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Asset Allocation Committee Outlook

4Q 2021
AAC Outlook 4Q2021 Webinar
On October 12, Erik Knutzen, CIO of Multi-Asset Class, and Hakan Kaya, Senior Portfolio Manager, discussed their views on how to manage these hurdles in further detail. ACCESS REPLAY
Clearing the Hurdles
“On a 12-month horizon, this looks to us like an attractive environment for risky assets, but the inflection point in the current cycle is already proving particularly volatile. We think it is prudent to position more defensively for the short term, to be better able to clear the immediate hurdles.”

—Erik L. Knutzen, CFA, CAIA, Chief Investment Officer—Multi-Asset Class

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Commentary

While the Asset Allocation Committee’s (“the AAC” or “the Committee”) headline views looking out over the coming 12 months have not changed notably this quarter, our discussion certainly has. The consensus remains cautiously positive on the economic and market outlook for the coming year but, for the first time in 18 months, and particularly among members of our fixed income team, we have started trimming risk in our views, advocating reducing exposure and building dry powder to take advantage of opportunities that arise due to potential short-term market volatility. The immediate hurdles that we believe investors need to clear include supply disruptions and rising input costs (particularly energy), tighter fiscal and monetary conditions, and threats to growth in China. These near-term challenges could lead to slowing growth and stubborn inflation. As a result, while our views remain largely consistent and oriented toward risk exposure on a 12-month horizon, we are looking to be more defensive in the short term. That raises a challenging question: Which markets do we favor, when stock market valuations are stretched and core government bond yields remain so low?

Three months ago, the AAC was preparing to move from smooth to choppy waters, as a descent from the “peak growth” of early summer coincided with the prospect of tighter monetary and fiscal impulses in 2022, feeding into higher uncertainty and volatility in the markets. This was not about assuming a defensive stance in our views, however, but about achieving a balanced risk outlook that would enable us to lean into risk-on views should volatility present the opportunity. The AAC believed that the next 12 months would be choppier for risky assets, but ultimately positive.

Our headline views show little change as we move into the final quarter of 2021. But the tone of our debate has arguably shifted more substantially than it has for a year, reflecting a growing consensus that we are getting closer to the point at which early-cycle recovery shifts into mid-cycle expansion. On a 12-month horizon, that still looks to us like an attractive environment for risky assets, but the inflection point is already proving particularly volatile. We think it is prudent to position still more defensively for the short term, to be better able to clear the immediate hurdles.

A Tricky Set of Obstacles

The terms of reference have evolved somewhat, but the twin threats of stubborn inflation and slowing growth identified by the Committee remain essentially unchanged. Concern that very high inflation might turn out to be structural rather than transitory has given way to worries about the problematic nature of current price pressures (see “Up for Debate: Inflation—Not a Question of Transitory Versus Structural”). And while rogue variants of the coronavirus remain a threat, China’s recent reframing of its business and social regulations, which appear to accept short-term disruption and slowdown in exchange for progress on longer-term policy goals, has risen to become the AAC’s top risk to global growth (see “Up for Debate: All Change in China?”).

These risks have now grown prominent enough to elicit the first sustained notes of caution from Committee members for more than a year, particularly those from our fixed income team. While there is still debate within the team about the urgency and speed of these moves, in multi-sector portfolios, for the first time in 18 months they favor taking advantage of spread tightening to sell credit risk rather than taking advantage of selloffs to add it.

This shift in sentiment is partly due to fundamental concerns about the turn in fiscal and monetary policy impulse, the stickiness of inflation and the descent from peak growth, but it is also partly due to perceptions that it is no longer worth taking so much risk. Spreads are already tight; but, in addition, there are a lot of investors whose profit-and-loss statements currently show 18 months of strong recent returns which may represent a good opportunity for reducing risk now.

Those taking the other side of the argument point out that there is still upside to be earned going into year-end, but also note the lack of cheaply priced safe havens to rotate into. Some fixed income AAC members think it best to wait for higher Treasury yields, both as a signal of a turn in the credit cycle and as a destination for capital. Indeed, while the fixed income team’s multi-sector portfolio managers have started to reduce credit risk, they also remain as short in duration as they have been since the start of the pandemic.

EQUITIES DO NOT YET APPEAR TO BE PRICING FOR THE DESCENT FROM PEAK GROWTH
 
Equities Do Not Yet Appear To Be Pricing For The Decsent From Peak Growth
Source: FactSet. Data as of September 30, 2021. For illustrative purposes only. Nothing herein constitutes a prediction of future economic or market environments. Due to a variety of factors, actual events, including the characteristic of economic or market environments may vary significantly from any views expressed. 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.

The debate is similar on the equities side of the Committee. We still see quite a lot of implied volatility priced into options—so these are not overly-complacent markets. Similarly, the valuation dispersion in U.S. stocks—the difference between the P/E valuations of the most expensive stocks versus the median stock in the index, or, essentially, how much value there is in the index’s cheapest stocks—remains surprisingly high. Nonetheless, it is questionable whether current valuations have really taken account of the apparent peak and modest downturn in the economic cycle. To reiterate, these inflection points are tricky to navigate, and there may be some adjustments to come over the coming weeks.

