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Neuberger Berman U.S. High Yield

Louise Babin (louise.babin@morningstar.com),Mike Mulach (mike.mulach@morningstar.com)

en-GB Team-based management approach should help weather recent changes. Despite changes on the management team, the strategy's experienced comanagers, extensive analyst resources, and well-aligned incentives continue to earn the fund an Above Average People Pillar rating.

Russ Covode took over as the lead manager on the strategy following Tom O'Reilly's retirement at the end of 2019. Russ joined Neuberger Berman in 2004 and has served as comanager for this fund since 2011. In addition to his 15 years with the firm, he has more than 31 years of experience in high-yield investing. Russ is joined by experienced comanagers Dan Doyle, Joe Lind, and Chris Kocinski; Doyle has more than three decades of high-yield experience, while Lind and Kocinski each have well over a decade. Previously supporting the fund as an analyst, Kocinski was promoted to the management team in early 2019 after the passing of comanager Patrick Flynn.

The credit research team is large and experienced. It has 22 credit analysts who are assigned to sectors and cover both high yield and bank loans. They tend to cover about 25-30 issuers each and average 12 years' experience.

The managers' incentives are aligned with investors'. Up to 20% of their bonuses (depending on seniority) goes into the funds they manage and is locked up for three years. Similarly, almost half of the team members own equity in the firm. Opportunistic use of CCC and BBB debt. Toward the end of 2019, the managers added credit risk to the portfolio. As of Dec. 31, 2019, its B rated stake had increased to 48%, while its CCC and below rated stake had increased to 9%, up roughly 14 and 4 percentage points from a year ago, respectively. As justification for taking on more credit risk, the managers argued that the Fed and ECB signaling their policy rates will likely stay the same in the near term reduces concerns about economic growth. They also noted that the phase-one trade deal between the U.S. and China removed some uncertainty about tariffs.

Execution has been underwhelming in recent years. In particular, the team has struggled with the strategy's energy exposure. After the commodity sell-off in late 2014, the team dramatically changed how it values energy companies. Before 2014, the team favored companies with high levels of current production; now it places more weight on companies that can more quickly adapt to changing commodity prices. From 2015 to 2018, this new approach led to poor calls from both an asset-allocation and security-level standpoint. While decisions around energy largely haven't helped, the fund has excelled in other areas such as gaming over the past several years. In late 2019, it allocated 4.3% of the portfolio to the sector relative to the benchmark's 2.7%. Sufficient, but lacks a clear edge. While the strategy's process is disciplined and risk-conscious, the managers have struggled to gain an edge over the competition through credit selection or sector allocation, resulting in a downgrade of the Process Pillar rating to Average.

Protecting against downside while participating on the upside are key themes of this strategy's approach and inform its broad characteristics. The team filters out the most illiquid, distressed, and defaulted names--though it will, at times, make use of CCC (and BBB) rated paper--and focuses on BB and B rated debt. The team does not invest in non-U.S. dollar debt or derivatives, but it can hold up to 10% in bank loans, and the firm has a team dedicated to that sector.

The process combines top-down considerations with fundamental security analysis. It is formalized in the firm's “Credit Best Practices” checklist, which ensures all the portfolio's prospective investments are evaluated on the same set of criteria. Its top-down analysis considers global economic trends, credit attractiveness, and valuations, and supplements it with industry-specific analysis. The team's bottom-up research looks at fundamentals, such as interest coverage, valuations, a company's ability to deleverage, and susceptibility to market shocks while also considering qualitative factors such as management quality. Core Stuck in the middle. Neuberger Berman High Yield Bond sports a deep and experienced team, but its process lacks a clear advantage over its high-yield bond Morningstar Category peers, leading to a downgrade of its Process Pillar rating to Average and a downgrade of its Morningstar Analyst Rating to Neutral from Bronze on its clean I USD share class, and Negative on its most expensive share classes.

Despite some turnover, the team supporting this strategy remains experienced and deep. In 2019, lead manager and head of non-investment-grade credit Tom O'Reilly retired as planned. Then in April 2019, comanager Patrick Flynn passed away suddenly. Despite this turnover, two of the fund's four remaining comanagers, Russ Covode and Dan Doyle, have worked alongside O'Reilly for several years, and veteran high-yield analyst Chris Kocinski was promoted to comanager. The group relies on a team of 22 high-yield research analysts, most with more than a decade of experience.

The team's process prizes downside protection, starting with the research analysts' methodical approach to credit analysis. The managers also avoid the market's smallest issues, which can suffer from bouts of illiquidity; tend to underweight the lowest-quality companies; and keep the fund well-diversified. A yield near the category median also suggests the team isn't taking excessive risks.

Unfortunately, this approach hasn't stood out versus peers in some time: Its returns have hovered around the category average in each year over the past decade. The strategy's more restrained style shouldn't lead the pack in credit rallies, such as 2016 and 2017's rebound, but it also hasn't helped during credit sell-offs, such as mid-2015 to early 2016 and 2018's fourth quarter. The last time the strategy outperformed significantly was in 2008's global financial crisis, when its prior management team had substantially upgraded the portfolio's credit quality. It remains to be seen whether the current team will fare as well in the next downturn. 2099 2099 Tony Thomas, Ph.D. Tony Thomas, Ph.D. Neuberger Berman's steady approach to its evolution earns the firm a Positive Parent rating.

The firm, founded in 1939, emerged from the collapse of Lehman Brothers with new capabilities and a new ownership structure. Lehman's fixed-income and private-equity acquisitions became part of Neuberger Berman in the wake of Lehman's 2008 collapse, when chairman and CEO George Walker led employees in taking the more diversified firm private. Over 460 employees now own the business, which manages $270 billion in assets.

Once known primarily as a U.S. value equities shop, the new Neuberger Berman sees growth opportunities in Europe and Asia. Clients in those regions own 30% of the firm's assets under management. Although solely an investment manager, its retail mutual funds make up only one fifth of business. The rest is institutional and private client money, long bastions of the firm's identity.

The firm has lifted a few teams out of other firms to expand its circle of competence, including a talented emerging-markets-debt team from ING in 2013. While the firm has been selective in its acquisitions, its hands-off approach lets the new teams do what they do best. Meanwhile, the firm's partnership structure allows these new teams to integrate more fully into Neuberger by becoming managing partners over time.

Building one piece at a time. 2018-03-29T11:52:00 2018-03-29T16:52:00Z Underwhelming. The last time this fund outshone its peers significantly was during the financial crisis. However, there are new managers at the helm, and the fund's performance has been uninspiring since.

From January 2010 through December 2019, the fund's 6.45% annualized return beat the category median by 82 basis points but underperformed its ICE Bank of America Merrill Lynch High Yield Constrained Index benchmark by 104 basis points while enduring more volatility than both.

