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Rating:Neuberger Berman Execs to Up Control by Year End Not Rated 3.0 Email Routing List Email & Route  Print Print
Tuesday, June 05, 2012

Neuberger Berman Execs to Up Control by Year End

Reported by Sean Hanna, Editor in Chief

It has been nearly four years since Lehman Brothers failed during the 2008 market crash, and Neuberger & Berman remains on track to win the last shares of control it gave up in 2003 when the firm sold.

CEO George Walker told reporters on Tuesday that employees will own nearly two-thirds of the company by the end of the year. He made his comments at the asset manager's annual press briefing. Walker added that Neuberger's employees are set to repurchase the outstanding common stock in the firm now that it has finished buying back preferred equity.

"We made important strides on our path toward 100 percent employee ownership," said Walker.

Neuberger Berman paid $850 million to purchase the preferred equity from Lehman Brothers Holdings in March (see MFWire).

"On April 30 we committed to and made payments which will raise employee ownership to 64 percent by year-end, leaving us with four final payments at which point we will be 100 percent employee owned."

Walker added that the firm has grown its mutual fund business by 11 percent over the past year to $31 billion. Altogether it managed some $199 billion worldwide at the end of March.

Company Press Release

Neuberger Berman Outperforms Over 10 Year Period and Wins New Business; Moves Toward 100% Employee Ownership

Neuberger Berman, founded in 1939, in May 2012 celebrated its third anniversary as an independent, employee-controlled money manager. The firm recorded $199 billion in assets under management as of March 31, 2012—nearing historical peaks—with Portfolio Managers averaging 26 years of industry experience and 84% spending more than 10 years in their roles.

Responding to global client demand, Neuberger Berman continues to launch new products and strategies, particularly those seeking exposure to alternative investments that seek to reduce volatility and provide a source of non-correlated returns. Recent launches include:

  • Neuberger Berman Global Equity Fund
  • Neuberger Berman Global Thematic Opportunities Fund
  • Neuberger Berman Long Short Fund
  • Equity and fixed income additions to the line-up of offshore funds available to non-U.S. investors
  • Raising approximately $720 million for the NB Crossroads 2010 Fund, to invest in buyout, distressed, and venture capital opportunities globally

  • To serve clients worldwide, Neuberger Berman has opened offices in Argentina, Australia, Canada, Italy, and Singapore in the past 12 months through March 2012. During that same period, the firm hired 33 new client-facing professionals in the U.S., Europe and Asia. Areas of focus include serving institutional investors worldwide and U.S. wirehouses, broker-dealers, Registered Investment Advisors and retirement platforms.

    Three years after returning to its roots as an independent company, Neuberger Berman recently made significant strides on the path to 100% employee ownership. In April 2012, it committed to and began payments on equity purchases from Lehman Brothers Holdings, which are expected to raise employee ownership to 64% by year’s end.

    "Our approach to our business is to focus on investing and delivering for clients," said George Walker, Chairman and CEO of Neuberger Berman. "We take great pride in the results we deliver to our clients and by increasing employee ownership, we further align our interests with theirs."

    Highlights of the past 12 months ended March 31, 2012 include:

  • Continued strong performance for clients, with 91% of equity and fixed income AUM outperforming their benchmarks over the ten years ending March 31.1
  • 57% of the firm’s mutual funds have an overall rating of 4- or 5-stars by Morningstar.2
  • A total of $11.5 billion of new institutional business from 156 clients across 35 strategies for the prior 12 months through March 2012.
  • U.S. mutual fund assets increased 11% to $30.2 billion in the 12 months through March 31.
  • Assets in the firm’s Dublin-based funds available to non-U.S. investors increased 332% to $5.4 billion in the 12 months through March 31.
  • The firm managed $42.9 billion for investors outside the U.S. as of March 31, 22% of the total, compared with 17% of the total on March 31, 2011.

  • "Thoughtful research, risk management, and seeking superior long-term investment performance for clients is the focus at Neuberger Berman," said Joseph Amato, President and Chief Investment Officer of Neuberger Berman.

    Reflecting an ability to offer client solutions across a wide range of asset classes, some recent mandates include a $975 million core bond assignment from an international insurance company and a $300 million TIPS mandate from a sovereign wealth fund. In the pension space, the firm was awarded a $200 million custom private equity fund of funds contract from a U.S. state pension fund, a $200 million large-cap growth mandate from a Dutch pension provider, and a $150 million high yield assignment from a European public pension 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 $199 billion in assets under management as of March 31, 2012. For more information, please visit our website at www.nb.com.

    1 As of 3/31/12: 42% of the total firm equity and fixed income Assets Under Management (“AUM”) outperformed on a 3-year basis and 82% on a 5-year basis. The AUM outperformance results are based on the overall performance of each individual investment strategy against its respective strategy benchmark and results are asset weighted so strategies with the largest amount of assets under management have the largest impact on the results. Individual strategies may have experienced negative performance during certain periods of time.

    2 Source: Morningstar Direct. As of 3/31/2012. The Morningstar ratings reflect the primary share class (typically the oldest share class or the share class with the most AUM). Does not include subadvised AUM, variable annuity shares, and money market funds and funds that are not rated by Morningstar.

