NEUBERGER BERMAN EUROPE LIMITED
- Advisory Business
- Fees and Compensation
- Performance-Based Fees
- Types of Clients
- Methods of Analysis
- Disciplinary Information
- Other Activities
- Code of Ethics
- Brokerage Practices
- Review of Accounts
- Client Referrals
- Investment Discretion
- Voting Client Securities
- Financial Information
A. Description of NBEL and the Firm
NBEL is a United Kingdom company with limited liability formed in May 2005. It is authorized and regulated by the United Kingdom Financial Conduct Authority to undertake various investment management activities, including dealing in securities, advising on securities and asset management. NBEL is directly owned by NBEH Limited, which, in turn, is owned by Neuberger Berman Europe Holdings II LLC, which is a wholly owned subsidiary of Neuberger Berman Europe Holdings LLC. It is an indirect, wholly owned subsidiary of Neuberger Berman Group LLC (“NBG”).
NBG is a holding company, the subsidiaries of which (collectively referred to herein as the “Firm” or “Neuberger Berman”) provide a broad range of global investment solutions – equity, fixed income and alternatives – to institutions and individuals through customized separately managed accounts, registered funds and alternative investment vehicles. As of December 31, 2019, Neuberger Berman had approximately $356 billion under management.1 NBG’s voting equity is wholly owned by NBSH Acquisition LLC (“NBSH”). NBSH is owned by current and former employees, directors, consultants and in certain instances their permitted transferees. Each of these employees entered into an agreement that provides strong incentives to continue with the organization, and has a number of restrictive covenants in the event an employee leaves the Firm. Neuberger Berman is headquartered in New York City. As of December 31, 2019, Neuberger Berman had approximately 2,197 employees in 35 cities around the world. NBEL’s investment management services are further discussed below.
B. Types of Advisory Services
NBEL currently provides the following types of investment management services: Funds NBEL currently serves as the investment manager for pooled investment vehicles (the “Funds”) and has been granted discretionary investment authority over the assets of each of the Funds pursuant to investment management agreements entered into with each Fund. NBEL may engage an affiliate (“Advisory Affiliate”) to act as sub-adviser or sub-investment manager to certain of the Funds, whereby NBEL delegates the majority of its discretionary authority to the Advisory Affiliate. 1 Firm assets under management figures reflect the collective assets for the various subsidiaries of NBG. Investors should refer to each Fund’s prospectus, offering memorandum or other offering materials (“Offering Documents”) for additional information.
NBEL also serves as sub-adviser to certain other pooled investment vehicles and accounts managed by Advisory Affiliates (“Sub-Advised Accounts”). NBEL acts as sub-adviser for many accounts primarily for currency hedging purposes. Those Sub-Advised Accounts for which NBEL's services are limited to providing currency hedging have been excluded from the calculation of NBEL’s regulatory assets under management.
NBEL provides ongoing discretionary investment management services to institutional clients with respect to assets held in the client’s custodial account (collectively, “Separate Accounts”) based on customized investment objectives or guidelines, time horizons, risk tolerances, policies and limitations of such clients. The Funds, Sub-Advised Accounts and Separate Accounts to which NBEL provides investment management services are each referred to in this Brochure as a “Client”, and collectively referred to as “Clients.” Further, the accounts to which NBEL provides investment management services are referred to collectively in this Brochure as “Client Accounts.”
C. Client Tailored Services and Client Tailored Restrictions
NBEL generally provides its investment management services pursuant to a discretionary investment management agreement. NBEL’s advisory services are performed in accordance with the terms of each investment management agreement. Each Client may impose investment restrictions or guidelines for its Client Account as it deems appropriate to achieve its particular investment objective. Such investment restrictions and/or guidelines are typically described in the respective Offering Document for each Fund, or in the case of other Client Accounts, in the relevant investment management agreement.
D. Wrap and Related Programs
NBEL does not sponsor or participate in wrap fee programs.
E. Assets under Management
$59.0bn $0.00bn 12/31/2019 please register to get more info
A. Fee Schedule
Funds and Separate Accounts
Client Accounts are charged a management fee. In very limited circumstances, Client Accounts may also be charged a fee based on the performance of the Account (a “performance fee”) in addition to the management fee. Fees are negotiable and are set forth in the investment management agreement with the Client. There may be differences in fees paid by certain Clients or Client Accounts. In addition, some Client Accounts may pay more or less than others for the same or similar services depending on, for example, account inception dates, number or value of related accounts, total assets under management, fee negotiation, fee waiver or the manner in which NBEL services are obtained. Detailed descriptions of the management and performance fees can be found in the respective Offering Documents of the Funds, or the applicable investment management agreement for the Separate Accounts.
Sub-advisory fees for the Sub-Advised Accounts are individually negotiated and vary depending on the account. NBEL receives management fees in its role as sub-adviser to certain funds and accounts offered, sponsored or managed by its affiliates.
B. Payment Method
Calculation and Payment of Fees
Management fees generally accrue on a daily or monthly basis, depending on the particular requirements of each Client Account, and generally are charged monthly in arrears as documented in the relevant investment management agreement. Where a performance fee is charged for a Client Account, such fees accrue on a daily, monthly basis or other basis, depending on the particular requirements of each Client Account, and may be payable semi-annually or annually in arrears, as set forth in the investment management agreement of each particular Client Account. Client Accounts may be invoiced for any management fees or performance fees (where applicable), or such fees may be deducted directly from the Client Account, in accordance with the investment management agreement governing the particular Client Account. Where NBEL begins managing an account during the applicable fee calculation period, the fee charged for such period will be pro-rated based on the portion of the period that NBEL actually manages the account. Termination of an agreement will not affect or preclude the consummation of any transaction initiated prior to termination and the Client Account may be subject to transaction-related costs associated with the unwinding of such transactions.
Valuation of Assets
The market value of securities and other financial instruments is determined by unaffiliated third- party service providers, which also serve as administrator or custodian for NBEL Client Accounts. NBEL uses market values of securities generally obtained from various quotation services for its own internal purposes. Each Client generally retains a third-party administrator or custodian to provide various administrative services to the Client. For each Client, this may include keeping the official books and records, calculating the Client Account’s NAV, as well as other administrative services on behalf of the Client. Where significant issues regarding valuation arise that cannot be addressed by the methods described above, NBEL will convene the European Valuations and Pricing Committee to evaluate the issues and seek prompt resolution thereof.
C. Other Fees and Expenses
In addition to the management and performance fees paid to NBEL, Client Accounts are charged other fees associated with their accounts and investments. Such fees include the following:
Each Client has generally engaged either a prime broker or custodian, depending on the specific requirements of the Client, to hold the Client’s assets and will bear any fees charged by such prime broker or custodian. To the extent that cash is held in such accounts and fees are charged by the provider of such service, the fees so incurred by the Client will be in addition to the fee payable to NBEL on the overall value of the account. See Item 15.
Client Accounts generally must bear all transaction-related costs, including brokerage commissions, for transactions affected for the account. See Item 12.
Other Fees and Expenses
Investors in the Funds will incur other fees and expenses associated with their investments in such Funds. Fund expenses are described in the respective Fund’s Offering Document. These expenses, in addition to brokerage and other transaction-related costs will generally include the fees and expenses of other service providers to the Fund, such as prime brokers, custodians, transfer agents, administrators, valuation agents, auditors and counsel. The Client Accounts may themselves invest in other funds as described in each Fund’s Offering Document or investment management agreement. To the extent a Client Account invests in another unaffiliated fund, it will bear the costs and expenses associated with an investment in that underlying fund. If, however, a Client Account invests in another affiliated Fund, the fees associated with that underlying fund will typically be waived.
D. Prepayment of Fees and Refunds
As described above, management fees may be paid monthly or quarterly, in arrears depending on the particular requirements of each Client Account. Certain Clients are charged performance fees at the end of their fiscal year, or upon withdrawal by an investor in the case of a Fund. Investors should refer to the applicable Offering Document if investing in a Fund for more information related to fees.
E. Sales Compensation
NBEL’s products and strategies may be marketed by the Firm’s central sales force, which also markets the products and strategies of NBEL’s affiliates. Certain members of the sales force are registered representatives of NBEL’s affiliate, Neuberger Berman BD LLC (formerly Neuberger Berman LLC) (“NBBD”) and as such, with respect to the Funds offered by NBEL and other pooled investment vehicles offered by its affiliates, may be entitled to sales compensation in connection with the introduction of investors to such funds. Given that the sales persons may market a wide range of products offered by NBEL and its affiliates, with differing sales compensation, the sales persons may have an incentive to promote or recommend certain products over others based on the compensation to be received and not on the specific requirements or investment objectives of the investor. The Firm’s central sales force also markets the investment management products and services of NBEL for which certain members may not receive any direct compensation. Certain Firm employees who are not members of the central sales force may be eligible to earn an account referral bonus for referring a Client to NBEL. please register to get more info
“Performance-Based Fees” are fees that are based on a share of the capital gains or capital appreciation of the assets of an account. Examples of performance-based fees include, but are not necessarily limited to: an incentive fee, where the fee is calculated as a percentage of a fund’s profits, taking into consideration both realized and unrealized profits; high water mark, where the manager receives performance fees only on increases in the net asset value of a fund in excess of the highest net asset value it has previously achieved; and Hurdle rate, where a manager does not charge a performance fee until the fund’s annualized performance exceeds a benchmark rate, such as T-bill yield, London Interbank Offered Rate (“LIBOR”) or a fixed percentage. As discussed above, NBEL charges performance fees in connection with the management of a very limited number of Client Accounts. To the extent that NBEL and its portfolio managers manage accounts that charge both management fees and performance fees, NBEL and/or its portfolio managers may have a conflict of interest in that an account with a performance fee arrangement will offer the potential for higher profitability when compared to an account with a management fee. Performance fee arrangements may create an incentive for NBEL and/or its portfolio managers to recommend investments, which may be riskier or more speculative than those, which would be recommended under a different fee arrangement. Performance fee arrangements may also create an incentive to favor higher fee-paying accounts over other accounts in the devotion of time, resources and allocation of investment opportunities. To manage these conflicts, NBEL has adopted a number of compliance policies and procedures. These policies and procedures include (i) the NBEL Personal Account Dealing Policy (see Item 11), (ii) various NBEL Compliance policies and procedures including the Conflicts of Interest Policy, Order Execution Policy, and the NBEL Trading Policy, which seek to ensure that investment opportunities are allocated fairly among Clients and that all accounts are managed in accordance with their investment mandate, and (iii) best execution and order allocation monitoring reasonably designed to identify unfair or unequal treatment of accounts. NBEL does not consider fee structures in allocating investment opportunities. please register to get more info
NBEL provides investment management services to institutional clients, including insurance companies, banks, investment companies, pension schemes, trusts, charitable organizations foundations, corporations, other financial institutions and other business entities. The minimum investment required by an investor in a Fund varies depending on the particular Fund. In general, NBEL requires a commitment in excess of $50 million in order to set up a Separate Account, but may consider smaller investments in its discretion. A detailed description of the minimum investments for each Fund is contained in the relevant Fund’s Offering Documents. please register to get more info
A. Methods of Analyses
NBEL, either directly, or indirectly through its sub-advisers, utilizes a variety of investment analysis methodologies including: Charting analysis involves the use of patterns in performance charts. NBEL uses this technique to search for patterns used to help predict favorable conditions for buying and/or selling a security. Fundamental analysis involves the analysis of financial statements, the general financial health of companies, and/or the analysis of management or competitive advantages. Technical analysis involves the analysis of past market data, primarily price and volume. Cyclical analysis involves the analysis of business and market cycles to find favorable conditions for buying and/or selling a security or other investment. ESG and Impact analysis involves the analysis of environmental, social and corporate governance (“ESG”) and impact factors and their implications on valuation, risk and sustainable growth, with a view towards socially responsive investing. Qualitative analysis involves the subjective evaluation of non-quantifiable factors such as the quality of management, labor relations, and strength of research and development factors not readily subject to measurement, in an attempt to predict changes to share price based on that data. Portfolio managers of NBEL bear primary responsibility for implementing the day-to-day investment activities and decisions on behalf of each Client Account and may consider these and other factors when implementing a Client Account’s investment program.