It's understandable that the strategy's restrained approach wouldn't lead peers during credit market rallies, such as 2016 and 2017's rebound. But some execution stumbles kept the fund from outperforming during recent credit market downturns. For instance, the fund was tripped up by a 2014 overweighting in energy, and its weakness spilled into 2015. The team also had several issue-specific misses that dragged on performance in 2017 and into 2018. The fund ended 2018--a negative year for high yield overall--only marginally above its median peer, despite its cautious bent and underweighting to the poor-performing CCC market. In 2019, however, CCC and energy sector underweightings worked well for the fund, which was a strong year for high yield. It's critical to evaluate expenses, as they come directly out of returns. The share class on this report levies a fee that ranks in its Morningstar category's costliest quintile. Such high fees stack the odds heavily against investors. Based on our assessment of the fund's People, Process and Parent pillars in the context of these fees, we think this share class's alpha relative to the category benchmark index will be materially negative, explaining its Morningstar Analyst Rating of Negative. F00000Q0UN Stuck in the middle. Neuberger Berman High Yield Bond sports a deep and experienced team, but its process lacks a clear advantage over its high-yield bond Morningstar Category peers, leading to a downgrade of its Process Pillar rating to Average and a downgrade of its Morningstar Analyst Rating to Neutral from Bronze on its clean I USD share class, and Negative on its most expensive share classes.

Despite some turnover, the team supporting this strategy remains experienced and deep. In 2019, lead manager and head of non-investment-grade credit Tom O'Reilly retired as planned. Then in April 2019, comanager Patrick Flynn passed away suddenly. Despite this turnover, two of the fund's four remaining comanagers, Russ Covode and Dan Doyle, have worked alongside O'Reilly for several years, and veteran high-yield analyst Chris Kocinski was promoted to comanager. The group relies on a team of 22 high-yield research analysts, most with more than a decade of experience.

The team's process prizes downside protection, starting with the research analysts' methodical approach to credit analysis. The managers also avoid the market's smallest issues, which can suffer from bouts of illiquidity; tend to underweight the lowest-quality companies; and keep the fund well-diversified. A yield near the category median also suggests the team isn't taking excessive risks.

Unfortunately, this approach hasn't stood out versus peers in some time: Its returns have hovered around the category average in each year over the past decade. The strategy's more restrained style shouldn't lead the pack in credit rallies, such as 2016 and 2017's rebound, but it also hasn't helped during credit sell-offs, such as mid-2015 to early 2016 and 2018's fourth quarter. The last time the strategy outperformed significantly was in 2008's global financial crisis, when its prior management team had substantially upgraded the portfolio's credit quality. It remains to be seen whether the current team will fare as well in the next downturn. 2099 2099 Tony Thomas, Ph.D. Tony Thomas, Ph.D. Neuberger Berman's steady approach to its evolution earns the firm a Positive Parent rating.

The firm, founded in 1939, emerged from the collapse of Lehman Brothers with new capabilities and a new ownership structure. Lehman's fixed-income and private-equity acquisitions became part of Neuberger Berman in the wake of Lehman's 2008 collapse, when chairman and CEO George Walker led employees in taking the more diversified firm private. Over 460 employees now own the business, which manages $270 billion in assets.

Once known primarily as a U.S. value equities shop, the new Neuberger Berman sees growth opportunities in Europe and Asia. Clients in those regions own 30% of the firm's assets under management. Although solely an investment manager, its retail mutual funds make up only one fifth of business. The rest is institutional and private client money, long bastions of the firm's identity.

The firm has lifted a few teams out of other firms to expand its circle of competence, including a talented emerging-markets-debt team from ING in 2013. While the firm has been selective in its acquisitions, its hands-off approach lets the new teams do what they do best. Meanwhile, the firm's partnership structure allows these new teams to integrate more fully into Neuberger by becoming managing partners over time.

Building one piece at a time. 2018-03-29T11:52:00 2018-03-29T16:52:00Z Underwhelming. The last time this fund outshone its peers significantly was during the financial crisis. However, there are new managers at the helm, and the fund's performance has been uninspiring since.

From January 2010 through December 2019, the fund's 6.45% annualized return beat the category median by 82 basis points but underperformed its ICE Bank of America Merrill Lynch High Yield Constrained Index benchmark by 104 basis points while enduring more volatility than both.

It's understandable that the strategy's restrained approach wouldn't lead peers during credit market rallies, such as 2016 and 2017's rebound. But some execution stumbles kept the fund from outperforming during recent credit market downturns. For instance, the fund was tripped up by a 2014 overweighting in energy, and its weakness spilled into 2015. The team also had several issue-specific misses that dragged on performance in 2017 and into 2018. The fund ended 2018--a negative year for high yield overall--only marginally above its median peer, despite its cautious bent and underweighting to the poor-performing CCC market. In 2019, however, CCC and energy sector underweightings worked well for the fund, which was a strong year for high yield. It's critical to evaluate expenses, as they come directly out of returns. The share class on this report levies a fee that ranks in its Morningstar category's costliest quintile. Such high fees stack the odds heavily against investors. Based on our assessment of the fund's People, Process and Parent pillars in the context of these fees, we don't think this share class will be able to deliver positive alpha relative to the category benchmark index, explaining its Morningstar Analyst Rating of Neutral. F00000P8E0 Stuck in the middle. Neuberger Berman High Yield Bond sports a deep and experienced team, but its process lacks a clear advantage over its high-yield bond Morningstar Category peers, leading to a downgrade of its Process Pillar rating to Average and a downgrade of its Morningstar Analyst Rating to Neutral from Bronze on its clean I USD share class, and Negative on its most expensive share classes.

Despite some turnover, the team supporting this strategy remains experienced and deep. In 2019, lead manager and head of non-investment-grade credit Tom O'Reilly retired as planned. Then in April 2019, comanager Patrick Flynn passed away suddenly. Despite this turnover, two of the fund's four remaining comanagers, Russ Covode and Dan Doyle, have worked alongside O'Reilly for several years, and veteran high-yield analyst Chris Kocinski was promoted to comanager. The group relies on a team of 22 high-yield research analysts, most with more than a decade of experience.

The team's process prizes downside protection, starting with the research analysts' methodical approach to credit analysis. The managers also avoid the market's smallest issues, which can suffer from bouts of illiquidity; tend to underweight the lowest-quality companies; and keep the fund well-diversified. A yield near the category median also suggests the team isn't taking excessive risks.

Unfortunately, this approach hasn't stood out versus peers in some time: Its returns have hovered around the category average in each year over the past decade. The strategy's more restrained style shouldn't lead the pack in credit rallies, such as 2016 and 2017's rebound, but it also hasn't helped during credit sell-offs, such as mid-2015 to early 2016 and 2018's fourth quarter. The last time the strategy outperformed significantly was in 2008's global financial crisis, when its prior management team had substantially upgraded the portfolio's credit quality. It remains to be seen whether the current team will fare as well in the next downturn. 2099 2099 Tony Thomas, Ph.D. Tony Thomas, Ph.D. Neuberger Berman's steady approach to its evolution earns the firm a Positive Parent rating.

The firm, founded in 1939, emerged from the collapse of Lehman Brothers with new capabilities and a new ownership structure. Lehman's fixed-income and private-equity acquisitions became part of Neuberger Berman in the wake of Lehman's 2008 collapse, when chairman and CEO George Walker led employees in taking the more diversified firm private. Over 460 employees now own the business, which manages $270 billion in assets.

Once known primarily as a U.S. value equities shop, the new Neuberger Berman sees growth opportunities in Europe and Asia. Clients in those regions own 30% of the firm's assets under management. Although solely an investment manager, its retail mutual funds make up only one fifth of business. The rest is institutional and private client money, long bastions of the firm's identity.