A Brighter 12-Month View

Investors who can clear the hurdles without tumbling are likely to be in a much better position to take advantage of the potential opportunities of a more settled mid-cycle expansion. Let’s not forget that many fundamental indicators remain very positive.

So far, we are seeing a growth plateau rather than a steep descent, supported by $3.5 trillion of excess cash on household and corporate balance sheets, relative to the pre-pandemic trend; rising wages; increasing capex; and a near record ratio of new orders to inventories across several industrial sectors. Consumers are likely to want to spend big on seasonal holiday celebrations after last year’s disappointments. Financial conditions remain very accommodative, and while the Federal Reserve and the European Central Bank have signaled an impending start to tapering asset purchases, they appear to have successfully separated this action from any suggestion of imminent rate hikes.

On balance, while this is not yet translating into substantial changes in our headline views, nor indeed its overarching view that potential market volatility remains an opportunity to lean into risky assets, the tone of the debate has changed, and the tenor of our short-term views has grown more cautious. That means the Committee faces a similar challenge to that of the fixed income team: Which markets do we favor? Our view on cash is upgraded to neutral, and some AAC members have started leaning towards Hedged Strategies, but views on expensive core government bonds remain firmly underweight.

The Regional Solution

Regional relative valuations help us here.

While non-U.S. allocations in equities and fixed income are not lower-risk in terms of their gearing to global growth, they may be lower-risk in terms of current valuations, and positively exposed to any weakness in the U.S. dollar. As such, the AAC retains its overweight view on emerging markets and developed market non-U.S. equities, with highest conviction on Europe and Japan, and downgrades its view on U.S. large-cap equities to underweight.

NON-U.S. MARKETS MAY BE LOWER-RISK IN TERMS OF VALUATION
Asset Allocation Committee Outlook 4Q2021: Clearing the Hurdles
Source: FactSet. Data as of September 28, 2021. For illustrative purposes only. Nothing herein constitutes a prediction of future economic or market environments. Due to a variety of factors, actual events, including the characteristic of economic or market environments may vary significantly from any views expressed. 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.

We acknowledge that the major economies in the non-U.S. markets face particularly heightened political risk right now. Germany’s tight election looks likely to end in the country’s first three-party coalition government, led by the center-left Social Democratic Party—but negotiations could be complex and lengthy. With Japan’s prime minister Yoshihide Suga opting to step down as leader of the Liberal Democratic Party after a much-criticized tenure struggling to control the COVID-19 crisis, the ruling party heads into November’s wide-open general election, with Fumio Kishida at the helm. Above all, markets are still grappling with the implications of China’s regulatory pivot (see “Up for Debate: All Change in China?”).

That said, U.S. political risk is also high. Congressional negotiations around both the debt ceiling and President Joe Biden’s multi trillion-dollar fiscal bills—and the taxes to pay for them—are likely to be at a crunch point as this report comes out. Looking longer-term, investors appear a little complacent about the regulatory vulnerability of the market-leading mega-cap technology companies over the next year or two.

AAC members that remain more bullish about year-end prospects see the favoring of non-U.S. markets, together with an ongoing preference across the Committee for value over growth stocks and sectors, as a continuation of our reflation-and-recovery views. Nonetheless, there are also reasons for this non-U.S. tilt to color the Committee’s more defensive short-term views.

The Alternatives Solution

Alternative investments are another place to look when one is downgrading views on public equities but reluctant to upgrade views on core government bonds.

The Committee’s headline view on Hedged Strategies remains underweight, but it is growing marginally more favorable and behind it lies a diversity of views on specific strategies. Many of the classic market-neutral styles, from long/short equity and statistical arbitrage to capital-structure arbitrage, have struggled again so far this year as market indices have risen steadily. Macro and trend-following strategies continue to find it difficult to implement sustained and differentiated ideas, beyond simply being long risky assets, in an environment of massive government intervention in the economy and markets. Things may change for these classic styles should volatility return in earnest—but there is no guarantee that the nature of that choppiness will suit them. Structured credit, particularly in U.S. mortgage securities, has been fruitful in the aftermath of the pandemic, but the opportunity set has become less abundant.

The opportunity set looks stronger for event-driven strategies, however, as this year’s merger-and-acquisition frenzy seems set to continue, while special situations and distressed are likely to benefit from the potential turn in the cycle next year. And while many insurance-linked strategies are grappling with the enormous liabilities created by Hurricane Ida and Germany’s summer floods, compounded by supply-side price pressures on labor and materials for reconstruction, this could signal an attractive entry point for new investors.

The Committee has higher conviction on private markets. As we have been reiterating for many quarters, now, while private equity carries equity risk and comes with high valuations, those valuations remain competitive relative to the public market, as well as less volatile on investors’ profit-and-loss statements. The sector’s ability to create value away from the volatility of the public markets can also address some of these concerns. Moreover, the high multiples being paid, together with the high level of equity in most current deals—more than 50% is now becoming the norm—is concentrating the minds of private equity managers on high-quality companies with strong organic growth prospects.