Sources of Information
In conducting investment analysis, NBEL utilizes a broad spectrum of information, including, but not limited to: financial publications, industry and trade journals; inspections of corporate activities; proprietary and third-party research materials; corporate rating services; annual reports, prospectuses, and filings with the SEC or regulators in other jurisdictions; newspapers, magazines, websites, trade journals; discussions and meetings with NBEL’s staff of research analysts; charts, statistical material and analysis; company press releases, presentations and interviews (in person or by telephone); contact or meetings with management of various companies, analysts and consultants; personal assessment of the financial consequences of world events derived from general information; and Such other material as is appropriate under the particular circumstances. NBEL may also rely on the research and portfolio management of its Advisory Affiliates. See Item 10.C.3.
B. Investment Strategies
Investments in securities and other assets involve risk of loss that investors must be prepared to bear. In carrying out its discretionary investment strategies, NBEL, or its sub-advisers, may offer advice on a wide range of securities and other financial instruments including, but not limited to: Corporate debt securities; Asset-backed securities, including, without limitation, mortgage-backed securities; Loan assets, including, without limitation, distressed debt; Rule 144A securities; Convertible bonds; Commercial paper; Certificates of deposit; Money market instruments; Municipal securities; Depositary receipts; Sovereign, quasi-sovereign and sub-sovereign securities; Supranational securities; Warrants; GDP performance linked securities (also known as GDP warrants); Put and call options; Swaptions; Inflation-linked securities; Exchange traded funds; Securities traded over-the-counter; Futures contracts on tangibles and intangibles and options thereon; Listed and over-the-counter derivatives, including, without limitation, credit default swaps, interest rate swaps, currency swaps, total return swaps, commodity swaps, forward contracts and other synthetic exposure instruments; Residential mortgage loans; Trade claims; Real estate investment trust (REITS); Credit-linked notes (CLN) and non-deliverable forward currency contracts (NDF); Equity securities; Currencies; Forward currency contracts; Investments in registered and unregistered investment companies (including mutual funds); Sukuk (Islamic bonds); and Other alternative investments. To the extent NBEL uses derivative instruments, it does so consistent with each Client Account’s investment objective and policies, including hedging, managing risk, or attempting to enhance returns. Additionally, NBEL may hedge its exposure to currency fluctuations for foreign securities owned by Clients. For Funds that offer non-U.S. dollar denominated share classes, or Clients with non-U.S. denominated accounts, NBEL may also engage in foreign exchange hedging activities in an attempt to limit currency fluctuations (relative to the U.S. dollar). As financial markets and products evolve, or at the investment discretion of NBEL, NBEL may invest in other financial instruments or securities, whether currently existing or developed in the future, when consistent with the guidelines, objectives and policies of a Client Account. As previously noted, NBEL may provide investment management services in relation to investment strategies, which are delegated to, and managed by, Advisory Affiliates. As such, Client participation in such other types of investments will be performed consistent with the Advisory Affiliate’s respective compliance policies and procedures and applicable rules and regulations. Subject to firm-wide restrictions dealing with prudence, conflicts of interest and compliance with securities laws and regulations, the purchases and sales for Client Accounts is based upon the judgment of the individual portfolio manager or group supervising the particular account, who are encouraged to use those methods with which they have been successful. The following is a summary of the principal investment strategies employed by NBEL, either directly or indirectly through its sub-advisers. Certain material risks associated with these strategies are set forth in Section (C), below. This is a summary only. Clients should not rely solely on the descriptions provided below. Cash and Short Term Duration Strategies: The focus is on investment strategies that utilize short-term instruments and bonds with durations of less than five years. The investment team that manages these strategies primarily manages client accounts with broader discretion to utilize securities with longer maturities. Municipal Strategies: The investment team manages strategies across the duration spectrum focusing on tax-exempt municipal securities with the investment objectives of competitive after tax returns, preservation of capital as well as the maintenance of sufficient liquidity to meet clients’ needs. These securities are typically investment grade. Non–Investment Grade Credit Strategies: The investment team for these strategies focuses on high yield bonds, leveraged loans, and distressed debt investing strategies. The high yield strategy focuses on investing in non-investment grade fixed income securities for Client Accounts that permit full discretion to invest across broad credit tiers as well as Client Accounts that are limited in terms of minimum credit rating. The distressed debt strategy seeks to provide investors with attractive risk-adjusted returns through long biased, opportunistic stressed, distressed and special situation investments in cred-related products. This strategy may invest with the intention of taking a control position in a company or as a non-control participant. Investment Grade Strategies: The investment team for these strategies focuses on a universe of investment grade issuers. The strategies are utilized in Client Accounts that span a continuum from highly structured portfolios with tight risk constraints to those that provide broad discretion with less focus on tracking error variability, including exposure to below-investment grade investments in some cases. Crossover Credit Strategies: The investment team for this strategy focuses on investment grade credit, high yield bonds and leveraged loans. The crossover credit strategy invests in both investment grade and non-investment grade fixed income securities for Client Accounts that permit full discretion to invest across credit tiers as well as Client Accounts that impose limitations in terms of minimum credit rating. Structured Products Strategies: Includes: (1) traditional portfolio management of asset-backed securities (including residential and commercial mortgage-backed securities) managed in accordance with client objectives and constraints and spanning from defensive buy/sell mandates to high-yield return objectives; (2) structured investments, including CDOs; and (3) investment advisory and consulting services with respect to both asset-backed securities and whole loan mortgage portfolios. Emerging Market Debt Strategies: The focus of the investment team for these emerging market debt strategies is hard currency, local currency and corporate debt strategies. These strategies may be applied to the management of an entire Client Account or a portion of a Client Account invested in other NBEL or other affiliates’ strategies. Derivative instruments are frequently utilized in these strategies. The hard currency strategy primarily invests in debt instruments denominated in core currencies such as U.S. dollars, Euro and Japanese Yen (“Hard Currency”) and issued by issuers (sovereign, quasi-sovereign, sub-sovereign or corporate) which have their head office or exercise an overriding part of their economic activity in emerging market countries. The local currency strategy primarily invests in debt instruments denominated in, or exposed to, local currencies and issued by issuers (sovereign, quasi-sovereign, sub-sovereign or corporate) from emerging market countries. The corporate debt strategy primarily invests in debt instruments issued by corporate issuers in emerging market countries, which may be denominated in Hard Currency or the currencies of such emerging market countries. Global Bond Strategy: The focus is on investment grade debt securities issued by governments and corporations from countries comprising the Organization for Economic Co-operation and Development (OECD). Securities may be dollar and non-dollar denominated. This strategy may be applied to the management of an entire Client Account or a portion of a Client Account invested in other NBEL strategies. Diversified Currency Strategy: The investment team within this strategy invests primarily in global liquid currencies (including, without limitation, Australian Dollars, Canadian Dollars, Swiss Franc, Euro, Sterling, Japanese Yen, Norwegian Krone, New Zealand Dollars, Swedish Krona and US Dollars) using a fundamentally driven, relative value approach. This strategy may be applied to the management of an entire Client Account or a portion of a Client Account invested in other NBEL strategies. Derivative instruments are frequently utilized in this strategy, typically for purposes of hedging against currency fluctuations. Quantitatively Driven Strategies: Includes a broad array of strategies that incorporate internally developed quantitative investment models that seek to exploit short-term and long-term investment opportunities. Residential Loan Modification Strategy: Through structured vehicles, which may invest in holding or grantor trusts or Real Estate Mortgage Investment Conduits (REMICs), NBEL provides exposure to the troubled residential loan market. This strategy focuses on the purchase, modification and resale or refinancing of sub-performing or nonperforming residential loans. The objective is to purchase pools of troubled loans at a discount to the unpaid principal balances, modify such loans to make them performing and then sell the performing loans at a profit either as whole loan pools or through securitizations. Inherent in the purchase of loan pools may be real estate that must be held for resale or leased for a period of time. This strategy involves the retention and supervision of mortgage loan servicers who work with borrowers on an individual level to achieve favorable loan outcomes. Generally, this strategy is implemented in vehicles that resemble in structure private equity funds that require capital commitments, have limited liquidity and may entail leverage. The above referenced investment strategies are a summary only. Clients and/or Investors should look to their investment management agreements, the relevant Offering Documents of a particular Fund and other Client materials provided by NBEL in its presentation of the particular strategy for a more complete description of each strategy and its associated risks and consult with their own counsel and advisers as to all matters concerning an investment in the respective Fund. Investors should not rely solely on the descriptions provided herein.