    This material is provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. Certain products and services may not be available in all jurisdictions or to all client types. Investments in hedge funds and private equity are speculative and involve a higher degree of risk than more traditional investments. Investments in hedge funds and private equity are intended for sophisticated investors only. Indexes are unmanaged and are not available for direct investment. Investing entails risks, including possible loss of principal. Past performance is no guarantee of future results.

    All information is as of March 31, 2012, unless otherwise indicated and is subject to change without notice. Firm data, including employee and assets under management figures, reflects collective data for the various affiliated investment advisers that are subsidiaries of Neuberger Berman Group LLC (the “firm”), including, but not limited to, Neuberger Berman LLC, Neuberger Berman Management LLC, Neuberger Berman Fixed Income LLC, NB Alternative Fund Management LLC, NB Alternative Investment Management LLC, NB Alternatives GP Holdings LLC, and NB Alternatives Advisers LLC. Firm history/timeline information dates back to the 1939 founding of Neuberger & Berman (the predecessor to Neuberger Berman LLC). The new business mandate examples referenced represent select new mandates of $100 million or more that were awarded over the past six months. The mandates include various products and services, including investment advisory mandates for the various affiliated investment advisers that are wholly owned subsidiaries of Neuberger Berman Group LLC. It is not known whether the referenced clients approve or disapprove of any investment adviser for such mandates or any of the investment advisory products and services provided.

    An investor should consider a fund’s investment objectives, risks and fees and expenses carefully before investing. This and other important information can be found in a fund’s prospectus and summary prospectus, which you can obtain for free by calling 877.628.2583. Please read the prospectuses and summary prospectuses carefully before making an investment.

    Equity and Fixed Income AUM Outperformance Note: Firm equity and fixed-income Assets Under Management (“AUM”) outperformance figures are based upon the aggregate assets for all Neuberger Berman LLC and Neuberger Berman Fixed Income LLC traditional equity and fixed-income strategies that are included in each firm’s institutional separate account (“ISA”), managed account/wrap (“MAG”) and private asset management/high-net-worth (“PAM”) composites. The AUM outperformance results are based on the overall performance of each individual investment strategy against its respective strategy benchmark and results are asset weighted so strategies with the largest amount of assets under management have the largest impact on the results. As of 3/31/2012, seven equity teams/strategies accounted for approximately 53% of the total firm equity (PAM, ISA and MAG combined) assets reflected, and eight strategies accounted for approximately 71% of the total firm fixed income (PAM, ISA and MAG combined) assets reflected. The performance of the individual PAM equity teams/strategies is generally shown as a supplemental exhibit to the PAM Equity Composite. The respective ISA, MAG and PAM composite reports, as well as the PAM Management Team supplemental performance exhibits are available upon request. Individual strategies may have experienced negative performance during certain periods of time. Hedge fund, private equity and other private investment vehicle assets are not reflected in the AUM and product outperformance results shown. AUM outperformance for ISA and MAG strategies is based on gross of fee returns. Gross of fee returns do not reflect the deduction of investment advisory fees and other expenses. If such fees and expense were reflected, AUM and products outperformance results would be lower.

    Morningstar Rating Note: 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 variations 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 is 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 ten-year (if applicable) Morningstar Rating metrics. Ratings are ©2012 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.

    Recent events in the U.S. and global economies have 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 funds. Investing in foreign or global funds may involve greater risks than investing in funds with only U.S. securities, including currency fluctuations, potential political instability, less regulation and less market liquidity. Changes in currency exchange rates bring an added dimension of risk. Currency fluctuations could erase investment gains or add to investment losses. Investing in emerging market countries involves risks in addition to those generally associated with investing in developed foreign countries. Securities issued in these countries may be more volatile and less liquid than securities issued in foreign countries with more developed economies or markets.

    All stocks are subject to investment risk, including the risk that they may lose value. Small- and mid-capitalization stocks trade less frequently and in lower volume than larger company stocks, and thus may be more volatile and more vulnerable to financial and other risks. Compared with smaller companies, large-cap companies may be less responsive to changes and opportunities. At times, the stocks of larger companies may lag other types of stock in performance.

    Short sales involve selling a security the Fund does not own in anticipation that the security’s price will decline. Short sales may help hedge against general market risk to the securities held in the portfolio but theoretically present unlimited risk on an individual stock basis, since the Fund may be required to buy the security sold short at a time when the security has appreciated in value. The Fund may not always be able to close out a short position at a favorable time and price. If the Fund covers its short sale at an unfavorable price, the cover transaction is likely to reduce or eliminate any gain, or cause a loss to the Fund, as a result of the short sale. There is no guarantee that the use of long and short positions will succeed in limiting the Fund’s exposure to market movements, sector-swings or other risk factors. A bond’s value may fluctuate based on interest rates, market condition, credit quality and other factors. You may have a gain or a loss if you sell your bonds prior to maturity. Bonds are also subject to the credit risk of the issuer. High-yield bonds, also known as “junk bonds,” are considered speculative and carry a greater risk of default than investment-grade bonds. Their market value tends to be more volatile than investment-grade bonds.

    Shares in a fund may fluctuate based on interest rates, market condition, 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 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, 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. 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. 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.

    Fund performance for Absolute Return Multi Manager Fund 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.

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