CLO Income Fund
UCITS Fund | Fixed Income
CLO Income Fund
SFDR Classification | Article 8
Why Invest
CLO Debt Can Offer Economic and Fundamental Advantages
Offering high income, long-only exposure to a portfolio of primarily non-investment grade collateralised loan obligation debt securities with no fund-level leverage
One of the Largest and Longstanding CLO Platforms
Success of the platform has enabled growth but remains nimble, driven by fundamental credit philosophy and long-term returns
Team Depth and Experience
An experienced and dedicated team of fixed income specialists, managing a broad platform of non-investment grade assets
This is a marketing communication in respect of the Neuberger Berman CLO Income Fund. Please refer to the fund prospectus and offering documents, including the Key Information Document (“KID”) or Key Investor Information Document (“KIID”) as applicable, before making any final investment decisions. Investors should note that by making an investment they will own shares in the fund, and not the underlying assets.
This fund is classified as complex under MIFID II and therefore will not be suitable for all investors. Investors should familiarise themselves with the risks that are associated with the fund as disclosed within the fund prospectus. This fund can accept subscriptions and redemptions on a fortnightly basis, and does not offer daily dealing. Investors should familiarize themselves with the dealing cycle and terms associated with subscriptions and redemptions as disclosed within the prospectus. A calendar for the dealing cycle of the fund can be downloaded at https://www.nb.com/documents/public/global/emea/nbif_clo_dealing.pdf.
The dealing deadline for the fund is six business days in advance of the dealing date, therefore investors should familiarise themselves with the risks associated with market movements in the intervening period between dealing cut-off and dealing. The fund may invest in instruments that have long settlement periods, such as primary issue Collateralised Loan Obligation (CLO) securities. The fund’s investments in CLOs will be frequently subordinate in right of payment to other securities sold by the applicable CLO and may not be readily marketable. Depending upon the payment and default rates on the collateral of the CLO, the fund may incur substantial losses on its investments. Accordingly, the mark-to-market value of CLOs may be volatile and the value of the Interests could likewise be volatile.
The fund complies with the Sustainable Finance Disclosure Regulation (the “SFDR”) and is classified as an Article 8 SFDR fund. Neuberger Berman believes that Environmental, Social and Governance (“ESG”) factors, like any other factor, should be incorporated in a manner appropriate for the specific asset class, investment objective and style of each investment strategy.
Key Risks
Risks of Investing in the Neuberger Berman CLO Income Fund
The following list of risk factors is a summary only and is qualified in its entirety by the more detailed description of the risk factors described in the ‘investment risk’ section of the prospectus.
Market Risk: The risk of a change in the value of a position as a result of underlying market factors, including among other things, the overall performance of companies and the market perception of the global economy.
Volatility in Market: In recent years, securities issued in securitization transactions have experienced significant fluctuations in market value and accordingly high price volatility relative to historical experience. There is no assurance that such volatility will not continue or (to the extent it has eased) return.
Liquidity Risk: The risk that the fund may be unable to sell an investment readily at its fair market value. In extreme market conditions this can affect the fund’s ability to meet redemption requests upon demand. CLO securities are generally illiquid and dealer marks and valuations provided may not represent prices where assets can actually be purchased or sold in the market from time to time. Accordingly, the mark-to-market value of CLOs maybe volatile and the value of the relevant interests could likewise be volatile.
Credit Risk: The risk that debt instrument issuers may fail to meet their interest repayments, or repay debt, resulting in temporary or permanent losses to the fund.
Interest Rate Risk: The risk of interest rate movements affecting the value of fixed-rate bonds.
Operational Risk: The risk of direct or indirect loss resulting from inadequate or failed processes, people and systems including those relating to the safekeeping of assets or from external events.
Counterparty Risk: The risk that a counterparty will not fulfil its payment obligation for a trade, contract or other transaction, on the due date.
Currency Risk: Investors who subscribe in a currency other than the base currency of the fund are exposed to currency risk. Fluctuations in exchange rates may affect the return on investment.
Risk Retention: Beginning 1 January 2019, the fund will become subject to certain risk retention and due diligence requirements. Amongst other things, these requirements will restrict the fund from investing in a CLO unless: (i) the originator, sponsor or original lender in respect of the relevant CLO has explicitly disclosed that it will retain, on an ongoing basis, a net economic interest of not less than 5% in respect of certain specified credit risk tranches or securitised exposures; and (ii) the fund is able to demonstrate that it has undertaken certain due diligence in respect of various matters. The fund may be required to dispose of any CLOs that are non-compliant. Under such circumstances, the fund could sustain losses.
Morningstar Rating
For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating based on a Morningstar Risk-Adjusted Return measure that accounts for variation 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 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 ©2023 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.
The ongoing charge figure (incl. management fee) is based on the annual expenses for the period ending 31 December 2023.
The fund’s benchmark name shown here may be abbreviated. Please refer to the supplement for the full benchmark name.
Joseph P. Lynch
Stephen J. Casey, CFA
Pim van Schie
Joseph Lynch, Managing Director, joined the firm in 2002. Joe is the Global Head of Non-Investment Grade Credit and a Senior Portfolio Manager for Non-Investment Grade Credit focusing on loan portfolios. In addition, he sits on the Credit Committee for Non-Investment Grade Credit and serves on Neuberger Berman’s Partnership Committee. Joe was a founding partner of LightPoint Capital Management LLC, which was acquired by Neuberger Berman in 2007. Prior to joining LightPoint, he was employed at ABN AMRO where he was responsible for structuring highly leveraged transactions. Joe earned a BS from the University of Illinois and an MBA from DePaul University.