C. Material Risks
Investments in securities and other financial instruments involve risk of loss that investors must be prepared to bear. The following is a summary of the principal risks associated with the investment strategies managed by NBEL, or its sub-advisers, in its Client Accounts. This is a summary only and not every strategy may be subject to every risk discussed below: Risk of Loss. Clients should understand that all investment strategies and the investments made pursuant to such strategies involve risk of loss, including the potential loss of the entire investment in the Client Accounts, which clients should be prepared to bear. The investment performance and the success of any investment strategy or particular investment can never be predicted or guaranteed, and the value of a client’s investments will fluctuate due to market conditions and other factors. The investment decisions made and the actions taken for Client Accounts will be subject to various market, liquidity, currency, economic, political and other risks, and will not necessarily be profitable and it is possible that they will lose value. Past performance of Client Accounts is not indicative of future performance. In addition to the risks listed here, there may be additional material risks associated with the types of products in which a Client Account invests. Clients should refer to the prospectus or Offering Documents, as applicable, of those particular products for a discussion of applicable risk factors for that particular investment. Absence of Regulatory Oversight for Funds. The Funds are not registered as investment companies under the Investment Company Act of 1940, as amended (“Investment Company Act”), and, accordingly, the significant investor protection provisions of the Investment Company Act (which provides certain regulatory safeguards to investors in registered investment companies), will not apply to investments in the Funds. Asset‐Backed Securities. Asset-backed securities represent direct or indirect participations in, or are secured by and payable from, pools of assets such as, among other things, motor vehicle installment sales contracts, installment loan contracts, leases of various types of real and personal property, and receivables from revolving credit (credit card) agreements, or a combination of the foregoing. These assets are securitized through the use of trusts and special purpose vehicles. Credit enhancements, such as various forms of cash collateral accounts or letters of credit, may support payments of principal and interest on asset-backed securities. Although these securities may be supported by letters of credit or other credit enhancements, payment of interest and principal ultimately depends upon individuals or other borrowers paying the underlying loans, which may be affected adversely by general downturns in the economy. Asset-backed securities are subject to the same risk of prepayment associated with mortgage-backed securities. Bank Loan Agents. Bank loans are typically administered by a bank, insurance company, finance company or other financial institution (the “agent”) for a lending syndicate of financial institutions. In a typical bank loan, the agent administers the terms of the loan agreement and is responsible for the collection of principal and interest and fee payments from the borrower and the apportionment of these payments to all lenders that are parties to the loan agreement. In addition, an institution (which may be the agent) may hold collateral on behalf of the lenders. Typically, under loan agreements, the agent is given broad authority in monitoring the borrower’s performance and is obligated to use the same care it would use in the management of its own property. In asserting rights against a borrower, the Client Account normally would be dependent on the willingness of the lead bank to assert these rights, or upon a vote of the lenders to authorize the action. If an agent becomes insolvent, or has a receiver, conservator, or similar official appointed for it by the appropriate bank or other regulatory authority, or becomes a debtor in a bankruptcy proceeding, the agent’s appointment may be terminated and a successor agent would be appointed. If an appropriate regulator or court determines that assets held by the agent for the benefit of the purchasers of bank loans are subject to the claims of the agent’s general or secured creditors, the purchasers might incur certain costs and delays in realizing payment on a bank loan or suffer a loss of principal and/or interest. Call Risk. When interest rates are low, issuers will often repay the obligation underlying a “callable security” earlier than expected, thereby affecting the investment’s average life and perhaps its yield. Furthermore, the Client Account will likely have to reinvest the proceeds from the called security at the current, lower rates. Collateralized Loan Obligations (“CLOs”) and Collateralized Debt Obligations (“CDOs”). CLOs and CDOs issue classes or “tranches” that vary in risk and yield, and may experience substantial losses due to actual defaults, decrease of market value due to collateral defaults and disappearance of subordinate tranches, market anticipation of defaults, and investor aversion to CLO and CDO securities as a class. The risks of investing in CLOs and CDOs depend largely on the type of the underlying collateral. Commodity Risk. A Client Account with investments in physical commodity-linked derivative instruments may be subject to greater volatility than investments in traditional securities. The value of physical commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates, or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Because a Client Account may concentrate assets in a particular sector of the commodities market (such as oil, metal or agricultural products), it may be more susceptible to risks associated with those sectors. Competition for Fund Portfolio Investments. Identifying, completing and realizing attractive private equity investments is highly competitive, and involves a high degree of uncertainty. There can be no assurance that NBEL will be able to locate, consummate and exit investments that satisfy a Fund’s investment objectives or realize their values or be able to invest fully a Fund’s committed capital. Counterparty Risk. To the extent that a Client Account invests in over-the-counter or OTC derivatives, the Client Account is subject to a range of risks, including the credit risk of its derivative counterparty (i.e., counterparty default), the risk of the counterparty delaying the return of or losing collateral relating to OTC derivatives, or the bankruptcy of the counterparty. Although there are risks in the trading of listed derivatives which are settled by means of a clearing house, risks associated with OTC derivatives may differ materially from those involved in exchange-traded transactions that generally are backed by clearing organization guarantees, daily marking-to-market and settlements, and the segregation and minimum capital requirements applicable to the financial intermediaries participating on the exchange. OTC derivatives entered directly between two counterparties generally do not benefit from such protections and expose the parties to the risk of counterparty default, especially in instances where OTC derivatives are not collateralized. From time to time, the counterparties with which a Client Account effects transactions might cease making markets or quoting prices in certain of the instruments. In such instances, a Client Account might be unable to enter into a desired transaction or to enter into any offsetting transaction with respect to an open position, which might adversely affect its performance. Further, in contrast to exchange-traded instruments, forward or spot contracts generally do not provide a trader with the right to offset its obligations through an equal and opposite transaction. For this reason, a Client Account entering into forward or spot contracts must be required and able to perform its obligations under the contract. Credit Default Swaps. Certain Client Accounts in accordance with their investment guidelines may purchase and sell credit derivatives — such as credit default swaps (or “CDS”) referencing single names, a basket or an index—both for hedging and other purposes. The typical CDS contract requires the protection seller (which is, in trade parlance, the “seller of protection” or the seller of the CDS) to pay to the protection buyer, (or the “buyer of protection”) a settlement amount, typically in cash, upon the occurrence of a “credit event”. A credit event is a failure to pay, default, bankruptcy, moratorium or restructuring of the debt referenced in the CDS, and the settlement amount generally is the difference between, in the case of a CDS referencing a single name, the notional amount of the contract and the value of a referenced bond or portfolio of securities issued by the reference entity (after the occurrence of a credit event) that the buyer of protection delivers to the protection seller (cash settlement is also a widely accepted form of CDS settlement). In return, for cash or physical settlement by the protection seller upon the occurrence of a credit event, the protection buyer agrees to make periodic payments equal to a fixed percentage of the notional amount of the contract. As a buyer of protection under the terms of a CDS which calls for physical settlement, the Client Account may be exposed to the risk that deliverable securities will not be available in the market, or will be available only at unfavorable prices, as would be the case in a so-called “short squeeze.” In these and other instances involving a reference obligor (or issuer) default, or restructurings of debt underlying the CDS, there was at least in the past a lack of clarity over whether or not a “credit event” triggering the protection seller’s payment obligation had occurred and an inability to settle the CDS by physical delivery. Industry committees have been formed to address these issues but the possibility of dispute over the existence or non-existence of a credit event still exists albeit in limited cases. If such a dispute were to occur, the Client Account may not be able to realize the full value of the CDS upon a default by the reference entity. As a seller of CDS, the Client Account may incur leveraged exposure to the credit of the reference entity and may be subject to many of the same risks they would incur if the Client Account were the holder of debt securities issued by the reference entity. CDS synthetically replicate bond ownership. However, depending on the circumstances, if the Client Account is a party to a CDS, it will not have any legal recourse against the reference entity and will not benefit from any collateral securing the reference entity’s debt obligations. In the past, the CDS buyer was able to exercise broad discretion to select which of the reference entity’s debt obligations to deliver to the Client Account following a credit event and would in that case likely choose the obligations with the lowest market value in order to maximize the payment obligations of the Client Account. Today, CDS buyers have more limited discretion to settle CDS after the occurrence of a credit event. This is due to industry-wide efforts to bring about more effective settlement of CDS. More recently, trade group-led efforts have attempted to minimize certain risks associated with CDS settlement. After February 2007, the International Swaps and Derivatives Association (“ISDA”), in an effort to standardize CDS, reduce settlement risk and minimize difficulties previously associated with physical settlement, published templates to facilitate the settlement of CDS referencing single-names. Settlement of single-name CDSs was then subject to industry- wide protocols published by ISDA which were designed to bring about cash settlement of most single- name CDS; cash settlement is based on the final price of the obligations of the reference entity under the CDS as determined by an auction following the determination of a credit event by a committee led by ISDA. Five years later, in February 2012, ISDA published a new series of standard template documentation for trading CDS based on an index (CDX and iTRaxx). The Client Account may enter into a single name, basket, or index-based CDS but many of the risks accompanying CDS (including settlement risk, risk that a credit event specified in the CDS may not be formally declared) may still exist as industry-led protections to minimize such risks are relatively new and untested. Credit Risk. A Client Account could lose money if the issuer or guarantor of a security (including a security purchased with securities lending collateral), or the counterparty to a derivatives contract, repurchase agreement or a loan of portfolio securities, is unable or unwilling, or is perceived (whether by market participants, rating agencies, pricing services or otherwise) as unable or unwilling, to honor its obligations. The downgrade of the credit of a security or of the issuer of the security held by the account may lessen its value. Securities are subject to varying degrees of credit risk, which are often reflected in credit ratings. Currency Risk. Currency fluctuations could negatively impact investment gains or add to investment losses. The value of Client Accounts invested in currencies may rise and fall due to exchange rate fluctuations in respect of the relevant currencies. Adverse movements in currency exchange rates can result in a decrease in return and a loss of capital. The investments may be hedged. However, currency hedging transactions, while potentially reducing the currency risks to which a Client Account would otherwise be exposed, involve certain other risks, including the risk of a default by counterparty. Where a Client Account engages in foreign exchange transactions, which alter the currency exposure characteristics of its investments, the performance of such Client Account may be strongly influenced by movements in exchange rates as currency positions held by the Client Account may not correspond with the securities positions held. Where a Client Account enters into “cross hedging” transactions (e.g., utilizing currency different than the currency in which the security being hedged is denominated), the Client Account will be exposed to the risk that changes in the value of the currency used to hedge may not correlate with changes in the value of the currency in which the securities are denominated, which could result in losses in both the hedging transaction and the Client Account securities. Dependence on NBEL. The performance of a Client Account depends on the skill of NBEL (or a sub-adviser to which NBEL delegates investment authority) and its portfolio managers in making appropriate investment decisions. Any Client Account’s success depends on NBEL’s ability to develop and implement investment strategies and to apply investment techniques and risk analyses that achieve the Client Account’s investment objectives. Subjective decisions made by NBEL (or a sub-adviser) may cause the account to incur losses or to miss profit opportunities on which it may otherwise have capitalized. Derivatives Risk. Derivatives are financial contracts whose value depend on, or are derived from, the value of an underlying asset, reference or index. Derivatives may be used in Client Accounts as part of a strategy designed to reduce exposure to other risks or to take a position in an underlying asset. Derivatives may involve risks different from, or greater than, those associated with more traditional investments. Derivatives can be highly complex, can create investment leverage and may be highly volatile, which could result in the Client Account losing more than the amount it invested. Derivatives may be difficult to value and highly illiquid, and the Client Account may not be able to close or sell a derivative position at a particular time or at an anticipated price. NBEL is not required to engage in derivative transactions to achieve the foregoing purposes, even when doing so would be beneficial to the account. Distressed Securities. A Client Account where the strategy invests