Neuberger Berman LLC, founded in 1939, is a New York City–based global asset management and financial advisory firm. The firm has assets under management (AUM) of $315 billion (including alternative assets like private equity and hedge funds) as of Sept. 30, 2018, with 32 offices in 20 countries. Neuberger Berman was a division of Lehman Brothers in 2008 but was a valuable asset, not a reason for the firm’s failure. During the Lehman Brothers liquidation in 2009, management engineered a private buyout by employees. Neuberger Berman is now one of the world’s largest employee-owned asset management companies.
George Walker has been chairman and chief executive officer since 2009. Prior to that, he was the global head of the investment management division at Lehman Brothers and was instrumental in arranging the employee buyout. President and Chief Investment Officer Joseph Amato also came to the company from Lehman Brothers in 2009. They have been leading the company on a path of expansion by opening new offices, offering more services and creating new products.
Employee-owned companies tend to treat its staff very well. The proof of this at Neuberger Berman is that it has been named by Pensions & Investments as a top place to work in the money-management industry between 2013 and 2017. The company has a strong diversity policy in place and focuses on employee retention. The retention rate for senior managers is 96% since 2009.
Employees participating in a deferred compensation plan can direct 50% of their funds to purchase company shares. Any money not invested in the company’s shares must be invested 100% in the same portfolios as the company’s clients. One of the firm’s big selling points is that its employees have more than $3 billion invested in alignment with clients.
Neuberger Berman portfolio managers average 25 years of industry experience, and 93% of client assets are managed by lead portfolio managers with more than 20 years of experience. Many portfolio managers have money invested alongside their clients.
Services and Products
Neuberger Berman provides financial advisory and investment management services to pension funds, retirement plans, charitable organizations, wealthy individuals, individual investors, sovereign funds and corporations. Breakdown by AUM is 66% from institutions, 18% through financial advisors and 16% from private clients. North American clients account for 70% of AUM.
Traditionally, Neuberger Berman was an equities management firm with a traditional mutual fund family. It has been expanding into high-yield securities, emerging markets, private equity and alternative investments. A big push is being made to create mutual fund investments that are managed more in the style common to hedge funds and private equity. The firm has 46 mutual funds available to both institutional and individual investors. AUM is divided, with $106 billion in equity investments, $135 billion in fixed-income securities and the balance in alternative and multi-asset class investments.
Neuberger Berman does not report information on the returns of private or institutional accounts but is required to report mutual fund information on a regular basis. Looking at the overall performance rating of the mutual fund family provides a glimpse of the firm’s portfolio management results.
The group was heavily focused on investment in equities at 60.5%, followed by fixed-income assets at 33.2%. Cash and other investments totaled 5.1% and 1.2% respectively. JP Morgan Chase was the top U.S. holding, at 0.96%, followed by Alphabet and Aspen Technology. As of Sept. 30, 2018, the total average return for Neuberger Berman's fund family was 6.1%, compared to the category average of 7.9%. The fund family's five-year trailing returns were 8.56%.
According to Morningstar, the fund with the best five-year relative performance was the Neuberger Berman Greater China Equity Institutional Class fund, which came with a five-star rating. The fund with the worst five-year relative performance, with a two-star rating, was the Neuberger Berman Short Duration Bond Fund Investor Class. The two funds with the highest and lowest expenses were the Neuberger Berman Absolute Return Multi-Manager Institutional and the Neuberger Berman Core Plus R6, with management expense ratios (MERs) of 2.60% and 0.39% respectively.