The Committee also recognizes that there are some very attractive specialized opportunities to be explored in private markets and singled out structured preferred stock capital solutions for private companies. These businesses have growth projects to finance but are unable to raise more senior debt. Preferred stock can help bridge the gap, and for investors willing to take some illiquidity risk and payment-in-kind rather than cash-pay coupons, it has the potential to offer a near-equity return outlook, with credit-like terms, at around half the valuation multiple of the same company’s common equity.

Finally, the AAC held its overweight view on commodities, as one of the few reliable ways to hedge against the potential for cost-push, supply-side inflation pressures to persist or even worsen into year-end and beyond. The picture is complex, however. Additional supply is likely to soften prices for many agricultural products, and potentially also for some metals. Energy is the real wild card, and especially natural gas: on top of pandemic-related supply constraints, which have compounded years of underinvestment, the northern-hemisphere winter and a pick-up in seasonal travel looks likely to add demand pressure onto an already fragile market.

More Cautious—For Now

While the AAC’s headline views have not changed notably this quarter, our discussion certainly has, and the tenor of our short-term views has grown more cautious. Our view on cash is upgraded to neutral, we favor select Hedged Strategies, and our view on U.S. large caps is downgraded to underweight to reflect greater caution on valuation risk. Overweight views in asset classes such as high yield and emerging markets debt remain in place but are under closer scrutiny in the immediate term. Core government bond yields are still too low to be attractive, but they have risen quickly and could be favored alongside cash over the coming weeks. Once the current inflection point in the cycle has passed, and its associated hurdles safely cleared, the Committee anticipates a return to a set of 12-month views that look more like those it held six months ago.

Fixed Income Market Views
Asset Allocation Committee Outlook 4Q2021: Clearing the Hurdles 
Asset Allocation Committee Outlook 4Q2021: Clearing the Hurdles
Investment Grade Fixed Income
  • The Committee maintained its underweight view.
  • The prospect of more stubborn, supply-led inflation dynamics has started to push government bond yields back up, but there remains some way to go before they present attractive valuations or reliable diversification.
Non-U.S. Developed Market Bonds
  • The Committee maintained its underweight view.
  • While not at the extreme valuations we saw in 2020, yield curves remain suppressed and flat and we see more attractive value in high yield and equity markets.
High Yield Corporates
  • The Committee maintained its overweight view.
  • The AAC believes that the continuing growth recovery and conservative management of corporate balance sheets will be supportive of credit markets in general.
  • Following a long period of strong performance, rising rates and tight spreads are beginning to look riskier, leaving this view under closer scrutiny as we navigate the coming months.
Emerging Markets Debt
  • The Committee maintained its overweight view.
  • This is one part of the fixed income market that has improved its relative valuation over recent months, largely due to the reversal of many pro-cyclical and reflation-and-recovery trades, and the strengthening of the U.S. dollar.
  • We believe these recent rotations are overdone, which makes emerging markets debt our highest-conviction overweight view in fixed income for a second quarter.
  • Volatility in China, particularly in the real estate sector, could pose a risk, but government bonds remain a useful source of yield and diversification.
Global Equity Market Views
Asset Allocation Committee Outlook 4Q2021: Clearing the Hurdles 
Asset Allocation Committee Outlook 4Q2021: Clearing the Hurdles
U.S. Equities
  • The Committee maintained its overweight view on U.S. small- and mid-caps and downgraded U.S. large caps from neutral to underweight.
  • The AAC believes that the continuing growth recovery will be supportive of higher quality small caps.
  • U.S. large caps were downgraded to reflect more attractive valuations in non-U.S. markets, and the AAC maintains its preference for cyclical and value stocks within the U.S.
Non-U.S. Developed Market Equities
  • The Committee maintained its overweight view.
  • While they are more highly geared to the growth recovery, and political risk is currently slightly elevated in Germany and Japan, Japanese and European equities remain relatively cheap and in our view that currently presents lower risk.
  • Relative valuation improved over the summer, due to the recent reversal of many pro-cyclical and reflation-and-recovery trades, and the strengthening of the U.S. dollar, which we believe is overdone.
  • On the margins, the AAC favors Japan, where we believe big changes in management attitudes to shareholder value are creating substantial opportunity.
Emerging Markets Equities
  • The Committee maintained its overweight view.
  • Asian equities stand out as sources of high-quality exposure to global economic recovery, and their relative valuation improved over the summer, due to the recent reversal of many pro-cyclical and reflation-and-recovery trades, and the strengthening of the U.S. dollar, which we believe is overdone: our view on China is downgraded to neutral on recent regulatory uncertainty but our view on India is upgraded to overweight to reflect interesting opportunities we see in small caps and innovation sectors.
  • This high gearing to the growth recovery may bear scrutiny as we navigate the next few months.
Real and Alternatives Asset Market Views
Asset Allocation Committee Outlook 4Q2021: Clearing the Hurdles
Asset Allocation Committee Outlook 4Q2021: Clearing the Hurdles
Commodities
  • The Committee maintained its overweight view.
  • Commodities increasingly appear to be one the few reliable ways to hedge against the potential for worsening cost-push, supply-side inflation pressures.
  • Energy stands out, and especially natural gas: on top of pandemic-related supply constraints, which have compounded years of underinvestment, the northern-hemisphere winter and a pick-up in seasonal travel looks likely to add demand pressure onto an already fragile market.
  • Additional supply may soften prices in agriculture and some metals.
Hedge Funds
  • The Committee maintained its underweight view.
  • After providing much-needed ballast for portfolios through the worst of the coronavirus crisis, the major liquid alternative strategies appear to have less of a role to play as the recovery gains a firmer footing.
  • Market neutral equity and credit strategies have been struggling against strong index performance and macro strategies look set to be challenged in an environment of increasing official intervention in the economy.
  • Opportunities appear to be growing in merger arbitrage and distressed, and potentially insurance-linked strategies.
Private Equity
  • The Committee maintained its overweight view.
  • While there are concerns about valuations, they remain attractive relative to public markets, and are driving deals in high-quality, fast-growing businesses with very low financial leverage; the ability to create value away from the potential volatility of the public markets may also provide some portfolio stability as the cycle matures.
  • If anything, many investors are constrained from increasing their allocations or making new commitments because they are already exceeding their limits, following many months of outperformance of public markets and early capital calls from managers that are finding abundant investment opportunities.
Private Debt
  • The Committee maintained its overweight view.
  • While some portfolios may be exposed to legacy assets affected by the coronavirus crisis, we believe those focused on higher quality assets have fared well and are positioned to benefit from favorable current conditions, as well as offering floating-rate exposure.
  • The market is becoming more borrower-friendly, with full valuations and (already loose) covenants loosening further, which makes credit selection important.
Private Real Estate
  • The Committee maintained its overweight view.
  • The sector’s inflation sensitivity is attractive, economic re-opening is removing a major headwind to this sector, and we believe post-pandemic growth dynamics will continue to support key sectors such as data centers, warehouses, industrial, and multi-family residential.
Currencies
USD
  • The AAC maintained its underweight view.
  • The currency is still overvalued based on purchasing power parity (PPP) metrics and faces headwinds from accommodative monetary policy, the compression of rate differentials with the rest of the world and the U.S.’s twin deficits (which may be exacerbated by its fiscal agenda).
  • The dollar could benefit from this being a U.S.-led recovery, however, especially if the Federal Reserve becomes more hawkish: this could also generate a feedback loop if higher long-dated yields trigger a flight to the safety of the dollar.
EUR
  • The AAC upgraded its view from neutral to overweight.
  • The euro is undervalued based on purchasing power parity (PPP) metrics, tends to be positively geared to global economic activity, has a tailwind in the form of disbursement of the E.U. Recovery Fund, and benefits from a large current account surplus and limits to the dovishness of European Central Bank messaging.
  • The market’s long position in the currency and China’s slowdown are the main risks to the view.
JPY
  • The AAC maintained its overweight view.
  • Both PPP and real exchange rates suggest the JPY is undervalued, market participants are now very short the currency, and hedged foreign investments are at their most attractive levels for years for JPY-based investors.
GBP
  • The AAC upgraded its view from neutral to overweight.
  • The U.K.’s budget is growth-supporting this year, most COVID-19 restrictions are now lifted, the BoE has adopted a relatively hawkish stance, and the GBP still appears undervalued based on PPP measures.
  • The view remains marginal, as market participants are long GBP, there is rising risk of premature fiscal tightening, and Brexit issues exacerbating COVID-related supply bottlenecks are the main risks to the view.
CHF
  • The AAC maintained its underweight view.
  • The Swiss franc is still very overvalued on PPP measures, and market participants remain very long in their positioning despite this year’s removal of many tail risks associated with the Eurozone.
Up For Debate
All Change in China?

