Neuberger Berman has broken into one of the Holy Grails for alts managers: the DC-space.
The Neuberger Berman Absolute Return Multi-Manager Fund was selected by Hartford HealthCare as an investment option for employees of its defined contribution plans.
Hartford, Connecticut-based Hartford HealthCare (HHC) employs approximately 18,000 people
and administers a defined contribution system that includes 401(k), 403(b), and 457(b) plans, with
total assets of approximately $650 million.
The product was the sole hedge fund strategy option selected by HHC officials as part of a restructuring of its defined contribution plans. The option will become available to HHC defined contribution participants beginning January 1, 2014.
“We believe HHC is one of the first major not-for-profit institutions to introduce innovative
options such as hedge funds in a mutual fund format to our employees as part of a comprehensive
plan to serve their retirement needs,” stated David Holmgren, HHC’s chief investment officer.
The fund invests in 11 sleeves managed by 11 hedge fund sub-advisors and charges 234 basis in its institutional class, according to the fund's prospectus and SEC filing.
Here is the press release:
NEUBERGER BERMAN MUTUAL FUND CHOSEN AS FIRST HEDGE
FUND OPTION FOR HARTFORD HEALTHCARE DEFINED
CONTRIBUTION RETIREMENT PLANS
Neuberger Berman Absolute Return Multi-Manager Fund offers Plan Participants
Portfolio Diversification with an Absolute Return Focus
NEW YORK, November 22, 2013 – Neuberger Berman Group LLC, one of the world’s leading
employee-controlled investment managers, is pleased to announce the selection of Neuberger
Berman Absolute Return Multi-Manager Fund by Hartford HealthCare as an investment option for
employees of its defined contribution plans.
Hartford, Connecticut-based Hartford HealthCare (HHC) employs approximately 18,000 people
and administers a defined contribution system that includes 401(k), 403(b), and 457(b) plans, with
total assets of approximately $650 million. Neuberger Berman Absolute Return Multi-Manager Fund
was the sole hedge fund strategy option selected by HHC officials as part of a restructuring of its
defined contribution plans. The option will become available to HHC defined contribution
participants beginning January 1, 2014.
“We believe HHC is one of the first major not-for-profit institutions to introduce innovative
options such as hedge funds in a mutual fund format to our employees as part of a comprehensive
plan to serve their retirement needs,” said David Holmgren, HHC’s chief investment officer.
“We believe that liquid alternative mutual funds provide a logical absolute return solution to defined
contribution plan participants and are honored to have Neuberger Berman Absolute Return Multi-
Manager Fund selected by Hartford HealthCare,” said Joseph Amato, Neuberger Berman’s
president and chief investment officer.
Neuberger Berman Absolute Return Multi-Manager Fund was introduced in May 2012 and seeks
capital appreciation with an emphasis on absolute returns. The Fund allocates its assets to multiple
hedge fund advisers that employ distinct alternative investment strategies and is managed by
members of the Neuberger Berman Hedge Fund Solutions team. Unlike traditional hedge funds, the
Fund is available to retail investors and offers daily liquidity, lower investment minimums, full
transparency of portfolio holdings and does not have a performance based management fee.
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. Neuberger Berman has more than 1,900
employees worldwide, with approximately 450 investment professionals, offering an investment
culture of independent thinking. Founded in 1939, the company provides solutions across equities,
fixed income, hedge funds and private equity, and had $227 billion in assets under management as of
September 30, 2013. For more information, please visit our website at www.nb.com.
An investor should consider the 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 or summary prospectus, which you can obtain by calling 877.628.2583.
Please read the prospectus or, if available, summary prospectus carefully before making an
investment.
The Fund’s performance will largely depend on the success of Neuberger Berman’s
methodology in allocating the Fund’s assets to subadvisors, and its selection and oversight of the
subadvisors. The subadvisors’ investment styles may not always be complementary, which could
adversely affect the performance of the Fund. Some subadvisors 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.
The Fund’s returns may deviate from overall market returns to a greater degree than other mutual
funds that do not employ an absolute return focus. Thus, the Fund might not benefit as much as
funds following other strategies during periods of strong market performance. Also, the
employment of hedging strategies, if any, in an attempt to mitigate risk may cause the Fund’s
returns to be lower than if hedging had not been employed.
Event Driven Strategies that invest in companies in anticipation of an event carry the risk that the
event may not happen or may take considerable time to unfold, it may happen in modified or
conditional form, or the market may react differently than expected to the event, in which case
the Fund may experience losses. Additionally, event-driven strategies may fail if adequate
information about the event is not obtained or such information is not properly analyzed. The
actions of other market participants may also disrupt the events on which event driven strategies
depend. Arbitrage Strategies involve the risk that underlying relationships between securities in
which investment positions are taken may change in an adverse manner or in a manner not
anticipated, in which case the Fund may realize losses. The Fund’s use of event-driven and
arbitrage strategies will cause it to invest in actual or anticipated special situations—i.e.,
acquisitions, spin-offs, reorganizations and liquidations, tender offers and bankruptcies. These
transactions may not be completed as anticipated or may take an excessive amount of time to be
completed. They may also be completed on different terms than the subadvisor anticipates,
resulting in a loss to the Fund. Some special situations are sufficiently uncertain that the Fund
may lose its entire investment in the situation.
The value of certain securities will fluctuate based on interest rates, market conditions, credit
quality and other factors. Generally, values of fixed income securities will decline as interest
rates rise. When interest rates are low, issuers of certain fixed income securities 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. 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. Unlike mortgage-
related securities issued or guaranteed by agencies of the U.S. government or government-
sponsored entities, mortgage related securities issued by private issuers do not have a
government or government-sponsored entity guarantee (but may have other credit enhancement
features), and may, and frequently do, have less favorable collateral, credit risk or other
underwriting characteristics. These securities potentially offer higher interest rates than agency-
backed mortgaged-backed securities, but require careful analysis of quality in an effort to protect
against risk of non-payment of principal and/or interest.
Stock markets are volatile and may decline significantly in response to adverse issuer, political,
regulatory, market or economic developments. To the extent that the fund sells stocks before
they reach their market peak, it may miss out on opportunities for higher performance. 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.
Investing in foreign securities may involve greater risks than investing in securities of U.S.
issuers, such as currency fluctuations, potential social, political or economic instability,
restrictions on foreign investors, less stringent regulation and less market liquidity. Securities
issued in emerging market countries may be more volatile and less liquid than securities issued
in foreign countries with more developed economies or markets as such governments may be
less stable and more likely to impose capital controls as well as impose additional taxes and
liquidity restrictions. Exchange rate exposure and currency fluctuations could erase or augment
investment results. Funds may hedge currency risks when available though the hedging
instruments may not always perform as expected. Derivatives contracts on non-U.S. currencies
are subject to exchange rate movements. The risks involved in seeking capital appreciation from
investments primarily in companies based outside the United States are set forth in the
prospectus. 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 introduce 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.
Several of the strategies utilized by the Fund may engage in frequent and active trading and have
a high portfolio turnover rate, which may increase the Fund’s transaction costs, may adversely
affect the Fund’s performance or may generate a greater amount of capital gain distributions to
shareholders than if the Fund had a low portfolio turnover rate.
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