in distressed securities may be exposed to greater risks than if the strategy only invested in higher grade securities. Distressed securities are those issued by companies that are, or might be, involved in reorganizations or financial restructurings, either out of court or in bankruptcy. As a result, it is often difficult to obtain information as to the true condition of financially distressed securities. In certain periods, there may be little or no liquidity in the markets for distressed securities or instruments. The prices of such securities may be subject to periods of abrupt and erratic market movements and above-average price volatility and it may be more difficult to value such securities. The account may lose a substantial portion of all of its investment in distressed securities or it may be required to accept cash or securities with a value less than the account’s original investment. Emerging Markets. Emerging markets are those of countries with immature economic and political structures. Securities issued in emerging markets have more risk than securities issued in more developed foreign markets. Investing in emerging markets may involve heightened and significant risks and special considerations not typically associated with investing in other more established economies or securities markets. Such risks may include, but are not limited to: (i) greater social, economic and political uncertainty including war; (ii) higher dependence on exports and the corresponding importance of international trade; (iii) greater risk of inflation; (iv) increased likelihood of governmental involvement in and control over the economies; (v) governmental decisions to cease support of economic reform programs or to impose centrally planned economies; (vi) the possibility of nationalization, expropriation, confiscatory tax policies and social instability; and (vii) considerations regarding the maintenance of a Client Account’s securities and cash with non-U.S. brokers and custodians. Emerging market securities will be affected by general economic and market conditions, such as interest rates, availability of credit, inflation rates, economic uncertainty, changes in laws, trade barriers, currency exchange controls and national and international political circumstances. These factors may affect the level and volatility of securities’ prices and the liquidity of the account’s investments. Volatility or illiquidity could impair an account’s profitability or result in losses. In addition, custodial and/or settlement systems may not be fully developed in emerging market countries, thereby exposing a Client’s Account to the risk of a sub-custodian’s failure with no recourse against the custodian. Equity Market Risk. Client Accounts invested in equity securities (e.g., common stocks, preferred stocks, convertible securities, rights, warrants and Depositary Receipts (“DRs”)) are subject to market risks that may cause their prices to fluctuate over time. Historically, the equity markets have moved in cycles and the value of the strategy’s securities may fluctuate substantially from day to day. Investments in income-producing equity securities are also subject to the risk that the issuer may discontinue paying dividends. Failure to Make Capital Contributions. With respect to Funds that utilize investor capital calls, the consequences of defaulting on a capital call notice generally are material and adverse to the defaulting investor. In addition, if an investor fails to make a capital contribution when due and the capital contributions made by non-defaulting investors and short-term borrowings by the Fund are inadequate to cover the defaulted capital contribution, the Fund itself may be unable to pay its obligations when due. As a result, Funds may be subjected to significant penalties that could materially adversely affect the returns to the non-defaulting investors. Fixed Income Securities. Fixed-income securities include traditional debt securities issued by corporations, such as bonds and debentures and debt securities that are convertible into common stock and interests. The market value of fixed-income securities is sensitive to changes in interest rates. In general, when interest rates rise, the fixed income security’s market value declines and when interest rates decline, its value rises. Normally, the longer the remaining maturity of a security, the greater the effect of interest rate changes on the market value of the security. In addition, changes in the ability of an issuer to make payments of interest and principal and in the market’s perception of an issuer’s creditworthiness affect the market value of fixed-income securities of that issuer. Fixed-income securities may also be subject to yield curve risk. When the yield curve shifts, the price of a bond which was initially priced based on the initial yield curve will change. Yield curve risk is reduced by keeping the duration of the bond portfolio relatively short. Additionally, fixed-income securities are subject to inflation risk, liquidity risk and reinvestment risk. Inflation risk is the risk that inflation will erode the purchasing power of the cash flows generated by debt securities. Fixed-rate debt securities are more susceptible to this risk than floating rate debt securities. Liquidity risk is the risk that certain fixed income securities may be difficult to sell at the time and at the price the account would like, which may cause the account to hold these securities for longer than it would like or to forego other investment opportunities. Reinvestment risk is the risk that when interest income from debt securities is reinvested, interest rates will have declined so that income must be reinvested at a lower interest rate. A decline in income could affect an account’s overall return. Foreign Securities. Securities in different jurisdictions, including countries with immature economic and political structures, can be volatile and experience rapid and extreme changes in price. Securities Markets in such jurisdictions are generally small with a limited number of issuers representing fewer industries. In many countries, there is less publicly available and lower quality information about issuers than is available in the reports and ratings published about issuers in more economically developed jurisdictions. In addition, issuers from such jurisdictions may not be subject to uniform accounting, auditing and financial reporting standards. Many securities from these jurisdictions may be less liquid than those from more economically sophisticated jurisdictions, which could affect the investments under a strategy that utilizes these types of securities. Further, exchange rates between currencies might fluctuate, which could negatively affect the value of the strategy’s investments. Securities from varying jurisdictions are also subject to higher political, social and economic risks. These risks include, but are not limited to, a downturn in the country’s economy, excessive taxation, political instability, exchange control regulations and expropriation of assets by foreign governments. Adverse conditions in a particular region could negatively affect securities of countries whose economies appear to be unrelated or not interdependent. Compared to the United States, foreign governments and markets often have less stringent accounting, disclosure and financial reporting requirements. Forward Contracts. If Client Account investment guidelines permit, NBEL may enter into forward contracts and options thereon which are not traded on exchanges and are generally not regulated on behalf of such account. There are no limitations on daily price moves of forward contracts. Banks and other dealers with which a Client Account may maintain accounts may require the Client Account to deposit margin with respect to such trading, although margin requirements are often minimal or non-existent. The counterparties are not required to continue to make markets in such contracts and these contracts can experience periods of illiquidity, sometimes of significant duration. There have been periods during which certain counterparties have refused to continue to quote prices for forward contracts or have quoted prices with an unusually wide spread (the price at which the counterparty is prepared to buy and that at which it is prepared to sell). Arrangements to trade forward contracts may be made with only one or a few counterparties, and liquidity problems therefore might be greater than if such arrangements were made with numerous counterparties. The imposition of credit controls by governmental authorities might limit such forward trading to less than that which NBEL would otherwise recommend, to the possible detriment of a Client Account. Market illiquidity or disruption could result in major losses to a Client Account. In addition, a Client Account may be exposed to credit risks with regard to counterparties with whom they trade as well as risks relating to settlement default. Such risks could result in substantial losses to a Client Account. Fraudulent Conveyance Considerations. Various laws enacted for the protection of creditors may apply to certain investments that are debt obligations, although the existence and applicability of such laws will vary from jurisdiction to jurisdiction. For example, if a court were to find that the borrower did not receive fair consideration or reasonably equivalent value for incurring indebtedness evidenced by an investment and the grant of any security interest or other lien securing such investment, and, after giving effect to such indebtedness, the borrower (i) was insolvent, (ii) was engaged in a business for which the assets remaining in such borrower constituted unreasonably small capital or (iii) intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they mature, such court could invalidate such indebtedness and such security interest or other lien as a fraudulent conveyance, subordinate such indebtedness to existing or future creditors of the borrower or recover amounts previously paid by the borrower (including to a Client Account) in satisfaction of such indebtedness or proceeds of such security interest or other lien previously applied in satisfaction of such indebtedness. In addition, if an issuer in which a Client Account has an investment becomes insolvent, any payment made on such investment may be subject to avoidance as a “preference” if made within a certain period of time (which may be as long as one year) before insolvency. In general, if payments on an investment are voidable, whether as fraudulent conveyances or preferences, such payments can be recaptured either from the initial recipient or from subsequent transferees of such payments. To the extent that any such payments are recaptured from a Client Account, the resulting loss will be borne by the Client Account or, indirectly, by investors in a Private Fund, as applicable. Futures. NBEL may engage in regulated futures transactions. Trading in futures and options on futures involve significant risks, including the following: (i) futures contracts and options on futures are volatile in price; (ii) futures trading is highly leveraged; (iii) futures trading may be illiquid; (iv) the clearing broker, or “futures commission merchant” may misuse or lose collateral (“margin”) associated with the futures contracts; and (v) the clearing broker may default, file for bankruptcy or be insolvent for any number of reasons including the default of a customer of the broker, and such event may lead to a loss within the Client Account of margin deposits made by the Client Account. Client Accounts may sustain a total loss of the futures contracts including the initial margin and any maintenance margin that it deposits with a broker to establish or maintain a position in the commodity futures market. If the market moves against a position in a Client Account such Client Account may be required to deposit a substantial amount of additional margin, on short notice, in order to maintain its position. If the Client Account does not provide the required margin within the prescribed time, its position may be liquidated at a loss, and the Client will be liable for any resulting deficit in its account. The high degree of leverage that is often obtainable in futures trading can work against a Client Account, as well as for it. The use of leverage can lead to large losses. Futures markets in certain countries may have greater risk than other futures markets. Trading on commodity exchanges in less economically sophisticated jurisdictions may not be regulated to the same extent as more economically sophisticated jurisdictions, and as such may be subject to greater risks. Futures markets may also be illiquid which could prevent NBEL from promptly liquidating unfavorable positions and adversely affect trading and profitability. General Risks of Owning Physical Assets. From time to time, particularly with respect to the distressed debt and residential loan modification strategies, a Client Account may be involved in transactions which result in the Client Account owning physical assets (typically collateral for secured loans acquired by the Client Account) directly. In such cases, the Client Account will be subject to all the risks inherent in owning physical assets such as real estate. These risks may include, without limitation: general and local economic and social conditions; fluctuations in asset values; over-concentration in the physical asset, declines in the financial resources of the prospective purchasers or lessees for such assets; a drop in demand and/or an increase in the competition for such assets; storage, insurance and other maintenance costs; destruction, spoilage, impairment, damage, depreciation and obsolescence; changes in tax, environmental and other applicable laws and regulations, increasing the costs and/or restricting the use of such assets; environmental protection penalties and liabilities (including those attributable to the conduct of prior owners of such assets); increases in interest rates and, accordingly, of the cost of inventory as well as of the availability of financing in order to maintain such assets or to finance purchases of such assets; a shortage of financing (irrespective of interest rates); and/or increases in operating expenses which could adversely affect the value of such assets to a potential purchaser or lessee. There can be no assurance of the profitable ownership or operation of any physical asset. The cost of operating and/or maintaining an asset may materially exceed the income or sale proceeds generated by such asset, while such asset itself — as opposed to the loans formerly secured by such asset — may not generate any cash flow. Hedging. Hedging techniques involve one or more of the following risks: (i) imperfect correlation between the performance and value of the hedging instrument and the Client Account’s position being hedged; (ii) possible lack of a secondary market for closing out a position in such instruments; (iii) losses resulting from interest rate, spread or other market movements not anticipated by NBEL; (iv) the possible obligation to meet additional margin or other payment requirements, all of which could worsen the Client Account’s position; and (v) default or refusal to perform on the part of the counterparty with which the Client Account trades. Furthermore, to the extent that any hedging strategy involves the use of derivatives instruments, such strategy will be subject to the risks applicable to such instruments, as described herein. Illiquid Securities. Illiquid securities are securities that are not readily marketable, and as a result, may be more difficult to purchase or sell at an advantageous price or time. A Client Account could lose money if it cannot sell a security at the time and price that would be most beneficial to it. Further, the lack of an established secondary market may make it more difficult to value illiquid securities, which could vary from the amount the Client Account could realize upon disposition. Increased Prepayment Risks with To‐Be‐Announced (“TBA”) Mortgage‐Backed Securities. NBEL may sell TBA mortgage-backed securities it has committed to purchase on behalf of Client Accounts