The AAC downgraded its regional view on China to neutral, given the uncertainty generated over recent months by the government’s flurry of social and business policy announcements, and the weakness in the real estate market uncovered by the Evergrande crisis.

Following years of growing economic and strategic competition with the U.S. and increasing inequality, compounded by the challenging demographic picture revealed by census data in May, China’s authorities appear to be doubling down on policies that promote a higher birth rate, “common prosperity,” and autarkical “internal circulation.” Policies aimed at sports, internet games and gambling, e-cigarettes, and the centralized procurement of pharmaceuticals and medical equipment are geared to promoting good health and reducing consumers’ medical expenses, both of which could encourage young people to take advantage of the country’s new three-child rule. Policies aimed at the education and real estate sectors, as well as measures to increase the tax liabilities of internet companies, are meant to foster economic equality. And policies for developing alternative energy and IT hardware sectors such as semiconductors have aims both geostrategic and domestic.

Some Committee members argued that this not only introduced uncertainty across a number of sectors, but also marked China’s transition from being a high-growth to a medium-growth economy. While President Xi Jinping’s objective of securing a third term is likely to make the government and central bank wary of allowing too rapid a slowdown, over the longer term, China’s rapidly ageing and slow-growing population means that it can now prioritize social and political cohesion over job-creating growth.

