On Monday, the Neuberger Berman Short Duration Income ETF (NBSD) launched, adding to the growing selecting of Neuberger Berman funds.
NBSD aims to give investors access to high current income consistent with liquidity, while mitigating principal risk. Additionally, the fund aims to generate total return, and operates with a net expense ratio of 0.35%.
Primarily, NBSD invests in fixed and floating-rate investment-grade bonds, along with other debt instruments. The list of investment options can also include collateralized debt and loan obligations, credit risk transfer securities, and mortgage- and asset-backed securities.
To monitor trends across markets and industries, the fund uses a mix of qualitative and quantitative factors. By doing so, the fund may reposition investments to capture undervalued sectors of the bond market.
To mitigate credit risk, the fund invests in a wide variety of issuers and securities. This may include U.S. Treasury securities, derivative instruments, or different ETFs, among other options.
A smaller portion of investments may be allocated toward junk bonds to bolster the fund’s yield and add diversification. In selecting potential junk bonds, NBSD seeks issuers with stronger financial health, with the potential to have their credit rating raised.
The fund prospectus notes that NBSD may also invest in foreign securities. This includes obligations of issuers on emerging market countries, of which can be denominated in any currency. However, the prospectus adds that no more than 20% of fund assets will be invested in securities that are not U.S. dollar denominated.
Lower Duration
As a short-duration fund, NBSD aims to keep an average portfolio duration of no longer than three years. However, the fund reserves the right to invest in securities of any maturity.
“Advisors are increasingly looking to short-duration fixed income products as proxies for money markets. It’s great to see Neuberger Berman bolster its ETF lineup by offering an array of bond exposures,” added Kirsten Chang, a VettaFi senior industry analyst.
With the launch of NBSD, Neuberger Berman now has nine ETFs listed in the United States. In total, these funds have over $970 million in assets under management.
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