before those securities are delivered to the account on the settlement date. The account may also enter into a TBA agreement and “roll over” such agreement prior to the settlement date by selling the obligation to purchase the pools set forth in the agreement and entering into a new TBA agreement for future delivery of mortgage-backed securities. TBA mortgage-backed securities may increase prepayment risks because the underlying mortgages may be less favorable than anticipated by NBEL. Junior Loans. NBEL’s loan strategy may utilize secured and unsecured subordinated loans and second lien loans (“Junior Loans”). Secured second lien loans are generally second in line in terms of repayment priority. A secured second lien loan may have a claim on the same collateral pool as the first lien or may be secured by a separate set of assets, such as property, plants, or equipment. Second lien loans generally give investors priority over general unsecured creditors in the event of an asset sale. Junior Loans are subject to the same general risks inherent to any loan investment, including credit risk, market and liquidity risk, and interest rate risk. Due to their lower place in the borrower’s capital structure, Junior Loans involve a higher degree of overall risk than senior loans of the same borrower. Lack of Liquidity. There is no public market for interests in the Funds. Substantial transfer restrictions typically exist with respect to such interests. Investors can only redeem all or any permissible part of their investments in accordance with the governing documents of the Fund, and may be subject to suspensions and other restrictions. Leverage. The use of leverage allows NBEL to control positions with a nominal value significantly more than its investment in such positions. As such, the amount that NBEL may lose in the event of adverse price movements will be high in relation to the amount of its investment. In the presence of leverage, relatively small price movements in market prices may result in immediate and substantial losses to Client Accounts. London Interbank Offered Rate (“LIBOR”) Discontinuance or Unavailability Risk. Interest rates (such as LIBOR) and a wide range of other index levels, rates and values are treated as benchmarks and are the subject of recent regulatory reform that can have an impact on Client Accounts. For example, Client Accounts can invest directly or indirectly in fixed income securities and other instruments that utilize interest rate benchmarks. There are certain risks associated with loans, derivatives, fixed income, floating rate securities and other instruments or investments that rely on a benchmark that changes or is affected by benchmark reforms. While benchmark reforms are intended to make benchmarks more robust, the reforms could cause benchmarks to perform differently than in the past, to disappear entirely or have other consequences that cannot be predicted. This could have a material impact on any investments linked to or referencing such a benchmark. Possible impacts include: (i) reducing or increasing the volatility of the published rate or level of the benchmark; (ii) early redemption or termination of the investment; or (iii) adjustments to the terms of the investment. Any of these impacts could be disadvantageous to Client Accounts. In particular, reforms could increase costs and risks associated with investments that use an affected benchmark. In June 2017, the Alternative Reference Rates Committee, a group of large U.S. banks working with the Federal Reserve, announced its selection of a new Secured Overnight Financing Rate (“SOFR”), which is intended to be a broad measure of secured overnight U.S. Treasury repo rates, as an appropriate replacement for LIBOR. The Federal Reserve Bank of New York began publishing the SOFR early in 2018, with the expectation that it could be used on a voluntary basis in new instruments and transactions. Bank working groups and regulators in other countries have suggested other alternatives for their markets, including the Sterling Overnight Interbank Average Rate (“SONIA”) in England. In July 2017, the regulatory authority that oversees financial services firms and financial markets in the U.K. announced that, from the end of 2021, it will no longer persuade or compel contributing banks to make submissions for purposes of determining the LIBOR rate. The LIBOR rate is intended to represent the rate at which contributing banks can obtain short-term borrowings from each other in the London interbank market. As a result, it is possible that commencing in 2022, LIBOR will no longer be available or no longer be deemed an appropriate reference rate upon which to determine the interest rate on or impacting certain loans, derivatives and other instruments or investments comprising Client Accounts. Many derivatives transactions contemplate LIBOR to be used to calculate certain payments between the parties. Under current standard definitions published by the International Swaps and Derivatives Association (“ISDA”) that are often incorporated into the terms of derivatives contracts, if a reference rate (such as LIBOR) is not available, the rate is calculated based on quotations from banks. This approach is not expected to be workable if LIBOR is no longer available. As a result, ISDA has announced that it plans to publish new standard definitions that will use the new fallback rates (including SOFR and SONIA). These definitions are expected to be incorporated into the terms of new derivatives transactions going forward. ISDA has also announced that it will publish a related protocol. The outstanding transactions between market participants that adhere to the protocol will be amended by means of the protocol to reference the new rates, and financial compensation will be made from one party to the other to compensate for the difference in the rates. The publication by ISDA of the new definitions and the protocol has been delayed, due to uncertainty as to whether the change to the new rates will occur when LIBOR is no longer available, or earlier when LIBOR is no longer a representative rate. Such delay has slowed down the move of derivatives counterparties to the new rates and created uncertainty as to how and when such change will occur. While market participants have begun transitioning away from LIBOR, there are obstacles to converting certain longer-term securities, instruments and transactions to a new benchmark or benchmarks. Although the period from the July 2017 announcement until the end of 2021 is generally expected to be enough time for market participants to transition to the use of a different benchmark for new securities and transactions, there remains uncertainty regarding the future utilization of LIBOR and the specific replacement rate or rates. The effectiveness of multiple alternative reference rates as opposed to one primary reference rate cannot yet be determined. The potential effect of a transition away from LIBOR on the financial instruments in which Client Accounts invest also cannot yet be determined. The replacement of LIBOR could require an adjustment to the terms and conditions (including a value payment between the parties) or otherwise result in rates being determined in accordance with fallback provisions. There could be mismatches between the rates applicable to different types of financial contracts that are linked to the same benchmark, and between hedging transactions and the transactions they are designed to hedge. As market participants transition away from LIBOR, LIBOR’s usefulness could deteriorate, potentially prior to the end of 2021. There is no assurance that the composition or characteristics of any alternative reference rate will be similar to or produce the same value or economic equivalence as LIBOR or that it will have the same volume or liquidity as did LIBOR prior to its discontinuance or unavailability, which could affect the value or liquidity or return on certain investments in Client Accounts and result in costs incurred in connection with closing out positions and entering into new trades. The effect of any changes to, or discontinuation of, LIBOR Client Accounts will vary depending, among other things, on (1) existing fallback or termination provisions in individual contracts and (2) whether, how, and when industry participants develop and adopt new reference rates and fallbacks for both legacy and new products and instruments. Accordingly, it is difficult to predict the full impact of the transition away from LIBOR on Client Accounts until new reference rates and fallbacks for both legacy and new products, instruments and contracts are commercially accepted. Litigation. Foreclosures and reorganizations are contentious and adversarial. It is by no means unusual for participants to use the threat of, as well as actual, litigation as a negotiating technique. NBEL anticipates that the Firm and/or Client Accounts that invest in distressed debt or the residential loan modification strategies may be named as defendants in civil proceedings relating to certain of such accounts’ investments. The expense of defending against such claims and paying any resulting settlements or judgments will generally be borne by the relevant Client Account. Any indemnification obligations would adversely affect such Client Account’s returns. With respect to Funds, indemnification obligations will generally survive the dissolution of the Fund, and may cause NBEL to retain a material reserve from the winding-up proceeds distributed to investors. Loan Interests. Loans generally are subject to restrictions on transfer, and NBEL may be unable to sell loans at a time when it may otherwise be desirable to do so or may be able to sell them only at prices that are less than their fair market value. NBEL may find it difficult to establish a fair value for loans held by the Client Account. Loans normally are not registered with the SEC or any state securities commission or listed on any securities exchange. As a result, the amount of public information available about a specific loan historically has been less extensive than if the loan were registered or exchange traded. Bank loan interests may also not be rated by independent rating agencies. Therefore, investments in a particular loan may depend almost exclusively on the credit analysis of the borrower performed by NBEL. Also, there is a risk that the value of the collateral securing a loan may decline after the Client Account invests or that the collateral may not be sufficient to cover the amount owed to the Client Account. Loans are also subject to the risk of a borrower defaulting, which may limit or delay the account’s access to the collateral under bankruptcy or other insolvency laws. Additionally, if the account acquires a participation interest in a loan, it may not be able to control the exercise of any remedies that the lender would have under the loan and likely would not have any rights against the borrower directly. Loans purchased by an account may represent interests in loans made to finance highly leveraged corporate acquisitions, known as “leveraged buyout” transactions, leveraged recapitalization loans and other types of acquisition financing. The highly leveraged capital structure of the borrowers in such transactions may make such loans especially vulnerable to adverse changes in economic or market conditions. Lower‐Rated Debt Securities. Fixed income securities receiving below investment grade ratings may have speculative characteristics, and, compared to higher-grade securities, may have a weakened capacity to make principal and interest payments in adverse economic conditions or other circumstances. High-yield, high-risk, and lower rated securities are subject to additional risk factors, such as increased possibility of default, decreased liquidity and fluctuations in value due to public perception of the issuer of such securities. In addition, both individual high-yield securities and the entire high yield bond market can experience sharp price swings due to a variety of factors, including changes in economic forecasts, stock market activity, large sustained sales by major investors or a high profile default. Market Events. World financial markets may, from time to time, experience extraordinary market conditions. In reaction to these events, regulators in the U.S. and other countries may undertake extraordinary regulatory measures, such as bailout and liquidity programs. The U.S. government and securities regulators of other jurisdictions may also implement other measures seeking to stabilize and further regulate U.S. and global financial markets. Despite these efforts, global financial markets may remain volatile. Master Limited Partnerships (“MLPs”). Investments in securities (units) of MLPs involve risks that differ from an investment in common stock. Holders of the units of MLPs have more limited control and limited rights to vote on matters affecting the partnership. For example, unit holders may not elect the general partner or the directors of the general partner and they have limited ability to remove a MLP’s general partner. MLPs may issue additional common units without unit holder approval, which would dilute existing unit holders. In addition, conflicts of interest may exist between common unit holders, subordinated unit holders and the general partner of a master limited partnership, including a conflict arising as a result of incentive distribution payments. There are also certain tax risks associated with an investment in units of MLPs. Model Valuations Risk. Certain of the Funds’ investments, particularly those that invest in asset- backed securities and mortgage loans, will be based, in part, on complex models that incorporate a range of different inputs. Inadequate or incorrect factual information, misstated assumptions, as well as unforeseeable changes in economic factors can cause these models to yield materially inaccurate valuations — even if the model is fundamentally sound. Moreover, there can be no assurance that NBEL’s models are fundamentally sound or contain fully accurate data. The models used by NBEL will typically require certain market forecasts that are based on analytical models and assumptions. There can be no assurance that such models are accurate or that assumptions are not oversimplified, which would adversely affect market forecasts leading to potential losses and cash flow insufficiencies. Mortgage‐Backed Securities. Mortgage-backed securities represent “pools” of mortgages and other assets, including consumer loans or receivables held in trust. Investment in mortgage- backed securities poses several risks, including market and credit risk. Generally, rising interest rates tend to extend the duration of fixed rate mortgage-backed securities, making them more sensitive to interest rate changes. When interest rates decline, borrowers may pay off their mortgages sooner than expected. This can reduce the return in a Client Account because the account may have to reinvest those funds at lower prevailing interest rates. Market risk reflects the risk that the price of a security may fluctuate over time. Credit risk reflects the risk that the strategy may not receive all or part of i please register to get more info
Registered investment advisers are required to disclose all material facts regarding any legal or disciplinary events that would be material to a Client’s or potential Client’s evaluation of the firm or the integrity of the firm’s management in this item. NBEL had been named as a target in an action brought by the UK Pensions Regulator in relation to certain underfunding of the Defined Benefit portion of the Lehman Brothers Pension Scheme. These proceedings have now been settled with no liabilities attached to Neuberger Berman Europe Limited. In any event, Neuberger Berman is indemnified by the Lehman Brothers estate against all costs and liabilities should any arise from this action. please register to get more info
A. Registration as a Broker-Dealer or Registered Representative
NBEL is not a registered broker or dealer. Some of NBEL’s management personnel are registered representatives of NBBD, a Financial Industry Regulatory Authority (“FINRA”) member broker- dealer.