The majority, however, preferred to see the investment case changing rather than fading away—and the current uncertainty as a source of potential opportunity. Alternative energy, photovoltaics, wind power, smart vehicles and semiconductors could be set to develop into high-growth industries, with potential world-class Chinese companies emerging over time. But there may be opportunities even in sectors that are currently perceived to be under threat. For example, 5G connectivity is at the heart of China’s new ambition to move up the manufacturing value chain into areas such as industrial automation and smart vehicles, but for the time being, the demand that the nascent 5G industry needs to build its foundations comes mostly from online gaming and video-sharing. Some Committee members, as well as our colleagues based within China, expect these commercial and industrial realities to inform China’s policy as it evolves. In fixed income, while we have been wary of the real estate sector for some time and are cautious on credit in general while opportunities take time to clarify, government bonds remain a useful source of yield and diversification.

Inflation—Not a Question of Transitory Versus Structural

On September 23, The Norges Bank became the first G10 central bank to raise its interest rate following the coronavirus crisis. On the same day, a notably hawkish turn in the Bank of England’s (BoE) messaging led markets to bring their expectation for its first hike forward to early in 2022. The prompt was the stubborn persistence of inflation pressures, and particularly an extraordinary run-up in global energy prices.

Four days later, however, BoE Governor Andrew Bailey conceded that monetary policy could not “increase the supply of semi-conductor chips” or “produce more Heavy Goods Vehicle drivers.” In fact, tighter policy could even make the inflation situation worse, he said, “by putting more downward pressure on a weakening recovery of the economy.”

The big question on inflation may not be whether it is transitory or structural, but whether it is addressable by central banks or not. It was this question that entered the AAC’s discussions.

There is a demand side to the current inflation dynamic. Without the huge government interventions in social security, job protection and market support during the pandemic, demand today would almost certainly be deflationary. As it is, it’s inflationary, and possibly even more inflationary than it would have been had the pandemic never happened. But current demand would not be nearly as inflationary were it meeting anything like a normal supply situation. It isn’t. It’s meeting supply that has been ravaged by coronavirus: ships and sailors in the wrong parts of the world, lorry drivers in the wrong countries, maintenance and new investment long-delayed, strategic re-alignment of supply chains preparing for the future but causing disruption in the present, thousands of workers re-thinking their jobs and careers. Like Governor Bailey, some Committee members pointed out that there is little that central banks can do about this kind of inflation—except destroy demand.

Some on the AAC were more inclined than others to see this as a danger. Should the current dynamics persist, central banks would be powerless to regain control, risking an inflationary spiral, or forced to slam the brakes on the recovery and jeopardize the very investment that is required to fix the problem.

The consensus, however, was more sanguine. Because central banks recognize the limits of their influence over cost-push, supply-side inflation, they are less likely to tighten policy prematurely for no good reason. Governor Bailey has been explicit on this point, while the Federal Reserve and, especially, the European Central Bank have made the same point implicitly. Moreover, recognition that the only solution to these high prices is supply-side investment increases the likelihood of a long-awaited recovery in private-sector capital expenditure—particularly given the momentum behind important, infrastructure-heavy development themes such as 5G, next-generation mobility and the green-energy transition.

In the meantime, the Committee acknowledged the need to identify tactical sources of diversifiers with positive exposure to cost-push inflation, given the unsuitability of core government bonds for this role, and the high cost of equity index put options. Commodities are the most obvious approach, with a focus on energy. But a further suggestion was foreign-exchange implied volatility, which is currently available with very low premiums after an unusually becalmed year in currency markets.

COULD A POST-PANDEMIC CAPEX BOOM SOLVE INFLATION—AND CREATE INVESTMENT OPPORTUNITIES?
U.S. Total capital expenditures, all sectors, transactions at a seasonally adjusted annual rate (SAAR, USD millions)
Asset Allocation Committee Outlook 4Q2021: Clearing the Hurdles
Source: Board of Governors of the Federal Reserve System. Data as of September 23, 2021. For illustrative purposes only. Nothing herein constitutes a prediction or projection of future events or future market behavior. Due to a variety of factors, actual events or market behavior may differ significantly from any views expressed. Past performance is no guarantee of future results.
OUTLOOK
The Asset Allocation Committee Outlook
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Asset Allocation Committee
About the Members
Neuberger Berman’s Asset Allocation Committee meets every quarter to poll its members on their outlook for the next 12 months on each of the asset classes noted and, through debate and discussion, to refine our market outlook. The panel covers the gamut of investments and markets, bringing together diverse industry knowledge, with an average of 26 years of experience.
Joseph V. Amato
President and Chief Investment Officer—Equities
26 Years of Industry Experience
26 Years with Neuberger Berman
Erik L. Knutzen, CFA, CAIA
Chief Investment Officer—Multi-Asset Class
36 Years of Industry Experience
7 Years with Neuberger Berman
Ashok Bhatia, CFA
Deputy Chief Investment Officer—Fixed Income
28 Years of Industry Experience
4 Years with Neuberger Berman
Thanos Bardas, PhD
Co-Head of Global Investment Grade Fixed Income
23 Years of Industry Experience
23 Years with Neuberger Berman
Joseph V. Amato, President and Chief Investment Officer—Equities

Joseph V. Amato serves as President of Neuberger Berman Group LLC and Chief Investment Officer of Equities. He is a member of the firm’s Board of Directors and its Audit Committee. His responsibilities also include overseeing the firm’s Fixed Income business. 