The firm has lifted a few teams out of other firms to expand its circle of competence, including a talented emerging-markets-debt team from ING in 2013. While the firm has been selective in its acquisitions, its hands-off approach lets the new teams do what they do best. Meanwhile, the firm's partnership structure allows these new teams to integrate more fully into Neuberger by becoming managing partners over time.

Building one piece at a time. 2018-03-29T11:52:00 2018-03-29T16:52:00Z Underwhelming. The last time this fund outshone its peers significantly was during the financial crisis. However, there are new managers at the helm, and the fund's performance has been uninspiring since.

From January 2010 through December 2019, the fund's 6.45% annualized return beat the category median by 82 basis points but underperformed its ICE Bank of America Merrill Lynch High Yield Constrained Index benchmark by 104 basis points while enduring more volatility than both.

It's understandable that the strategy's restrained approach wouldn't lead peers during credit market rallies, such as 2016 and 2017's rebound. But some execution stumbles kept the fund from outperforming during recent credit market downturns. For instance, the fund was tripped up by a 2014 overweighting in energy, and its weakness spilled into 2015. The team also had several issue-specific misses that dragged on performance in 2017 and into 2018. The fund ended 2018--a negative year for high yield overall--only marginally above its median peer, despite its cautious bent and underweighting to the poor-performing CCC market. In 2019, however, CCC and energy sector underweightings worked well for the fund, which was a strong year for high yield. It's critical to evaluate expenses, as they come directly out of returns. The share class on this report levies a fee that ranks in its Morningstar category's costliest quintile. Such high fees stack the odds heavily against investors. Based on our assessment of the fund's People, Process and Parent pillars in the context of these fees, we think this share class's alpha relative to the category benchmark index will be materially negative, explaining its Morningstar Analyst Rating of Negative. F00000ZJ5R Stuck in the middle. Neuberger Berman High Yield Bond sports a deep and experienced team, but its process lacks a clear advantage over its high-yield bond Morningstar Category peers, leading to a downgrade of its Process Pillar rating to Average and a downgrade of its Morningstar Analyst Rating to Neutral from Bronze on its clean I USD share class, and Negative on its most expensive share classes.

Despite some turnover, the team supporting this strategy remains experienced and deep. In 2019, lead manager and head of non-investment-grade credit Tom O'Reilly retired as planned. Then in April 2019, comanager Patrick Flynn passed away suddenly. Despite this turnover, two of the fund's four remaining comanagers, Russ Covode and Dan Doyle, have worked alongside O'Reilly for several years, and veteran high-yield analyst Chris Kocinski was promoted to comanager. The group relies on a team of 22 high-yield research analysts, most with more than a decade of experience.

The team's process prizes downside protection, starting with the research analysts' methodical approach to credit analysis. The managers also avoid the market's smallest issues, which can suffer from bouts of illiquidity; tend to underweight the lowest-quality companies; and keep the fund well-diversified. A yield near the category median also suggests the team isn't taking excessive risks.

Unfortunately, this approach hasn't stood out versus peers in some time: Its returns have hovered around the category average in each year over the past decade. The strategy's more restrained style shouldn't lead the pack in credit rallies, such as 2016 and 2017's rebound, but it also hasn't helped during credit sell-offs, such as mid-2015 to early 2016 and 2018's fourth quarter. The last time the strategy outperformed significantly was in 2008's global financial crisis, when its prior management team had substantially upgraded the portfolio's credit quality. It remains to be seen whether the current team will fare as well in the next downturn. 2099 2099 Tony Thomas, Ph.D. Tony Thomas, Ph.D. Neuberger Berman's steady approach to its evolution earns the firm a Positive Parent rating.

The firm, founded in 1939, emerged from the collapse of Lehman Brothers with new capabilities and a new ownership structure. Lehman's fixed-income and private-equity acquisitions became part of Neuberger Berman in the wake of Lehman's 2008 collapse, when chairman and CEO George Walker led employees in taking the more diversified firm private. Over 460 employees now own the business, which manages $270 billion in assets.

Once known primarily as a U.S. value equities shop, the new Neuberger Berman sees growth opportunities in Europe and Asia. Clients in those regions own 30% of the firm's assets under management. Although solely an investment manager, its retail mutual funds make up only one fifth of business. The rest is institutional and private client money, long bastions of the firm's identity.

The firm has lifted a few teams out of other firms to expand its circle of competence, including a talented emerging-markets-debt team from ING in 2013. While the firm has been selective in its acquisitions, its hands-off approach lets the new teams do what they do best. Meanwhile, the firm's partnership structure allows these new teams to integrate more fully into Neuberger by becoming managing partners over time.

Building one piece at a time. 2018-03-29T11:52:00 2018-03-29T16:52:00Z Underwhelming. The last time this fund outshone its peers significantly was during the financial crisis. However, there are new managers at the helm, and the fund's performance has been uninspiring since.

From January 2010 through December 2019, the fund's 6.45% annualized return beat the category median by 82 basis points but underperformed its ICE Bank of America Merrill Lynch High Yield Constrained Index benchmark by 104 basis points while enduring more volatility than both.

It's understandable that the strategy's restrained approach wouldn't lead peers during credit market rallies, such as 2016 and 2017's rebound. But some execution stumbles kept the fund from outperforming during recent credit market downturns. For instance, the fund was tripped up by a 2014 overweighting in energy, and its weakness spilled into 2015. The team also had several issue-specific misses that dragged on performance in 2017 and into 2018. The fund ended 2018--a negative year for high yield overall--only marginally above its median peer, despite its cautious bent and underweighting to the poor-performing CCC market. In 2019, however, CCC and energy sector underweightings worked well for the fund, which was a strong year for high yield. It's critical to evaluate expenses, as they come directly out of returns. The share class on this report levies a fee that ranks in its Morningstar category's costliest quintile. Such high fees stack the odds heavily against investors. Based on our assessment of the fund's People, Process and Parent pillars in the context of these fees, we think this share class's alpha relative to the category benchmark index will be materially negative, explaining its Morningstar Analyst Rating of Negative. F00000ZSAG Stuck in the middle. Neuberger Berman High Yield Bond sports a deep and experienced team, but its process lacks a clear advantage over its high-yield bond Morningstar Category peers, leading to a downgrade of its Process Pillar rating to Average and a downgrade of its Morningstar Analyst Rating to Neutral from Bronze on its clean I USD share class, and Negative on its most expensive share classes.

Despite some turnover, the team supporting this strategy remains experienced and deep. In 2019, lead manager and head of non-investment-grade credit Tom O'Reilly retired as planned. Then in April 2019, comanager Patrick Flynn passed away suddenly. Despite this turnover, two of the fund's four remaining comanagers, Russ Covode and Dan Doyle, have worked alongside O'Reilly for several years, and veteran high-yield analyst Chris Kocinski was promoted to comanager. The group relies on a team of 22 high-yield research analysts, most with more than a decade of experience.

The team's process prizes downside protection, starting with the research analysts' methodical approach to credit analysis. The managers also avoid the market's smallest issues, which can suffer from bouts of illiquidity; tend to underweight the lowest-quality companies; and keep the fund well-diversified. A yield near the category median also suggests the team isn't taking excessive risks.