B. Registration as a Futures Commission Merchant, Commodity Pool Operator,
Commodity Trading Advisor or Associated Person
NBEL is exempt from registration as a futures commission merchant, commodity pool operator (CPO) or commodity trading advisor (CTA). With respect to the operation of its Client Accounts, NBEL is exempt from registration as a CPO and CTA pursuant to the exemptions in CFTC rules 4.13(a)(3) and 4.14(a)(8).
C. Material Relationships
NBEL currently has certain relationships or arrangements that are material to its advisory business or its Clients. Below is a discussion of such relationships/arrangements and any conflicts that arise from them.
1. Broker-dealer, municipal securities dealer, or government securities dealer or
NBEL is affiliated with NBBD, a U.S. registered broker-dealer. In providing services to its Clients, NBEL draws upon the operational and administrative resources of NBBD and other affiliates. NBEL may use security analysis and research reports prepared by its affiliates’ dedicated research staff, such as Neuberger Berman Investment Advisors LLC (“NBIA”). Registered representatives of NBBD have, and in the future can be expected to, solicit Clients for NBEL or investors for the Funds for NBEL. See Item 14. NBEL may utilize placement agents in offering the Funds to investors. These placement agents may include NBBD or unaffiliated registered broker-dealers. See Item 5. The Firm has established policies and procedures (“Procedures”) reasonably designed to prevent the misuse by the Firm and its personnel of material information regarding issuers of securities that has not been publicly disseminated (“material non-public information”). See Item 11.D.1.
2. Investment Company or other pooled investment vehicle
NBEL is investment manager or sub-investment manager of the Funds. Neither NBEL nor its related persons are obligated to allocate any specific amount of time or investment opportunities to a particular Fund. NBEL and its related persons intend to devote as much time as they deem necessary for the management of each Fund, and will allocate investment opportunities in accordance with NBEL’s Trading Policy described in Item 12.B. below.
3. Other investment adviser or financial planner
NBEL has relationships that are material to its investment management business with the following Advisory Affiliates: SEC‐Registered Advisers Neuberger Berman BD LLC* Neuberger Berman Asia Limited Neuberger Berman Investment Advisers LLC Neuberger Berman Singapore Pte. Limited Neuberger Berman Loan Advisers LLC NB Alternatives Advisers LLC Neuberger Berman Breton Hill ULC
Neuberger Berman AIFM S.à.r.l. (Exempt Reporting Adviser)
Non‐SEC‐Registered Advisers Neuberger Berman Australia Limited Neuberger Berman East Asia Limited Neuberger Berman Investment Management (Shanghai) Limited Neuberger Berman Taiwan (SITE) Limited Neuberger Berman Asset Management Ireland Limited
* While NBBD is also registered with the SEC as an investment adviser, it does not currently act as an investment adviser.
In providing services to its Client Accounts, NBEL may draw upon the portfolio management, trading, research, operational and administrative resources of the Advisory Affiliates. Advisory Affiliates may engage NBEL as subadvisor or may treat NBEL as a “participating affiliate,” in accordance with applicable SEC No-Action Letters. As a subadvisor, investment professionals from NBEL may be delegated decision-making roles for some or all aspects of the strategy, including the opening of brokerage accounts and the placement of orders to deploy the strategy. As a participating affiliate, NBEL may provide designated investment personnel to associate with Advisory Affiliates and perform specific advisory services to Advisory Affiliates consistent with the powers, authority and mandates of such Advisory Affiliate’s clients. The designated investment personnel from NBEL are subject to certain policies and procedures of the Advisory Affiliate as well as supervision and periodic monitoring by the relevant Advisory Affiliate. As a participating affiliate, NBEL agrees, in addition to making available certain of its employees to provide investment advisory services to its Advisory Affiliate’s clients through the Advisory Affiliate, to keep certain books and records in accordance with the Investment Advisers Act and to submit the designated personnel to requests for information or testimony before the SEC. NBEL may also be delegated the duty to place orders for certain securities and commodity interest transactions pursuant to an agreement between the Advisory Affiliate and NBEL as participating affiliate. Neither NBEL nor its related persons are obligated to allocate any specific amount of time or investment opportunities to a particular Client Account. NBEL and its related persons intend to devote as much time as they deem necessary for the conduct of each Client Account’s management and will allocate investment opportunities in accordance with NBEL’s Trading Policy. Depending on the strategy, investment professionals from Advisory Affiliates may have decision- making roles for certain Clients of NBEL. NBEL may engage any of these Advisory Affiliates as a sub-adviser to manage its Client Accounts (see Item 10.D) and currently engages Neuberger Berman Asia Limited (“NBAL”), NBIA, and Neuberger Berman Singapore Pte. Limited (“NBS”) to act in such a sub-advisory capacity for certain of the Funds. The views and opinions of NBEL, and those of these Advisory Affiliates and their research departments, may differ from one another. See Item 11.B.7. The Firm has established Procedures reasonably designed to prevent the misuse by the Firm and its personnel of material non-public information. See Item 11.D.1. Certain employees of NBBD, NBAL and NBIA may provide marketing and/or other Client- related services in connection with NBEL’s investment strategies.
4. Futures commission merchant, commodity pool operator, or commodity trading
NBBD is registered as a Commodity Trading Adviser, Commodity Pool Operator and Futures Commission Merchant. NBIA is registered as a Commodity Trading Adviser.
5. Banking or thrift institution
6. Accountant or accounting firm
7. Lawyer or law firm
8. Insurance company or agency
9. Pension consultant
10. Real estate broker or dealer
11. Sponsor or syndicator of limited partnerships
Affiliates of NBEL may serve as the general partner or investment manager to one or more of the Funds. Further information about the partnerships where affiliates of NBEL serve as the general partners or investment manager is available in Section 7.B.(1) and (2) of Schedule D of Part 1 of NBEL’s affiliated SEC-registered investment advisers’ Form ADVs.
D. Selection of Other Investment Advisers
NBEL may engage other advisers, including its Advisory Affiliates, to act as sub-advisers or managers for its Client Accounts. As discussed further below, NBEL does not employ the same selection criteria with respect to its Advisory Affiliates, given that it already knows a great deal about each of their advisory businesses, by virtue of their affiliation. Where NBEL has delegated the discretionary day-to-day management of certain strategies to Advisory Affiliates, the due diligence conducted may not include all components of the standard due diligence program. NBEL selects Advisory Affiliates based on the investment strategy of the Client Account, and the expertise of the particular Advisory Affiliate. please register to get more info
A. Code of Ethics
NBEL has adopted policies (the “Policies”), which governs the activities of all NBEL employees. Employees are required not only to comply with the Policies but with all applicable laws and regulations. The Policies include (1) Personal Account Dealing Policy and Procedures, including outside business activities, (2) Gifts and Entertainment Policy and Procedures, (3) Market Abuse Policy and (4) Whistleblowing Policy, which support NBEL’s fiduciary duty to place the interests of the Firm’s clients before the interests of the Firm and its employees. Each employee must avoid any activity or relationship that may reflect unfavorably on the Firm as a result of a possible conflict of interest, the appearance of such a conflict, the improper use of confidential information or the appearance of any impropriety. In managing assets for Clients, NBEL has a fiduciary responsibility to treat all Clients fairly. This duty requires a course of conduct, consistent with other statutory obligations, that seeks to be prudent and in the Client’s best interest. The nature of NBEL’s fiduciary obligations necessarily requires some restrictions on the investment activities of its employees and their domestic dependents.
Amendments to the Policies
If amendments are made to the Policies other than on an annual basis and determined to be material, employees will be required to submit a written acknowledgement that they have received, read and understood the amendments.
Administration of the Policies
Compliance will receive and review all reports submitted pursuant to the Policies and determine whether the investment or business activities of employees are consistent with requirements and restrictions set forth in the Policies and do not otherwise indicate any improper activities. Compliance will also ensure that all books and records relating to the Policies are properly maintained. NBEL will maintain the following records in a readily accessible place: A copy of each Code that has been in effect at any time during the past five years; A record of all written acknowledgements of receipt, review and understanding of the Policies and amendments for each person who is currently, or within the past five years was, an employee; A record of each report made by an employee, including any brokerage confirmations and brokerage account statements obtained from employees; A list of the names of persons who are currently, or within the past five years were, employees; and A record of any decision for approving the acquisition of securities by employees in private placements and hedge funds for at least five years after the end of the fiscal year in which approval was granted.
Employees must immediately report any violation of the Policies to Compliance. All reports will be treated confidentially and investigated promptly and appropriately. Compliance will keep records of any violation of the Policies, and of any action taken as a result of the violation. Violations of the Policies may lead to disgorgement of profits, suspension of trading privileges for the particular employee, or disciplinary action up to and including termination.
B. Participation or Interest in Client Transactions
NBEL may participate or have an interest in Client transactions as described below. NBEL makes all investment management decisions in its Clients’ best interests.
Principal and Agency Transactions
Principal transactions are generally defined as transactions where an adviser, acting as principal for its own account or the account of an affiliated broker-dealer, buys from or sells any security to a Client Account. A principal transaction would occur if NBEL bought securities for its own inventory from a NBEL Client Account or sold securities from its inventory to a NBEL Client Account. Where NBEL, its affiliates or principals own a substantial equity interest in a Client Account, transactions involving such Client Account may be characterized as principal. A principal transaction presents conflicts of interest which may include the adviser or affiliate earning a fee or earning (or losing) money as a result of the transaction. NBEL does not engage in principal transactions with Client Accounts.
NBEL may permit cross trading transactions for its Clients, provided that there is a benefit to those Clients and that no Client is being disadvantaged.
NBEL is affiliated with NBBD, but does not affect any transactions in securities or other instruments for Client Accounts through NBBD. See Item 12.
Financial Interests in Securities or Investment Products
Furthermore, NBEL may invest Client Accounts in securities or other assets of companies with which NBEL or its affiliates have a business relationship, whether Client, broker, vendor or investment consultant.