Previously, Joe served as Lehman Brothers’ Global Head of Asset Management and Head of its Neuberger Berman subsidiary, beginning in April 2006.  From 1996 through 2006, Joe held senior level positions within Lehman Brothers’ Capital Markets business, serving as Global Head of Equity Research for the majority of that time.  Joe joined Lehman Brothers in 1994 as Head of High Yield Research.  Prior to joining Lehman Brothers, Joe spent ten years at Kidder Peabody, ultimately as head of High Yield Research. 

He received his BS from Georgetown University and is a member of the University’s Board of Regents and the Business School’s Board of Advisors. He is also Co-Chair of the New York City Board of Advisors of Teach for America, a national non-profit organization focused on public education reform.

Erik L. Knutzen, CFA, CAIA, Chief Investment Officer—Multi-Asset Class
Erik Knutzen, CFA, CAIA and Managing Director, is Co-Head of the Neuberger Berman Quantitative and Multi-Asset Class investment team and Multi-Asset Class Chief Investment Officer. Erik joined in 2014 and is responsible for leading the management of multi-asset portfolios, driving the asset allocation process on a firm-wide level, as well as engaging with clients on strategic partnerships and multi-asset class and quantitative solutions. Previously, Erik was with NEPC, LLC where he served as chief investment officer since 2008. As CIO, he oversaw a group of more than 45 investment professionals, including dedicated research teams focused on Alternative Investments, Traditional Strategies and Asset Allocation for NEPC’s client base with, collectively, more than $800 billion in assets under advisement. He has over 25 years of experience in the financial services industry, including nine years at Putnam Investments. In 2013, he was recognized by aiCIO magazine, ranking atop their 25 most influential investment consultants. Erik holds an MBA from Harvard Business School and a BA from Williams College. He has been awarded the Chartered Financial Analyst designation, as well as the Chartered Alternative Investment Analyst designations. Erik sits on the Boards of the Massachusetts Audubon Society, where he is a member of their Investment Committee, and of Start Small Think Big.

Ashok Bhatia, CFA, Deputy Chief Investment Officer—Fixed Income
Ashok K. Bhatia, CFA, Managing Director, joined the firm in 2017. Ashok is the Deputy Chief Investment Officer for Fixed Income. He is a lead portfolio manager on multi-sector fixed income strategies and is also a member of the Multi-Asset Class portfolio management team, the Fixed Income Investment Strategy Committee and the firm’s Asset Allocation Committee. Previously, Ashok has held senior investment and leadership positions in several asset management firms and hedge funds, including Wells Fargo Asset Management, Balyasny Asset Management, and Stark Investments. Ashok has had investment responsibilities across global fixed income and currency markets. Ashok began his career in 1993 as an investment analyst at Morgan Stanley. Ashok received a BA with high honors in Economics from the University of Michigan, Ann Arbor, and an MBA with high honors from the University of Chicago. He has been awarded the Chartered Financial Analyst designation.
Thanos Bardas, PhD, Co-Head of Global Investment Grade Fixed Income
Thanos Bardas, PhD, Managing Director, joined the firm in 1998. Thanos is the Global Co-Head of Investment Grade and serves as a Senior Portfolio Manager on Global Investment Grade and Multi-Sector Fixed income strategies. He sits on the firm’s Asset Allocation Committee and Fixed Income’s Investment Strategy Committee, and is a member of the Fixed Income Multi-Sector Group. Thanos also leads the Global Rates team in determining rates exposure across various portfolio strategies and oversees both inflation and LDI investments. Thanos graduated with honors from Aristotle University, Greece, earned his MS from the University of Crete, Greece, and holds a PhD in Theoretical Physics from State University of New York at Stony Brook. He holds FINRA Series 7 and Series 66 licenses.
Timothy F. Creedon, CFA
Director, Global Equity Research
23 Years of Industry Experience
21 Years with Neuberger Berman
Tokufumi Kato, PhD
Senior Portfolio Manager
12 Years with Neuberger Berman
Hakan Kaya, PhD
Senior Portfolio Manager
15 Years of Industry Experience
14 Years with Neuberger Berman
David G. Kupperman, PhD
Co-Head, NB Alternative Investment Management
22 Years of Industry Experience
10 Years with Neuberger Berman
Timothy F. Creedon, CFA, Director, Global Equity Research
Timothy Creedon, CFA, Managing Director, joined the firm in 2005 and has been the Director of Research for the Global Equity Research Department since 2011. Tim previously served as an equity analyst covering Consumer companies for the firm. Before that, he worked at Lehman Brothers, also covering consumer stocks, and worked in the Private Equity group at Lehman Brothers, where he was responsible for analyzing and executing investments in early-stage telecom/media companies. Tim began his career at Merrill Lynch, where he worked in Investment Banking, covering the Communications industry. He is a CFA charterholder and graduated magna cum laude from Georgetown University’s School of Foreign Service with a concentration in International Economics. Tim is a member of the firm’s Operating Committee and Investment Risk Committee, and he also serves on the Board of Room to Grow in New York City.
Tokufumi Kato, PhD, Senior Portfolio Manager
Fumi Kato, PhD, Managing Director, joined the firm in 2009. Fumi is Head of Portfolio Construction and Risk Management and serves as a Portfolio Manager in the Multi-Asset Class Investment Team. He is responsible for portfolio construction, asset allocation, risk management and daily management of multi-asset class portfolios, as well as cross-asset class research and idea generation. Fumi also sits on the firm’s Asset Allocation Committee and the Model Risk Subcommittee. Prior to joining the team, he was a member of the Investment Strategy and Risk team, where his focus was multi-asset class solutions for strategic partners and global institutional clients. He also worked at Neuberger Berman East Asia, where he was a client portfolio manager for strategies across asset classes. Prior to joining the firm, Fumi served as a quantitative analyst in the Investment Management team at SPARX Asset Management. Fumi earned his BS in Physics and Mathematics with honors and holds an MA and a PhD in Physics from State University of New York at Stony Brook. Fumi is on the Board of Directors of Asia Initiatives, a 501(c)(3) nonprofit organization.
Hakan Kaya, PhD, Senior Portfolio Manager