Unfortunately, this approach hasn't stood out versus peers in some time: Its returns have hovered around the category average in each year over the past decade. The strategy's more restrained style shouldn't lead the pack in credit rallies, such as 2016 and 2017's rebound, but it also hasn't helped during credit sell-offs, such as mid-2015 to early 2016 and 2018's fourth quarter. The last time the strategy outperformed significantly was in 2008's global financial crisis, when its prior management team had substantially upgraded the portfolio's credit quality. It remains to be seen whether the current team will fare as well in the next downturn. 2099 2099 Tony Thomas, Ph.D. Tony Thomas, Ph.D. Neuberger Berman's steady approach to its evolution earns the firm a Positive Parent rating.

The firm, founded in 1939, emerged from the collapse of Lehman Brothers with new capabilities and a new ownership structure. Lehman's fixed-income and private-equity acquisitions became part of Neuberger Berman in the wake of Lehman's 2008 collapse, when chairman and CEO George Walker led employees in taking the more diversified firm private. Over 460 employees now own the business, which manages $270 billion in assets.

Once known primarily as a U.S. value equities shop, the new Neuberger Berman sees growth opportunities in Europe and Asia. Clients in those regions own 30% of the firm's assets under management. Although solely an investment manager, its retail mutual funds make up only one fifth of business. The rest is institutional and private client money, long bastions of the firm's identity.

The firm has lifted a few teams out of other firms to expand its circle of competence, including a talented emerging-markets-debt team from ING in 2013. While the firm has been selective in its acquisitions, its hands-off approach lets the new teams do what they do best. Meanwhile, the firm's partnership structure allows these new teams to integrate more fully into Neuberger by becoming managing partners over time.

Building one piece at a time. 2018-03-29T11:52:00 2018-03-29T16:52:00Z Underwhelming. The last time this fund outshone its peers significantly was during the financial crisis. However, there are new managers at the helm, and the fund's performance has been uninspiring since.

From January 2010 through December 2019, the fund's 6.45% annualized return beat the category median by 82 basis points but underperformed its ICE Bank of America Merrill Lynch High Yield Constrained Index benchmark by 104 basis points while enduring more volatility than both.

It's understandable that the strategy's restrained approach wouldn't lead peers during credit market rallies, such as 2016 and 2017's rebound. But some execution stumbles kept the fund from outperforming during recent credit market downturns. For instance, the fund was tripped up by a 2014 overweighting in energy, and its weakness spilled into 2015. The team also had several issue-specific misses that dragged on performance in 2017 and into 2018. The fund ended 2018--a negative year for high yield overall--only marginally above its median peer, despite its cautious bent and underweighting to the poor-performing CCC market. In 2019, however, CCC and energy sector underweightings worked well for the fund, which was a strong year for high yield. It's critical to evaluate expenses, as they come directly out of returns. The share class on this report levies a fee that ranks in its Morningstar category's costliest quintile. Such high fees stack the odds heavily against investors. Based on our assessment of the fund's People, Process and Parent pillars in the context of these fees, we don't think this share class will be able to deliver positive alpha relative to the category benchmark index, explaining its Morningstar Analyst Rating of Neutral. F0000112BR Stuck in the middle. Neuberger Berman High Yield Bond sports a deep and experienced team, but its process lacks a clear advantage over its high-yield bond Morningstar Category peers, leading to a downgrade of its Process Pillar rating to Average and a downgrade of its Morningstar Analyst Rating to Neutral from Bronze on its clean I USD share class, and Negative on its most expensive share classes.

Despite some turnover, the team supporting this strategy remains experienced and deep. In 2019, lead manager and head of non-investment-grade credit Tom O'Reilly retired as planned. Then in April 2019, comanager Patrick Flynn passed away suddenly. Despite this turnover, two of the fund's four remaining comanagers, Russ Covode and Dan Doyle, have worked alongside O'Reilly for several years, and veteran high-yield analyst Chris Kocinski was promoted to comanager. The group relies on a team of 22 high-yield research analysts, most with more than a decade of experience.

The team's process prizes downside protection, starting with the research analysts' methodical approach to credit analysis. The managers also avoid the market's smallest issues, which can suffer from bouts of illiquidity; tend to underweight the lowest-quality companies; and keep the fund well-diversified. A yield near the category median also suggests the team isn't taking excessive risks.

Unfortunately, this approach hasn't stood out versus peers in some time: Its returns have hovered around the category average in each year over the past decade. The strategy's more restrained style shouldn't lead the pack in credit rallies, such as 2016 and 2017's rebound, but it also hasn't helped during credit sell-offs, such as mid-2015 to early 2016 and 2018's fourth quarter. The last time the strategy outperformed significantly was in 2008's global financial crisis, when its prior management team had substantially upgraded the portfolio's credit quality. It remains to be seen whether the current team will fare as well in the next downturn. 2099 2099 Tony Thomas, Ph.D. Tony Thomas, Ph.D. Neuberger Berman's steady approach to its evolution earns the firm a Positive Parent rating.

The firm, founded in 1939, emerged from the collapse of Lehman Brothers with new capabilities and a new ownership structure. Lehman's fixed-income and private-equity acquisitions became part of Neuberger Berman in the wake of Lehman's 2008 collapse, when chairman and CEO George Walker led employees in taking the more diversified firm private. Over 460 employees now own the business, which manages $270 billion in assets.

Once known primarily as a U.S. value equities shop, the new Neuberger Berman sees growth opportunities in Europe and Asia. Clients in those regions own 30% of the firm's assets under management. Although solely an investment manager, its retail mutual funds make up only one fifth of business. The rest is institutional and private client money, long bastions of the firm's identity.

The firm has lifted a few teams out of other firms to expand its circle of competence, including a talented emerging-markets-debt team from ING in 2013. While the firm has been selective in its acquisitions, its hands-off approach lets the new teams do what they do best. Meanwhile, the firm's partnership structure allows these new teams to integrate more fully into Neuberger by becoming managing partners over time.

Building one piece at a time. 2018-03-29T11:52:00 2018-03-29T16:52:00Z Underwhelming. The last time this fund outshone its peers significantly was during the financial crisis. However, there are new managers at the helm, and the fund's performance has been uninspiring since.

From January 2010 through December 2019, the fund's 6.45% annualized return beat the category median by 82 basis points but underperformed its ICE Bank of America Merrill Lynch High Yield Constrained Index benchmark by 104 basis points while enduring more volatility than both.

It's understandable that the strategy's restrained approach wouldn't lead peers during credit market rallies, such as 2016 and 2017's rebound. But some execution stumbles kept the fund from outperforming during recent credit market downturns. For instance, the fund was tripped up by a 2014 overweighting in energy, and its weakness spilled into 2015. The team also had several issue-specific misses that dragged on performance in 2017 and into 2018. The fund ended 2018--a negative year for high yield overall--only marginally above its median peer, despite its cautious bent and underweighting to the poor-performing CCC market. In 2019, however, CCC and energy sector underweightings worked well for the fund, which was a strong year for high yield. It's critical to evaluate expenses, as they come directly out of returns. The share class on this report levies a fee that ranks in its Morningstar category's second-costliest quintile. That's poor, and based on our assessment of the fund's People, Process and Parent pillars in the context of these fees, we don't think this share class will be able to deliver positive alpha relative to the category benchmark index, explaining its Morningstar Analyst Rating of Neutral. F0GBR06TK4 Stuck in the middle. Neuberger Berman High Yield Bond sports a deep and experienced team, but its process lacks a clear advantage over its high-yield bond Morningstar Category peers, leading to a downgrade of its Process Pillar rating to Average and a downgrade of its Morningstar Analyst Rating to Neutral from Bronze on its clean I USD share class, and Negative on its most expensive share classes.