Employee Investment in NBEL Products
NBEL personnel may be investors in the Funds. Any such investments are made in conformity with the Policies, which include procedures regarding the use of confidential information and personal investing.
Buying and Selling Securities That Are Recommended to Clients
Whilst NBEL may recommend investments in which NBEL, its affiliates or advisory personnel are also invested, to Clients, in practice, it does not provide advice. Personnel of NBEL may also be invested directly in the Funds, subject to applicable law, and the performance fee distributions and management fee payable by such Funds may be separately negotiated by NBEL. Certain Funds may elect to waive management or performance fees/allocations for employees of the Firm who invest in the Fund pursuant to the Firm’s employee investment program. NBEL may recommend to Clients securities or financial instruments, in which a related person has established an interest independent of NBEL.
Other Interests in Client Transactions
NBEL advisory personnel may also be officers, employees and/or registered representatives of NBBD or any of the Advisory Affiliates. In such capacity, they may sell or provide similar services as the services offered by NBEL. The views and opinions of NBEL, NBBD or any of the Advisory Affiliates and their research staff, may differ from one another. As a result, Client Accounts may hold securities or other investment products for which each of these entities may have a different investment opinion or outlook at the time of their acquisition or subsequent thereto.
C. Personal Trading
The Policies contain NBEL’s Personal Account Dealing Policy and Procedures. Key aspects of this policy include:
Disclosure of Personal Investment Accounts and Pre-Approval of Transactions
Employees or other parties named in an employee-related account are required to disclose the existence of any outside brokerage account to Compliance, and can only maintain an outside brokerage account at a broker on NBEL’s list of approved outside brokers. Employees must advise their broker that they are an employee of NBEL and arrange for copy contract notes for all transactions to be sent to Compliance. Subsequently, employees or other parties named in an employee-related account must obtain prior approval from Compliance before placing an order for a covered transaction. Transaction approvals are valid for 24 hours.
Employee and employee-related accounts must hold investments for a minimum of thirty (30) calendar days after purchase.
Specific Investment Restrictions
Short sales are permitted in certain circumstances, but are strongly discouraged. Employees and employee related accounts are prohibited from receiving allocations of initial public offerings where the employee in question is FINRA registered. Any employee who wishes to invest in a hedge fund, limited partnership, closely held corporation or other outside private investment must obtain pre-approval from Compliance.
Reporting and Certification Requirements
Initial On commencing employment at NBEL, employees are required to disclose their outside broker accounts. A sample email is prepared by Compliance and provided to employees for them to instruct their brokers to send duplicate confirmations and/or monthly statements to Compliance. Approval to open new outside brokerage accounts When an existing employee wishes to open a new outside brokerage account, it is compulsory for the employee to notify Compliance. The employee must advise their broker that they are an employee of NBEL and arrange for copy contract notes for all transactions to be sent to Compliance. Annual Employees are required to declare annually that: they have read, understand, and complied with the Policies: they have reported all employee and employee-related accounts to Compliance; the transactions executed in these accounts have been approved as necessary; and, they have obtained the required approval and submitted the required reporting for any Outside Business Activities.Other Conflicts of Interest.
D. Other Conflicts of Interest
1. Non Public Material Inside Information/Insider Trading
The Firm has established policies and procedures, including certain information barriers within the Firm, (“Procedures”) reasonably designed to prevent the misuse by the Firm and its personnel of material information regarding issuers of securities that has not been publicly disseminated (“material non-public information”). The Procedures are designed to be in accordance with the requirements of the Advisers Act and other federal securities laws. In general, under the Procedures and applicable law, when the Firm is in possession of material non-public information related to a publicly-traded security or the issuer of such security, whether acquired unintentionally or otherwise, neither the Firm nor its personnel are permitted to render investment advice as to, or otherwise trade or recommend a trade in, the securities of such issuer until such time as the information that the Firm has is no longer deemed to be material non-public information. In the ordinary course of operations, however, certain businesses within the Firm may seek access to material non-public information. The Procedures address the process by which material non- public information may be acquired intentionally by the Firm and the sharing of information between different businesses within the Firm. When considering whether to acquire or share material non-public information, the Firm will attempt to balance the interests of all Clients, taking into consideration relevant factors, including, but not limited to, the extent of the prohibition on trading that may occur, the size of the Firm's existing position in the issuer, if any, and the value of the information as it relates to the investment decision-making process. The intentional acquisition of material non-public information may give rise to a potential conflict of interest since NBEL may be limiting the universe of public securities that NBEL may purchase or sell. Similarly, where the Firm declines access to (or otherwise does not receive or share within the firm) material non-public information regarding an issuer, NBEL may base its investment decisions with respect to assets of such issuer solely on public information, thereby limiting the amount of information available to NBEL in connection with such investment decisions. In determining whether or not to elect to receive material non-public information, the Firm will endeavor to act fairly to its clients as a whole. If material non-public information is inadvertently obtained, employees are required to disclose it to Compliance whereupon the issuer to whom the material non-public information relates will be included in a “Restricted List” distributed by Compliance. Any activities relating to such securities are required to be cleared by Compliance.
2. Gifts and Entertainment
Gifts and entertainment provided or received by NBEL’s employees to/from Clients, prospective clients, vendors, suppliers, consultants and others with whom NBEL conducts business can strengthen business relationships yet may also create actual or apparent conflicts of interest. Therefore, in accordance with its Gifts and Entertainment policy, all NBEL employees are required to follow the following guiding principles: No gifts or entertainment may be solicited No cash or cash equivalents should be offered or accepted All gifts and entertainment received or offered should be for a clear business purpose All gifts and entertainment should not be excessive, inappropriate or intended to influence recipients inappropriately. In addition to the above, NBEL imposes certain specific restrictions on providing and receiving gifts and entertainment, including the imposition of monetary limits and requiring employees to report to, and, in certain circumstances, to obtain prior approval from Compliance. Compliance is responsible for monitoring practices on giving gifts, including travel, entertainment and contributions, and carries out ongoing monitoring of NBEL's practices
3. Political Contributions
Due to the potential for conflicts of interest, the Firm has established policies and procedures relating to political activities which are designed to comply with applicable federal, state and local law. Each employee is required to seek preapproval before the employee, the employee’s spouse or domestic partner, the employee’s dependent children or any other person that the employee materially supports (where any such person is either a U.S. citizen or a green card holder) makes any political contribution or engages in other political activities, including, but not limited to, volunteering or fundraising for a campaign Finally, all employees are required (1) to comply with the limitations on volunteer activity so as not to cause an in-kind contribution by the Firm, and (2) to keep records of their political contributions.
4. Outside Business Activities
Given the nature of NBEL’s business, employees who engage in outside activities may face numerous and significant conflicts of interest. Each new employee is required to complete an Outside Affiliation Form to disclose any outside activities, including service as an employee, consultant, board member, partner, officer, director, owner or trustee of an organization that is not an affiliate of NBEL. Prior to pursuing any outside business activity, an employee must: complete the Outside Affiliation form; receive written approval from his/her manager; and Receive written approval from Compliance. General Guidelines When engaged in an approved outside business activity, an employee must always: act in the best interest of NBEL in the event a potential conflict of interest arises; remain aware of how personal activities can lead to conflicts, such as taking a second job with, or making an investment in, a customer, vendor or competitor; discuss with his/her manager any situation that could be perceived as a potential conflict of interest; and Pro-actively address situations that may put his/her interests or those of a family member or friend in potential conflict with NBEL’s. Service on Outside Boards Compliance determines procedures to prevent the misuse of material non-public information which may be acquired through outside board service, as well as other procedures or investment restrictions which may be required to prevent actual or potential conflicts of interest. In addition to complying with the policies and procedures set forth in the Policies, employees must be vigilant in identifying and managing the potential conflicts of interest that may arise by virtue of their service on outside boards. Depending on the circumstances, these conflicts may require the employee to recuse him or herself from deliberations of the board. In some cases, it may be necessary to resign from the Board entirely. Employees are encouraged to seek guidance from Compliance as to how these potential conflicts may be best addressed.
5. Outsourcing/Service Providers
The Firm must conduct appropriate due diligence on any outside vendor that provides products or services to the Firm and enter into an appropriate contract. The Firm’s relationships with outside vendors must be managed so that appropriate controls and oversight are in place to protect the Firm’s interests, including safeguarding of private and confidential information regarding the Firm’s clients and employees. please register to get more info
A. Criteria for Selection of Broker-Dealers
Except where NBEL has delegated investment discretion to a Sub-Adviser, NBEL has discretion to select the broker-dealer for securities transactions for each Client Account. NBEL looks to the overall quality of service provided by the broker-dealer and will consider many factors when making a selection for execution. The broker-dealer’s ability to provide best execution is of paramount importance in NBEL’s selection of the broker-dealer. Best execution is not determined solely based on obtaining the lowest commission costs, but is an evaluation of a number of quantitative and qualitative factors. The factors that NBEL will take into account when executing orders on behalf of a Client Account will include price, costs, speed, likelihood of execution and settlement, size, nature and any other consideration relevant to the execution of the order in question (including market impact). The best possible result for a particular transaction will be determined by the relative importance given by NBEL to those factors, which will in turn determine the choice of broker. NBEL will also take into account the following criteria: Client’s characteristics, including Client’s categorization as a professional client; the characteristics of the relevant order; the characteristics of the instruments or products that are the subject of the relevant order; and The characteristics of the broker and the place of execution.
Research and Other Soft Dollar Benefits
NBEL does not operate a soft dollar program. Its Advisory Affiliates may acquire soft dollar benefits when sub-advising NBEL’s Client Accounts. Please refer to Part 2A of the SEC registered Advisory Affiliates’ Form ADVs for details.
Brokerage for Client Referrals
NBEL does not enter into agreements with, or make commitments to, any broker-dealer that would bind NBEL to compensate that broker-dealer, directly or indirectly, for Client referrals (or sale of fund interests) through the placement of brokerage transactions.
NBEL has a small number of Clients that specify which brokers must be used to execute transactions on their account.
Other Fees in Connection with Trading
In an effort to achieve best execution of portfolio transactions, NBEL may place securities or future transactions for Client Accounts by utilizing electronic marketplace or trading platforms. Some of these electronic systems may impose additional service fees or commissions. NBEL may pay these fees directly to the provider of the service or these fees may be included in the execution price of a security. NBEL’s intention is that it will only use such systems and incur such fees if it believes that doing so helps it to achieve the best execution of the applicable transaction, taking into account all relevant factors under the circumstances. For example, NBEL will consider the speed of the transaction, the price of the security, its ability to block the transaction and other factors discussed in this Brokerage Practices section.
On occasion, an error may be made in a Client Account. For example, a security may be erroneously purchased for a Client Account instead of sold. In these situations, NBEL seeks to rectify the error by placing the Client Account in a similar position as it would have been had no error occurred. Depending on the circumstances, various corrective steps may be taken, including but not limited to, canceling the trade, adjusting an allocation, and/or reimbursing the account. While NBEL will generally compensate Client Accounts for actual losses suffered as a result of a trade error caused through the fault of NBEL. NBEL does not compensate its Clients for lost investment opportunities (e.g., the failure to take advantage of investment or market improvements).
