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The ratings house is pinning its growth strategy on a revamped methodology that increases the emphasis on governance to 25 per cent – a timely move considering APRA’s proposed reforms.
Neuberger Berman looks beyond super for insto money
(Pictured: Lucas Rooney)
Neuberger Berman will take its Absolute Return Multi-Strategy (ARMS) Trust to institutional investors beyond the superannuation space, following a positive retail rating for the fund.
Local managing director, Lucas Rooney, said the retail fund, which was launched just a month ago, already has $20 million in it, although the strategy has no institutional clients as of yet. Lonsec gave the fund a “recommended rating”.
“Even though our ARMS strategy is at the lower end of the fee range of this type of hedge fund, investment in it is still more expensive than traditional asset classes like plain equities and the Australian superannuation funds have, in recent years, been quite focussed on fees,” he says.
Neuberger Berman has been talking to institutional investors about the strategy. Institutional investors can access it through the Australian trust or a UCITS vehicle, which is Dublin domiciled.
Rooney said: “there may be more application outside superannuation funds – we’re going to be talking to institutional investors beyond superannuation funds.”
This could include large insurance companies or university trusts.
In total, including the US and the UK, the strategy has $US1.9 billion in funds under management.
The retail option is administered in Australia by OneVue
The fund is different from the traditional fund-of- hedge-fund type structure in that Neuberger Berman retains control of the assets.
“We’ve built a platform of managed accounts and within each we – Neuberger Berman – control all of the underlying positions in the portfolio, so that we have risk ownership and full transparency and control for the whole underlying portfolio,” Rooney says.
“So none of the hedge funds that advise us, can lockup or gate any of the portfolio.
“We’ve built this portfolio from nine underlying hedge fund managers’ strategies and across half a dozen different hedge fund strategy styles, but we control the portfolio so our clients can access full transparency and daily liquidity and benefit from Neuberger Berman’s risk platform”
The fund does not charge performance fees and has been able to negotiate competitive fees with the hedge fund managers to keep the cost to investors low.
“We expect this to re-ignite the debate about using a portfolio of diversified hedge funds strategies, given our success in overcoming the perceived drawbacks around transparency, liquidity and risk management,” Rooney says.
“Maybe now low volatility and low fee can kiss and make up.”
– Penny Pryor