Despite some turnover, the team supporting this strategy remains experienced and deep. In 2019, lead manager and head of non-investment-grade credit Tom O'Reilly retired as planned. Then in April 2019, comanager Patrick Flynn passed away suddenly. Despite this turnover, two of the fund's four remaining comanagers, Russ Covode and Dan Doyle, have worked alongside O'Reilly for several years, and veteran high-yield analyst Chris Kocinski was promoted to comanager. The group relies on a team of 22 high-yield research analysts, most with more than a decade of experience.

The team's process prizes downside protection, starting with the research analysts' methodical approach to credit analysis. The managers also avoid the market's smallest issues, which can suffer from bouts of illiquidity; tend to underweight the lowest-quality companies; and keep the fund well-diversified. A yield near the category median also suggests the team isn't taking excessive risks.

Unfortunately, this approach hasn't stood out versus peers in some time: Its returns have hovered around the category average in each year over the past decade. The strategy's more restrained style shouldn't lead the pack in credit rallies, such as 2016 and 2017's rebound, but it also hasn't helped during credit sell-offs, such as mid-2015 to early 2016 and 2018's fourth quarter. The last time the strategy outperformed significantly was in 2008's global financial crisis, when its prior management team had substantially upgraded the portfolio's credit quality. It remains to be seen whether the current team will fare as well in the next downturn. 2099 2099 Tony Thomas, Ph.D. Tony Thomas, Ph.D. Neuberger Berman's steady approach to its evolution earns the firm a Positive Parent rating.

The firm, founded in 1939, emerged from the collapse of Lehman Brothers with new capabilities and a new ownership structure. Lehman's fixed-income and private-equity acquisitions became part of Neuberger Berman in the wake of Lehman's 2008 collapse, when chairman and CEO George Walker led employees in taking the more diversified firm private. Over 460 employees now own the business, which manages $270 billion in assets.

Once known primarily as a U.S. value equities shop, the new Neuberger Berman sees growth opportunities in Europe and Asia. Clients in those regions own 30% of the firm's assets under management. Although solely an investment manager, its retail mutual funds make up only one fifth of business. The rest is institutional and private client money, long bastions of the firm's identity.

The firm has lifted a few teams out of other firms to expand its circle of competence, including a talented emerging-markets-debt team from ING in 2013. While the firm has been selective in its acquisitions, its hands-off approach lets the new teams do what they do best. Meanwhile, the firm's partnership structure allows these new teams to integrate more fully into Neuberger by becoming managing partners over time.

Building one piece at a time. 2018-03-29T11:52:00 2018-03-29T16:52:00Z Underwhelming. The last time this fund outshone its peers significantly was during the financial crisis. However, there are new managers at the helm, and the fund's performance has been uninspiring since.

From January 2010 through December 2019, the fund's 6.45% annualized return beat the category median by 82 basis points but underperformed its ICE Bank of America Merrill Lynch High Yield Constrained Index benchmark by 104 basis points while enduring more volatility than both.

It's understandable that the strategy's restrained approach wouldn't lead peers during credit market rallies, such as 2016 and 2017's rebound. But some execution stumbles kept the fund from outperforming during recent credit market downturns. For instance, the fund was tripped up by a 2014 overweighting in energy, and its weakness spilled into 2015. The team also had several issue-specific misses that dragged on performance in 2017 and into 2018. The fund ended 2018--a negative year for high yield overall--only marginally above its median peer, despite its cautious bent and underweighting to the poor-performing CCC market. In 2019, however, CCC and energy sector underweightings worked well for the fund, which was a strong year for high yield. It's critical to evaluate expenses, as they come directly out of returns. The share class on this report levies a fee that ranks in its Morningstar category's second-costliest quintile. That's poor, and based on our assessment of the fund's People, Process and Parent pillars in the context of these fees, we don't think this share class will be able to deliver positive alpha relative to the category benchmark index, explaining its Morningstar Analyst Rating of Neutral. F00000NZEY Stuck in the middle. Neuberger Berman High Yield Bond sports a deep and experienced team, but its process lacks a clear advantage over its high-yield bond Morningstar Category peers, leading to a downgrade of its Process Pillar rating to Average and a downgrade of its Morningstar Analyst Rating to Neutral from Bronze on its clean I USD share class, and Negative on its most expensive share classes.

Despite some turnover, the team supporting this strategy remains experienced and deep. In 2019, lead manager and head of non-investment-grade credit Tom O'Reilly retired as planned. Then in April 2019, comanager Patrick Flynn passed away suddenly. Despite this turnover, two of the fund's four remaining comanagers, Russ Covode and Dan Doyle, have worked alongside O'Reilly for several years, and veteran high-yield analyst Chris Kocinski was promoted to comanager. The group relies on a team of 22 high-yield research analysts, most with more than a decade of experience.

The team's process prizes downside protection, starting with the research analysts' methodical approach to credit analysis. The managers also avoid the market's smallest issues, which can suffer from bouts of illiquidity; tend to underweight the lowest-quality companies; and keep the fund well-diversified. A yield near the category median also suggests the team isn't taking excessive risks.

Unfortunately, this approach hasn't stood out versus peers in some time: Its returns have hovered around the category average in each year over the past decade. The strategy's more restrained style shouldn't lead the pack in credit rallies, such as 2016 and 2017's rebound, but it also hasn't helped during credit sell-offs, such as mid-2015 to early 2016 and 2018's fourth quarter. The last time the strategy outperformed significantly was in 2008's global financial crisis, when its prior management team had substantially upgraded the portfolio's credit quality. It remains to be seen whether the current team will fare as well in the next downturn. 2099 2099 Tony Thomas, Ph.D. Tony Thomas, Ph.D. Neuberger Berman's steady approach to its evolution earns the firm a Positive Parent rating.

The firm, founded in 1939, emerged from the collapse of Lehman Brothers with new capabilities and a new ownership structure. Lehman's fixed-income and private-equity acquisitions became part of Neuberger Berman in the wake of Lehman's 2008 collapse, when chairman and CEO George Walker led employees in taking the more diversified firm private. Over 460 employees now own the business, which manages $270 billion in assets.

Once known primarily as a U.S. value equities shop, the new Neuberger Berman sees growth opportunities in Europe and Asia. Clients in those regions own 30% of the firm's assets under management. Although solely an investment manager, its retail mutual funds make up only one fifth of business. The rest is institutional and private client money, long bastions of the firm's identity.

The firm has lifted a few teams out of other firms to expand its circle of competence, including a talented emerging-markets-debt team from ING in 2013. While the firm has been selective in its acquisitions, its hands-off approach lets the new teams do what they do best. Meanwhile, the firm's partnership structure allows these new teams to integrate more fully into Neuberger by becoming managing partners over time.

Building one piece at a time. 2018-03-29T11:52:00 2018-03-29T16:52:00Z Underwhelming. The last time this fund outshone its peers significantly was during the financial crisis. However, there are new managers at the helm, and the fund's performance has been uninspiring since.

From January 2010 through December 2019, the fund's 6.45% annualized return beat the category median by 82 basis points but underperformed its ICE Bank of America Merrill Lynch High Yield Constrained Index benchmark by 104 basis points while enduring more volatility than both.

