of the Fund's assets invested in any single issuer is not limited by the Investment Company Act of 1940. Investing a higher percentage of its assets in any one issuer could increase the Fund's risk of loss and its share price volatility, because the value of its shares would be more susceptible to adverse events affecting that issuer.
Interest Rate Risk. The Fund's total return and share price will fluctuate in response to changes in interest rates. Generally, the value of investments with interest rate risk, such as fixed income securities, will move inversely to movements in interest rates. In general, 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.
Prepayment and Extension Risk. The Fund's performance could be affected if unexpected interest rate trends cause the Fund's mortgage- or asset-backed securities to be paid off earlier or later than expected, shortening or lengthening their duration. An increase in market interest rates would likely extend the effective duration of mortgage-backed securities, thereby magnifying the effect of the rate increase on the securities' price.
Call Risk. When interest rates are low, issuers will often repay the obligation underlying a "callable security" early, in which case the Fund may have to reinvest the proceeds in an investment offering a lower yield and may not benefit from any increase in value that might otherwise result from declining interest rates.
Credit Risk. A downgrade or default affecting any of the Fund's securities could affect the Fund's performance.
U.S. Government Securities Risk. Although the Fund may hold securities that carry U.S. government guarantees, these guarantees do not extend to shares of the Fund itself and do not guarantee the market price of the securities. Furthermore, not all securities issued by the U.S. government and its agencies and instrumentalities are backed by the full faith and credit of the U.S. Treasury.
Foreign Risk. Foreign securities, including those securities issued by foreign governments, involve risks in addition to those associated with comparable U.S. securities. Additional risks include exposure to less developed or less efficient trading markets; social, political or economic instability; fluctuations in foreign currencies or currency redenomination; potential for default on sovereign debt; nationalization or expropriation of assets; settlement, custodial or other operational risks; and less stringent auditing and legal standards.
Currency Risk. Currency fluctuations could negatively impact investment gains or add to investment losses.
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. Individual sectors may move up and down more than the broader market. The several industries that constitute a sector may all react in the same way to economic, political or regulatory events.
Other Investment Company Risk. Through its investment in other investment companies, the Fund is subject to the risks of the investment companies' investments, as well as to the investment companies' expenses.
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 frequent and active trading and may have a high portfolio turnover rate, which may increase its transaction costs, may adversely affect its performance and/or may generate a greater amount of capital gain distributions to shareholders than if the Fund had a low portfolio turnover rate.
Recent Market Conditions. The financial crisis in the U.S. and global economies over the past several years, including the European sovereign debt and banking crises, has resulted, and may continue to result, in an unusually high degree of volatility in the financial markets, both domestic and foreign, and in the net asset values of many mutual funds, including to some extent the Fund, and the economy at large. It is uncertain how long these conditions will continue.
For Neuberger Berman Global Allocation Fund, Neuberger Berman Long Short Fund and Neuberger Berman Absolute Return Multi-Manager Fund
Shares in a fund may fluctuate based on interest rates, market conditions, credit quality and other factors. In a rising interest rate environment, the value of a fund's fixed income investments is likely to fall.
Derivatives Risk.
Derivatives may involve risks different from, or greater than, those associated with more traditional investments. Investments in the over-the-counter ("OTC") market introduces counterparty risk due to the possibility that the dealer providing the derivative may fail to timely satisfy its obligations. Investments in the futures markets also introduce the risk that its futures commission merchant ("FCM") may default on its obligations including the FCM's obligation to return margin posted in connection with a fund's futures contracts.
Short Sales Risk.
Short sales, selling a security a fund does not own in anticipation that the security's price will decline, theoretically presents unlimited risk on an individual stock basis, since a fund may be required to buy the security sold short at a time when the security has appreciated in value. Leverage may amplify changes in a fund's net asset value.
ETF Risk.
ETFs are subject to tracking error and may be unable to sell poorly performing stocks that are included in their index. ETFs may trade in the secondary market at prices below the value of their underlying portfolios and may not be liquid.
Options Risk.
The use of options involves investment strategies and risks different from those associated with ordinary securities transactions. A "covered call" involves selling a call option while simultaneously holding an equivalent position in the underlying security. A put option involves buying the right to sell a security at a specific price within a given time period.
Multi-Manager Risk.
For the Absolute Return Multi-Manager Fund, Fund performance will largely depend on the success of Neuberger Berman's methodology in allocating the Fund's assets to subadvisers, and its selection and oversight of the subadvisers. The subadvisers' investment styles may not always be complementary, which could adversely affect the performance of the Fund. Some subadvisers have little experience managing registered investment companies which, unlike the hedge funds these managers have been managing, are subject to daily inflows and outflows of investor cash and are subject to certain legal and tax-related restrictions on their investments and operations. Please refer to the Fund's prospectus for additional information on the risks associated with each subadvisers' investment strategy.
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.
© 2012 Neuberger Berman Management LLC, distributor. Member FINRA. All rights reserved.
Media Contact:
Alexander Samuelson, Neuberger Berman, 212.476.5392, [email protected]
SOURCE Neuberger Berman Group LLC
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