B. Aggregation of Orders/Allocation of Trades
Transactions for each Client Account generally will be effected on a block trade basis, where NBEL decides to purchase or sell the same security or financial instrument for several Client Accounts at approximately the same time. NBEL may (but is not obligated to) combine or block trade such orders in order to secure certain efficiencies and results with respect to execution, clearance and settlement of orders. This aggregation of orders across Client Accounts could lead to a conflict of interest in the event an order cannot be entirely fulfilled and NBEL is required to determine which accounts should receive executed shares and in what order. To mitigate such conflicts, NBEL has adopted allocation procedures, reasonably designed to treat all participating accounts fairly (see below). NBEL is not obligated to include every Client Account in an aggregated trade. A variety of factors is used to determine whether a particular Client Account may or may not participate in a particular aggregated transaction. These include investment objectives and strategies, position weightings, cash availability, and risk tolerance. NBEL will aggregate and allocate orders only in a manner designed to ensure that no Client Account is favored or disfavored and that participating Client Accounts are treated in a fair and equitable manner over time. NBEL may not intentionally allocate profitable trades at each day’s end so as to favor disproportionally certain clients without appropriate disclosure. When a block trade order is filled in its entirety, each participating Client Account will participate at the average price paid or received, per share or unit, on that day for the order, and share in any associated transaction costs, based upon the initial amount requested for the account (subject to certain size- or cost-related exceptions). When price averaging is used, some Client Accounts will get a better price and some Client Accounts will get a worse price than they would have received if price averaging was not used. When a block trade order is partially filled, the order will be allocated in accordance with NBEL’s written aggregation and allocation procedures. These procedures are described generally below. NBEL will receive no additional compensation or remuneration of any kind as a result of the aggregation of Client trades.
Allocation of Investment Opportunities
NBEL provides investment management services to a number of Client Accounts and may deal with conflicts of interest when allocating investment opportunities among such Client Accounts. For example: (i) NBEL receives different investment management fees in respect of different Client Accounts; (ii) the performance records of some Client Accounts are more public than the performance records of other Clients; and (iii) NBEL and its affiliates, owners, officers and employees have invested substantial amounts of their own capital in some Client Accounts, but do not invest their own capital in every Client Account. The majority of NBEL’s Clients pursue specific investment strategies, many of which are similar. NBEL expects that, over long periods of time, most Client Accounts employing similar investment strategies should experience similar, but not identical, investment performance. Many factors affect investment performance, including but not limited to: (i) the timing of cash deposits and withdrawals to and from an account; (ii) the fact that NBEL may not purchase or sell a given security on behalf of all Client Accounts employing similar strategies; (iii) price and timing differences when buying or selling securities; (iv) the size of the Client Account; and (v) each Client Account’s own different investment restrictions. The trading policy for NBEL is designed to minimize possible conflicts of interest in trading for Client Accounts. NBEL considers many factors when allocating securities and financial instruments among Client Accounts, including but not limited to the Client’s investment objectives, applicable restrictions, the type of investment or financial instrument, the number of shares or contracts purchased or sold, the size of the account, the amount of available cash or the size of an existing position or weighting in an account. Client Accounts are not assured of participating equally or at all in particular investment allocations. The nature of a Client Account’s investment style may exclude it from participating in many investment opportunities, even if the Client is not strictly precluded from participation based on written investment restrictions. NBEL attempts to allocate limited investment opportunities, including IPOs, among Client Accounts in a manner that is fair and equitable when viewed over a considerable period of time and involving many allocations. NBEL follows detailed procedures allocating shares in IPOs and in secondary offerings. The factors taken into account in allocating shares of IPOs include whether the account’s investment objectives fall primarily within the market capitalization of the issuer of securities to be allocated, cash available and legal restrictions on the account. Once those requirements are met, shares are generally allocated on a pro rata basis based on total AUM of each participating manager and thereafter based on the AUM of each Client Account. Compliance is responsible for monitoring and interpreting these policies. Any exceptions to these policies require the prior written approval of Compliance, in conjunction with the senior portfolio manager. please register to get more info
A. Periodic Reviews
For investment grade fixed income, NBEL’s portfolio managers, research analysts and traders hold weekly meetings where they review market conditions in a broader context. Portfolio managers review market and Client positioning on a daily ongoing basis. If a Client requests, NBEL may prepare material for them on a monthly, quarterly or ad-hoc basis. Compliance reviews transactions for compliance with investment guidelines, possible conflicts and adherence to the Policies and regulatory obligations, on a regular basis. Reviews may be in the form of trade data and exception reports. Topics covered in the review include, but are not limited to, trading on the basis of material, non-public information and trading in affiliated securities. For the Funds, reviews are also performed regularly by the Fund Accounting team, in conjunction with the Portfolio Management team, Operations and the respective fund administrator.
B. Non-Periodic Reviews
Other than the periodic review of accounts described above, a review of individual Client Accounts will also be triggered by anomalies in the investment strategy (e.g.¸ performance numbers do not look right for the portfolio). Account reviews may also take place as a result of major changes in macro- or micro-economic conditions, and material market, economic or political events. Further, changes in regulation may cause NBEL to review Client Accounts.
C. Client Reports
Clients receive such reports as are provided for in the Fund’s Offering Document (or, on rare occasion, as otherwise negotiated with NBEL), or relevant investment management agreement. Depending on the account, Clients or investors may also receive some of the following regular written reports: Monthly commentary from NBEL; Monthly/ Quarterly statement from the fund administrator; Monthly Fact Sheet; and Annual letter from NBEL. Clients should carefully review any statements or other reports that they receive from a custodian and compare them to the client reports provided by NBEL. please register to get more info
A. Compensation by Non-Clients
B. Compensation for Client Referrals
Subject to applicable law, certain Firm employees are eligible to earn an account referral bonus for referring a potential client to NBEL. Firm senior management determines whether an employee’s involvement was significant enough to warrant this bonus. From time to time, in accordance with applicable law, NBEL may retain and compensate third parties for introducing new Clients to NBEL. The compensation to such parties generally represents a percentage of the management fee paid by the Client to NBEL. Clients do not pay a higher fee than they would otherwise pay due to the solicitor’s or placement agent’s involvement in the introduction. From time to time, NBEL may refer a Client to unaffiliated financial institutions or other professional service providers for purposes of rendering certain services to the Client. These services are generally not directly provided by NBEL. The referral may result in the Client allocating additional assets to NBEL for management. please register to get more info
NBEL or its affiliates will not maintain physical possession of the funds or securities of any Fund. However, for those Funds where an affiliate serves as managing member or general partner, the affiliate will have “legal custody” to access the Fund’s account, and as a result, will be deemed to have custody over that account for purposes of the Custody Rule under the Advisers Act. To comply with the Custody Rule, with respect to such Fund, NBEL or the third-party administrator to the Fund will provide each investor, annually, with audited financial statements, prepared in accordance with GAAP or IFRS, within 120 days following the end of the Fund’s fiscal year. please register to get more info
Except to the extent that NBEL has delegated investment discretion to a sub-adviser, NBEL has the authority to determine, without obtaining specific Client consent, the securities or financial instruments to be bought or sold and the amount of securities or financial instruments to be bought or sold for a Client Account. NBEL’s discretionary authority is derived from an express grant of authority under each Client Account’s investment management agreement with NBEL. Purchases and sales must be suitable for the particular Client Account and limitations may be imposed as a result of instructions from the Client. Clients may limit NBEL’s authority by prohibiting or by limiting the purchasing of certain securities or financial instruments. See Item 4. Pursuant to the Firm’s Procedures on material non-public information, when the Firm is in possession of material non-public information related to a publicly-traded security or the issuer of such security, whether acquired unintentionally or otherwise, neither the Firm nor its personnel are permitted to render investment advice as to, or otherwise trade or recommend a trade in, the securities of such issuer until such time as the information that the Firm has is no longer deemed to be material non-public information. As such, there may be circumstances which will prevent the purchase or sale of securities for Client Accounts for a period of time. please register to get more info
Investments in which NBEL invests on behalf of its Clients are typically debt instruments that do not have voting rights, and as such, NBEL currently has not adopted a policy with respect to voting client securities. There is a Firm proxy voting policy which the sub-adviser follows, where it has invested the Client’s account in securities. please register to get more info
A. Prepayment of Fees (Six or more months in advance)
B. Impairment of Contractual Commitments
NBEL has no financial commitment that impairs its ability to meet contractual and fiduciary commitments to clients.
C. Bankruptcy Petitions
NBEL has not been the subject of a bankruptcy proceeding. please register to get more info
Open Brochure from SEC website
|Pooled Investment Vehicles
Registered Web Sites
Raymond James & Associates Sells 1,407 Shares of Neuberger Berman New York Municipal Fund, Inc. (NYSEAMERICAN:NBO)Raymond James & Associates cut its stake in Neuberger Berman New York Municipal Fund, Inc. (NYSEAMERICAN:NBO) by 7.7% in the 3rd quarter, according to its most recent disclosure with the Securities and Exchange Commission (SEC).
Neuberger Berman High Yield Strategies Fund Inc. (NYSE American: NHS) (the "Fund") announced today the preliminary results of its tender offer. The tender offer, which expired at 5:00 p.m., New York City time,
Neuberger Berman Global Opportunistic Bond Fund is an open-end fund incorporated in Ireland. The Fund's objective is achieve an attractive level of total return by opportunistically investing in a ...
State Street Corporation (NYSE:STT) today announced an extension of its service agreement with Neuberger Berman to renew accounting services for
NEW YORK , Nov. 30, 2020 /PRNewswire/ -- Neuberger Berman Real Estate Securities Income Fund Inc. ( NYSE American: NRO ) (the "Fund") has announced a distribution declaration of $0.04 per share of common stock. The distribution announced today is payable ...
NEW YORK, Nov. 30, 2020 /PRNewswire/ -- Neuberger Berman High Yield Strategies Fund Inc. (NYSE American: NHS) (the "Fund") has announced a distribution declaration of $0.0905 per share of common ...
NEW YORK, Nov. 30, 2020 /PRNewswire/ -- Neuberger Berman Real Estate Securities Income Fund Inc. (NYSE:NRO) (the "Fund") has announced a distribution declaration of $0.04 per share of common stock.
NEW YORK, Nov. 30, 2020 /PRNewswire/ -- Neuberger Berman Real Estate Securities Income Fund Inc. (NYSE:NRO) (the "Fund") has announced a distribution declaration of $0.04 per share of common stock.
Disclaimer | Commerce Policy | Made In NYC | Stock quotes by finanzen.net NEW YORK, Nov. 30, 2020 /PRNewswire/ -- Neuberger Berman Real Estate Securities Income Fund Inc. (NYSE American ...
NEW YORK, Nov. 30, 2020 /PRNewswire/ -- Neuberger Berman MLP and Energy Income Fund Inc. (NYSE American: NML) (the "Fund") has announced a distribution declaration of $0.01345 per share of common ...
No recent news were found.