Hakan Kaya, PhD, Managing Director, joined the firm in 2008. Hakan is a Senior Portfolio Manager on the Quantitative and Multi-Asset Class (“QMAC”) team responsible for Global Risk Balanced Portfolios and Commodities. He contributes to asset allocation research with a focus on risk management and has a record of publishing research in both refereed journals and white papers on timely investment issues. Prior to joining the firm, he was a consultant with Mount Lucas Management Corporation where he developed weather risk and statistical relative value models for commodities investment. Dr. Kaya received BS degrees summa cum laude in Mathematics and Industrial Engineering from Koc University in Istanbul, Turkey and holds a PhD in Operations Research & Financial Engineering from Princeton University.

David G. Kupperman, PhD, Co-Head, NB Alternative Investment Management
David Kupperman, PhD, Managing Director, is Co-head of the NB Alternative Investment Management team and a member of its Investment Committee. He is also on the Investment Committee of the Specialty Finance Group which he co-founded after years of investing experience in the consumer credit space, as well as Chairman of the NB Insurance-Linked Strategies Underwriting Committee and a Director of NB Reinsurance Ltd. David also sits on the firm’s Asset Allocation Committee, the Investment Risk Committee and the Model Risk Subcommittee. Prior to joining the firm in 2011, David was a partner and member of the investment committee at Alternative Investment Management, LLC. Before that, he was a managing director and member of the executive committee at Paloma Partners Management Company, a multi-strategy hedge fund focused on relative value trading strategies. Previously, David was a principal at The Carlyle Group, one of the world’s largest alternative investment managers. Prior to joining Carlyle, he was a vice president in both the private equity and portfolio strategy groups at Goldman, Sachs & Co. In his portfolio strategy role, he authored papers on asset allocation and helped develop Goldman’s quantitative asset allocation framework for high-net-worth investors. David is the Chairman of The Johns Hopkins Physics & Astronomy Advisory Council and is a member of the Cornell University Council. David holds an MA and a PhD in physics from Johns Hopkins University and a BA and an ME from Cornell University.

Ugo Lancioni
Head of Global Currency
26 Years of Industry Experience
14 Years with Neuberger Berman
Suzanne F. Peck
Head of Investments – Private Wealth Management
26 Years of Industry Experience
Raheel Siddiqui
Senior Research Analyst
24 Years of Industry Experience
17 Years with Neuberger Berman
Robert Surgent
Senior Portfolio Manager
29 Years of Industry Experience
1 Year with Neuberger Berman
Ugo Lancioni, Head of Global Currency
Ugo Lancioni, Managing Director, joined the firm in 2007. Ugo is the Head of Global Currency and serves as Senior Portfolio Manager on Global Investment Grade and Multi-Sector Fixed Income strategies. He sits on the firm’s Asset Allocation Committee and is a member of the senior investment team that sets overall portfolio strategy for Global Investment Grade. Ugo leads the Currency team in determining FX exposures across various portfolio strategies. Prior to joining the firm, Ugo was employed by JP Morgan for 11 years. At JP Morgan AM he worked as Currency Strategist and Portfolio Manager in charge of the FX risk in Fixed Income Portfolios. Prior to this, Ugo worked as a Trader at JP Morgan Bank, both in London and Milan, in the short term interest rate trading group (STIRT) where he was responsible for foreign exchange forwards market making and rates derivatives trading. Ugo received a Master’s in Economics from the University “La Sapienza” in Rome.
Suzanne F. Peck, Head of Investments – Private Wealth Management
Suzanne F. Peck, Managing Director, is the Head of Investments for Private Wealth Management at Neuberger Berman, and a member of the firm’s Asset Allocation Committee. Prior to joining the firm in 2021, she was Head of BlackRock's Endowments and Foundations effort, which provides investment management services and risk advisory solutions to endowments and foundations, including outsourced CIO services. Prior to joining BlackRock in 2013, Suzanne spent 18 years with Goldman Sachs, most recently in its Investment Management Division, where she served in a number of roles including Portfolio Manager and member of the Investment Committee of Institutional Client Solutions. She also led a team that built an outsourced CIO offering for endowments and foundations. Previously, Suzanne spent nine years in the Investment Banking Division. Suzanne serves on the Investment Committees and Boards of UJA-Federation of NY and the New-York Historical Society. She earned a BA in history from Columbia College, MA in economics from New York University and MBA from Columbia Business School.
Raheel Siddiqui, Senior Research Analyst