It's understandable that the strategy's restrained approach wouldn't lead peers during credit market rallies, such as 2016 and 2017's rebound. But some execution stumbles kept the fund from outperforming during recent credit market downturns. For instance, the fund was tripped up by a 2014 overweighting in energy, and its weakness spilled into 2015. The team also had several issue-specific misses that dragged on performance in 2017 and into 2018. The fund ended 2018--a negative year for high yield overall--only marginally above its median peer, despite its cautious bent and underweighting to the poor-performing CCC market. In 2019, however, CCC and energy sector underweightings worked well for the fund, which was a strong year for high yield. It's critical to evaluate expenses, as they come directly out of returns. The share class on this report levies a fee that ranks in its Morningstar category's middle quintile. That's not great, and based on our assessment of the fund's People, Process and Parent pillars in the context of these fees, we don't think this share class will be able to deliver positive alpha relative to the category benchmark index, explaining its Morningstar Analyst Rating of Neutral. F00000PWEW Stuck in the middle. Neuberger Berman High Yield Bond sports a deep and experienced team, but its process lacks a clear advantage over its high-yield bond Morningstar Category peers, leading to a downgrade of its Process Pillar rating to Average and a downgrade of its Morningstar Analyst Rating to Neutral from Bronze on its clean I USD share class, and Negative on its most expensive share classes.

Despite some turnover, the team supporting this strategy remains experienced and deep. In 2019, lead manager and head of non-investment-grade credit Tom O'Reilly retired as planned. Then in April 2019, comanager Patrick Flynn passed away suddenly. Despite this turnover, two of the fund's four remaining comanagers, Russ Covode and Dan Doyle, have worked alongside O'Reilly for several years, and veteran high-yield analyst Chris Kocinski was promoted to comanager. The group relies on a team of 22 high-yield research analysts, most with more than a decade of experience.

The team's process prizes downside protection, starting with the research analysts' methodical approach to credit analysis. The managers also avoid the market's smallest issues, which can suffer from bouts of illiquidity; tend to underweight the lowest-quality companies; and keep the fund well-diversified. A yield near the category median also suggests the team isn't taking excessive risks.

Unfortunately, this approach hasn't stood out versus peers in some time: Its returns have hovered around the category average in each year over the past decade. The strategy's more restrained style shouldn't lead the pack in credit rallies, such as 2016 and 2017's rebound, but it also hasn't helped during credit sell-offs, such as mid-2015 to early 2016 and 2018's fourth quarter. The last time the strategy outperformed significantly was in 2008's global financial crisis, when its prior management team had substantially upgraded the portfolio's credit quality. It remains to be seen whether the current team will fare as well in the next downturn. 2099 2099 Tony Thomas, Ph.D. Tony Thomas, Ph.D. Neuberger Berman's steady approach to its evolution earns the firm a Positive Parent rating.

The firm, founded in 1939, emerged from the collapse of Lehman Brothers with new capabilities and a new ownership structure. Lehman's fixed-income and private-equity acquisitions became part of Neuberger Berman in the wake of Lehman's 2008 collapse, when chairman and CEO George Walker led employees in taking the more diversified firm private. Over 460 employees now own the business, which manages $270 billion in assets.

Once known primarily as a U.S. value equities shop, the new Neuberger Berman sees growth opportunities in Europe and Asia. Clients in those regions own 30% of the firm's assets under management. Although solely an investment manager, its retail mutual funds make up only one fifth of business. The rest is institutional and private client money, long bastions of the firm's identity.

The firm has lifted a few teams out of other firms to expand its circle of competence, including a talented emerging-markets-debt team from ING in 2013. While the firm has been selective in its acquisitions, its hands-off approach lets the new teams do what they do best. Meanwhile, the firm's partnership structure allows these new teams to integrate more fully into Neuberger by becoming managing partners over time.

Building one piece at a time. 2018-03-29T11:52:00 2018-03-29T16:52:00Z Underwhelming. The last time this fund outshone its peers significantly was during the financial crisis. However, there are new managers at the helm, and the fund's performance has been uninspiring since.

From January 2010 through December 2019, the fund's 6.45% annualized return beat the category median by 82 basis points but underperformed its ICE Bank of America Merrill Lynch High Yield Constrained Index benchmark by 104 basis points while enduring more volatility than both.

It's understandable that the strategy's restrained approach wouldn't lead peers during credit market rallies, such as 2016 and 2017's rebound. But some execution stumbles kept the fund from outperforming during recent credit market downturns. For instance, the fund was tripped up by a 2014 overweighting in energy, and its weakness spilled into 2015. The team also had several issue-specific misses that dragged on performance in 2017 and into 2018. The fund ended 2018--a negative year for high yield overall--only marginally above its median peer, despite its cautious bent and underweighting to the poor-performing CCC market. In 2019, however, CCC and energy sector underweightings worked well for the fund, which was a strong year for high yield. It's critical to evaluate expenses, as they come directly out of returns. The share class on this report levies a fee that ranks in its Morningstar category's costliest quintile. Such high fees stack the odds heavily against investors. Based on our assessment of the fund's People, Process and Parent pillars in the context of these fees, we think this share class's alpha relative to the category benchmark index will be materially negative, explaining its Morningstar Analyst Rating of Negative. F00000TW30 Stuck in the middle. Neuberger Berman High Yield Bond sports a deep and experienced team, but its process lacks a clear advantage over its high-yield bond Morningstar Category peers, leading to a downgrade of its Process Pillar rating to Average and a downgrade of its Morningstar Analyst Rating to Neutral from Bronze on its clean I USD share class, and Negative on its most expensive share classes.

Despite some turnover, the team supporting this strategy remains experienced and deep. In 2019, lead manager and head of non-investment-grade credit Tom O'Reilly retired as planned. Then in April 2019, comanager Patrick Flynn passed away suddenly. Despite this turnover, two of the fund's four remaining comanagers, Russ Covode and Dan Doyle, have worked alongside O'Reilly for several years, and veteran high-yield analyst Chris Kocinski was promoted to comanager. The group relies on a team of 22 high-yield research analysts, most with more than a decade of experience.

The team's process prizes downside protection, starting with the research analysts' methodical approach to credit analysis. The managers also avoid the market's smallest issues, which can suffer from bouts of illiquidity; tend to underweight the lowest-quality companies; and keep the fund well-diversified. A yield near the category median also suggests the team isn't taking excessive risks.

Unfortunately, this approach hasn't stood out versus peers in some time: Its returns have hovered around the category average in each year over the past decade. The strategy's more restrained style shouldn't lead the pack in credit rallies, such as 2016 and 2017's rebound, but it also hasn't helped during credit sell-offs, such as mid-2015 to early 2016 and 2018's fourth quarter. The last time the strategy outperformed significantly was in 2008's global financial crisis, when its prior management team had substantially upgraded the portfolio's credit quality. It remains to be seen whether the current team will fare as well in the next downturn. 2099 2099 Tony Thomas, Ph.D. Tony Thomas, Ph.D. Neuberger Berman's steady approach to its evolution earns the firm a Positive Parent rating.

