Neuberger Berman Converts Mutual Fund to ETF

Neuberger Berman Group, which manages $460 billion in assets, has added a fourth exchange-traded fund to its lineup by converting one of its mutual funds into a new format. 

The New York-based investment manager converted its $196 million Neuberger Berman Commodity Strategy Fund into the Neuberger Berman Commodity Strategy ETF (NBCM). Before the switch, Neuberger Berman managed $14.4 million in three ETFs. 

The change highlights the growth of the ETF industry, which has nearly doubled in five years to $6.04 trillion in assets, according to ETF.com data, thanks to advantages like tax efficiencies and intraday trading not available with mutual funds.  

Guinness Atkinson last year was the first to convert a mutual fund to an ETF, and several have followed. At the same time, studies are forecasting slower growth in the mutual fund industry. 

Neuberger’s actively managed fund invests in commodity-linked derivative instruments via multiple quantitative models. It charges an expense ratio of 0.65% and lists on the NYSE Arca. It started 10 years ago as a mutual fund.  

"The firm continually assesses where our investment expertise intersects with client demand and preference for an ETF vehicle," Scott Kilgallen, Neuberger Berman’s head of North America intermediary client coverage, said in a statement issued Oct 24. Commodities exposure can help alleviate the impact of inflation on a portfolio, he said.  

The fund’s prospectus says its portfolio managers “seek to provide investors with an investment vehicle whose returns are not highly correlated with other major asset classes.” 

Currently, the fund’s portfolio takes long or short futures positions in commodities such as gold, gasoline, corn, heating oil, crude oil, zinc, copper, soybean meal, soybean oil, aluminum, natural gas, wheat, cocoa, cotton, lead, live cattle, nickel, palladium, platinum and more. 

NBCM’s strategies include a macro-driven, risk-balancing approach that looks at commodity sectors and a strategy that considers the outlook for individual commodities, according to the prospectus.  

Contact Heather Bell at [email protected]