Raheel Siddiqui, Senior Vice President, Senior Research Analyst, joined the firm in 2004. Raheel is the Portfolio and Quantitative Strategist in the Neuberger Berman Global Equity Research Department. In this role he researches impending inflection points in the business cycle, risk appetite, inflation, global asset classes, US sectors, style (growth vs. value), and size to enhance fundamental stock selection and portfolio construction processes by taking advantage of emerging trends not fully appreciated by the market. His research spans finding systematic ways of distilling leading or confirming messages from macroeconomic, quantitative, derivatives data, and behavioral data as well as periodically evaluating portfolios for efficient asset allocation.

Prior to this role, Raheel was a part of Lehman Brothers US Equity Strategy Team where he co-authored over 100 strategy reports, many of which were quoted in the Wall Street Journal, Financial Times, and Barron’s. Raheel also worked as a senior member of the Corporate Development team at Monsanto for six years, where he developed industry leading and award winning approach for valuing genomics assets.

Raheel earned MS/BS degrees in Biochemical Engineering from the Indian Institute of Technology and an MBA from Columbia University. Raheel has also been published with the American Institute of Physics.

Accolades referenced are issued by independent third-parties and information regarding specific criteria for accolades is available upon request and generally may be found on such third-party’s website. Barron’s rankings are based on a proprietary formula that considers various factors: assets under management, revenues generated by advisors for their firms, and the quality of the advisors’ practices. Investment performance is not an explicit criterion because performance is often a function of each client’s appetite for risk. Third-party accolades referenced do not reflect the experiences of any Neuberger Berman client and readers should not view such information as representative of any particular client’s experience or assume that they will have a similar investment experience as any previous or existing client. Third-party accolades are not indicative of the past or future performance of any Neuberger Berman product or service.

Robert Surgent, Senior Portfolio Manager
Bob Surgent joined the firm in March 2020 as a Managing Director and Senior Portfolio Manager working in the Multi-Asset group. Prior to Neuberger Berman, Bob was a Managing Director at Goldman Sachs managing the Multi Asset Tactical Portfolio for GSAM's GPS Group where he was a member of the Investment Committee providing input for longer term asset allocation decisions as well as shorter term absolute return opportunities. Previously, Bob was a Macro Portfolio Manager at Tudor Investments and a Global Macro Proprietary trader at Goldman Sachs in both the London and New York offices. Before joining the Macro Prop Team at Goldman, Bob was a member of the Equity Divisions Principle Strategies Group specializing in the European Tech, Telecom, and Financial sectors. Bob graduated with an MBA in Finance from the Wharton School of Business in 1993 and from the University of Pennsylvania in 1988 with a Bachelors in Economics.
Brad Tank
Chief Investment Officer—Fixed Income
40 Years of Industry Experience
18 Years with Neuberger Berman
Anthony Tutrone
Global Head of Alternatives
33 Years of Industry Experience
33 Years with Neuberger Berman
Brad Tank, Chief Investment Officer—Fixed Income
Brad Tank, Managing Director, joined the firm in 2002 and is the Chief Investment Officer and Global Head of Fixed Income. He is a member of Neuberger Berman’s Operating, Investment Risk, Asset Allocation Committees and Fixed Income’s Investment Strategy Committee, and leads the Fixed Income Multi-Sector Group. From inception in 2008 through 2015, Brad was also Chief Investment Officer of Neuberger Berman’s Multi-Asset Class Investment business and remains an important member of that team along with the firm’s other CIOs. From 1990 to2002, Brad was director of fixed income for Strong Capital Management in Wisconsin. He was also a member of the Office of the CEO and headed institutional and intermediary distribution. In 1997, Brad was named “Runner Up” for Morningstar Mutual Fund Manager of the Year. From 1982 to 1990, he was a vice president at Salomon Brothers in the government, mortgage and financial institutions areas. Brad earned a BBA and an MBA from the University of Wisconsin.

Anthony Tutrone, Global Head of Alternatives
Anthony Tutrone is the Global Head of NB Alternatives and a Managing Director of Neuberger Berman. He is a member of all Neuberger Berman Private Equity’s Investment Committees. Anthony is also a member of Neuberger Berman's Partnership, Operating, and Asset Allocation Committees. Prior to Neuberger Berman, from 1994 to 2001, Anthony was a Managing Director and founding member of The Cypress Group, a private equity firm focused on middle market buyouts that managed approximately $3.5 billion of commitments. Anthony began his career at Lehman Brothers in 1986, starting in Investment Banking and in 1987 becoming one of the original members of the firm’s Merchant Banking Group. This group managed a $1.2 billion private equity fund focused on middle market buyouts. He has been a member of the board of directors of several public and private companies and has sat on the advisory boards of several private equity funds. Anthony earned an MBA from Harvard Business School and a BA in Economics from Columbia University.