The firm, founded in 1939, emerged from the collapse of Lehman Brothers with new capabilities and a new ownership structure. Lehman's fixed-income and private-equity acquisitions became part of Neuberger Berman in the wake of Lehman's 2008 collapse, when chairman and CEO George Walker led employees in taking the more diversified firm private. Over 460 employees now own the business, which manages $270 billion in assets.

Once known primarily as a U.S. value equities shop, the new Neuberger Berman sees growth opportunities in Europe and Asia. Clients in those regions own 30% of the firm's assets under management. Although solely an investment manager, its retail mutual funds make up only one fifth of business. The rest is institutional and private client money, long bastions of the firm's identity.

The firm has lifted a few teams out of other firms to expand its circle of competence, including a talented emerging-markets-debt team from ING in 2013. While the firm has been selective in its acquisitions, its hands-off approach lets the new teams do what they do best. Meanwhile, the firm's partnership structure allows these new teams to integrate more fully into Neuberger by becoming managing partners over time.

Building one piece at a time. 2018-03-29T11:52:00 2018-03-29T16:52:00Z Underwhelming. The last time this fund outshone its peers significantly was during the financial crisis. However, there are new managers at the helm, and the fund's performance has been uninspiring since.

From January 2010 through December 2019, the fund's 6.45% annualized return beat the category median by 82 basis points but underperformed its ICE Bank of America Merrill Lynch High Yield Constrained Index benchmark by 104 basis points while enduring more volatility than both.

It's understandable that the strategy's restrained approach wouldn't lead peers during credit market rallies, such as 2016 and 2017's rebound. But some execution stumbles kept the fund from outperforming during recent credit market downturns. For instance, the fund was tripped up by a 2014 overweighting in energy, and its weakness spilled into 2015. The team also had several issue-specific misses that dragged on performance in 2017 and into 2018. The fund ended 2018--a negative year for high yield overall--only marginally above its median peer, despite its cautious bent and underweighting to the poor-performing CCC market. In 2019, however, CCC and energy sector underweightings worked well for the fund, which was a strong year for high yield. It's critical to evaluate expenses, as they come directly out of returns. The share class on this report levies a fee that ranks in its Morningstar category's second-costliest quintile. That's poor, and based on our assessment of the fund's People, Process and Parent pillars in the context of these fees, we don't think this share class will be able to deliver positive alpha relative to the category benchmark index, explaining its Morningstar Analyst Rating of Neutral. F00000OV7X Stuck in the middle. Neuberger Berman High Yield Bond sports a deep and experienced team, but its process lacks a clear advantage over its high-yield bond Morningstar Category peers, leading to a downgrade of its Process Pillar rating to Average and a downgrade of its Morningstar Analyst Rating to Neutral from Bronze on its clean I USD share class, and Negative on its most expensive share classes.

Despite some turnover, the team supporting this strategy remains experienced and deep. In 2019, lead manager and head of non-investment-grade credit Tom O'Reilly retired as planned. Then in April 2019, comanager Patrick Flynn passed away suddenly. Despite this turnover, two of the fund's four remaining comanagers, Russ Covode and Dan Doyle, have worked alongside O'Reilly for several years, and veteran high-yield analyst Chris Kocinski was promoted to comanager. The group relies on a team of 22 high-yield research analysts, most with more than a decade of experience.

The team's process prizes downside protection, starting with the research analysts' methodical approach to credit analysis. The managers also avoid the market's smallest issues, which can suffer from bouts of illiquidity; tend to underweight the lowest-quality companies; and keep the fund well-diversified. A yield near the category median also suggests the team isn't taking excessive risks.

Unfortunately, this approach hasn't stood out versus peers in some time: Its returns have hovered around the category average in each year over the past decade. The strategy's more restrained style shouldn't lead the pack in credit rallies, such as 2016 and 2017's rebound, but it also hasn't helped during credit sell-offs, such as mid-2015 to early 2016 and 2018's fourth quarter. The last time the strategy outperformed significantly was in 2008's global financial crisis, when its prior management team had substantially upgraded the portfolio's credit quality. It remains to be seen whether the current team will fare as well in the next downturn. 2099 2099 Tony Thomas, Ph.D. Tony Thomas, Ph.D. Neuberger Berman's steady approach to its evolution earns the firm a Positive Parent rating.

The firm, founded in 1939, emerged from the collapse of Lehman Brothers with new capabilities and a new ownership structure. Lehman's fixed-income and private-equity acquisitions became part of Neuberger Berman in the wake of Lehman's 2008 collapse, when chairman and CEO George Walker led employees in taking the more diversified firm private. Over 460 employees now own the business, which manages $270 billion in assets.

Once known primarily as a U.S. value equities shop, the new Neuberger Berman sees growth opportunities in Europe and Asia. Clients in those regions own 30% of the firm's assets under management. Although solely an investment manager, its retail mutual funds make up only one fifth of business. The rest is institutional and private client money, long bastions of the firm's identity.

The firm has lifted a few teams out of other firms to expand its circle of competence, including a talented emerging-markets-debt team from ING in 2013. While the firm has been selective in its acquisitions, its hands-off approach lets the new teams do what they do best. Meanwhile, the firm's partnership structure allows these new teams to integrate more fully into Neuberger by becoming managing partners over time.

Building one piece at a time. 2018-03-29T11:52:00 2018-03-29T16:52:00Z Underwhelming. The last time this fund outshone its peers significantly was during the financial crisis. However, there are new managers at the helm, and the fund's performance has been uninspiring since.

From January 2010 through December 2019, the fund's 6.45% annualized return beat the category median by 82 basis points but underperformed its ICE Bank of America Merrill Lynch High Yield Constrained Index benchmark by 104 basis points while enduring more volatility than both.

It's understandable that the strategy's restrained approach wouldn't lead peers during credit market rallies, such as 2016 and 2017's rebound. But some execution stumbles kept the fund from outperforming during recent credit market downturns. For instance, the fund was tripped up by a 2014 overweighting in energy, and its weakness spilled into 2015. The team also had several issue-specific misses that dragged on performance in 2017 and into 2018. The fund ended 2018--a negative year for high yield overall--only marginally above its median peer, despite its cautious bent and underweighting to the poor-performing CCC market. In 2019, however, CCC and energy sector underweightings worked well for the fund, which was a strong year for high yield. It's critical to evaluate expenses, as they come directly out of returns. The share class on this report levies a fee that ranks in its Morningstar category's second-cheapest quintile. Even so, based on our assessment of the fund's People, Process and Parent pillars in the context of these fees, we don't think this share class will be able to deliver positive alpha relative to the category benchmark index, explaining its Morningstar Analyst Rating of Neutral. F00000OZ5S Stuck in the middle. Neuberger Berman High Yield Bond sports a deep and experienced team, but its process lacks a clear advantage over its high-yield bond Morningstar Category peers, leading to a downgrade of its Process Pillar rating to Average and a downgrade of its Morningstar Analyst Rating to Neutral from Bronze on its clean I USD share class, and Negative on its most expensive share classes.

Despite some turnover, the team supporting this strategy remains experienced and deep. In 2019, lead manager and head of non-investment-grade credit Tom O'Reilly retired as planned. Then in April 2019, comanager Patrick Flynn passed away suddenly. Despite this turnover, two of the fund's four remaining comanagers, Russ Covode and Dan Doyle, have worked alongside O'Reilly for several years, and veteran high-yield analyst Chris Kocinski was promoted to comanager. The group relies on a team of 22 high-yield research analysts, most with more than a decade of experience.

The team's process prizes downside protection, starting with the research analysts' methodical approach to credit analysis. The managers also avoid the market's smallest issues, which can suffer from bouts of illiquidity; tend to underweight the lowest-quality companies; and keep the fund well-diversified. A yield near the category median also suggests the team isn't taking excessive risks.

Unfortunately, this approach hasn't stood out versus peers in some time: Its returns have hovered around the category average in each year over the past decade. The strategy's more restrained style shouldn't lead the pack in credit rallies, such as 2016 and 2017's rebound, but it also hasn't helped during credit sell-offs, such as mid-2015 to early 2016 and 2018's fourth quarter. The last time the strategy outperformed significantly was in 2008's global financial crisis, when its prior management team had substantially upgraded the portfolio's credit quality. It remains to be seen whether the current team will fare as well in the next downturn. 2099 2099 Tony Thomas, Ph.D. Tony Thomas, Ph.D. Neuberger Berman's steady approach to its evolution earns the firm a Positive Parent rating.

The firm, founded in 1939, emerged from the collapse of Lehman Brothers with new capabilities and a new ownership structure. Lehman's fixed-income and private-equity acquisitions became part of Neuberger Berman in the wake of Lehman's 2008 collapse, when chairman and CEO George Walker led employees in taking the more diversified firm private. Over 460 employees now own the business, which manages $270 billion in assets.

Once known primarily as a U.S. value equities shop, the new Neuberger Berman sees growth opportunities in Europe and Asia. Clients in those regions own 30% of the firm's assets under management. Although solely an investment manager, its retail mutual funds make up only one fifth of business. The rest is institutional and private client money, long bastions of the firm's identity.

The firm has lifted a few teams out of other firms to expand its circle of competence, including a talented emerging-markets-debt team from ING in 2013. While the firm has been selective in its acquisitions, its hands-off approach lets the new teams do what they do best. Meanwhile, the firm's partnership structure allows these new teams to integrate more fully into Neuberger by becoming managing partners over time.

Building one piece at a time. 2018-03-29T11:52:00 2018-03-29T16:52:00Z Underwhelming. The last time this fund outshone its peers significantly was during the financial crisis. However, there are new managers at the helm, and the fund's performance has been uninspiring since.

From January 2010 through December 2019, the fund's 6.45% annualized return beat the category median by 82 basis points but underperformed its ICE Bank of America Merrill Lynch High Yield Constrained Index benchmark by 104 basis points while enduring more volatility than both.

It's understandable that the strategy's restrained approach wouldn't lead peers during credit market rallies, such as 2016 and 2017's rebound. But some execution stumbles kept the fund from outperforming during recent credit market downturns. For instance, the fund was tripped up by a 2014 overweighting in energy, and its weakness spilled into 2015. The team also had several issue-specific misses that dragged on performance in 2017 and into 2018. The fund ended 2018--a negative year for high yield overall--only marginally above its median peer, despite its cautious bent and underweighting to the poor-performing CCC market. In 2019, however, CCC and energy sector underweightings worked well for the fund, which was a strong year for high yield. It's critical to evaluate expenses, as they come directly out of returns. The share class on this report levies a fee that ranks in its Morningstar category's middle quintile. That's not great, and based on our assessment of the fund's People, Process and Parent pillars in the context of these fees, we don't think this share class will be able to deliver positive alpha relative to the category benchmark index, explaining its Morningstar Analyst Rating of Neutral. F00000OXRQ Stuck in the middle. Neuberger Berman High Yield Bond sports a deep and experienced team, but its process lacks a clear advantage over its high-yield bond Morningstar Category peers, leading to a downgrade of its Process Pillar rating to Average and a downgrade of its Morningstar Analyst Rating to Neutral from Bronze on its clean I USD share class, and Negative on its most expensive share classes.

Despite some turnover, the team supporting this strategy remains experienced and deep. In 2019, lead manager and head of non-investment-grade credit Tom O'Reilly retired as planned. Then in April 2019, comanager Patrick Flynn passed away suddenly. Despite this turnover, two of the fund's four remaining comanagers, Russ Covode and Dan Doyle, have worked alongside O'Reilly for several years, and veteran high-yield analyst Chris Kocinski was promoted to comanager. The group relies on a team of 22 high-yield research analysts, most with more than a decade of experience.

The team's process prizes downside protection, starting with the research analysts' methodical approach to credit analysis. The managers also avoid the market's smallest issues, which can suffer from bouts of illiquidity; tend to underweight the lowest-quality companies; and keep the fund well-diversified. A yield near the category median also suggests the team isn't taking excessive risks.

Unfortunately, this approach hasn't stood out versus peers in some time: Its returns have hovered around the category average in each year over the past decade. The strategy's more restrained style shouldn't lead the pack in credit rallies, such as 2016 and 2017's rebound, but it also hasn't helped during credit sell-offs, such as mid-2015 to early 2016 and 2018's fourth quarter. The last time the strategy outperformed significantly was in 2008's global financial crisis, when its prior management team had substantially upgraded the portfolio's credit quality. It remains to be seen whether the current team will fare as well in the next downturn. 2099 2099 Tony Thomas, Ph.D. Tony Thomas, Ph.D. Neuberger Berman's steady approach to its evolution earns the firm a Positive Parent rating.

The firm, founded in 1939, emerged from the collapse of Lehman Brothers with new capabilities and a new ownership structure. Lehman's fixed-income and private-equity acquisitions became part of Neuberger Berman in the wake of Lehman's 2008 collapse, when chairman and CEO George Walker led employees in taking the more diversified firm private. Over 460 employees now own the business, which manages $270 billion in assets.

Once known primarily as a U.S. value equities shop, the new Neuberger Berman sees growth opportunities in Europe and Asia. Clients in those regions own 30% of the firm's assets under management. Although solely an investment manager, its retail mutual funds make up only one fifth of business. The rest is institutional and private client money, long bastions of the firm's identity.

The firm has lifted a few teams out of other firms to expand its circle of competence, including a talented emerging-markets-debt team from ING in 2013. While the firm has been selective in its acquisitions, its hands-off approach lets the new teams do what they do best. Meanwhile, the firm's partnership structure allows these new teams to integrate more fully into Neuberger by becoming managing partners over time.

Building one piece at a time. 2018-03-29T11:52:00 2018-03-29T16:52:00Z Underwhelming. The last time this fund outshone its peers significantly was during the financial crisis. However, there are new managers at the helm, and the fund's performance has been uninspiring since.

From January 2010 through December 2019, the fund's 6.45% annualized return beat the category median by 82 basis points but underperformed its ICE Bank of America Merrill Lynch High Yield Constrained Index benchmark by 104 basis points while enduring more volatility than both.

It's understandable that the strategy's restrained approach wouldn't lead peers during credit market rallies, such as 2016 and 2017's rebound. But some execution stumbles kept the fund from outperforming during recent credit market downturns. For instance, the fund was tripped up by a 2014 overweighting in energy, and its weakness spilled into 2015. The team also had several issue-specific misses that dragged on performance in 2017 and into 2018. The fund ended 2018--a negative year for high yield overall--only marginally above its median peer, despite its cautious bent and underweighting to the poor-performing CCC market. In 2019, however, CCC and energy sector underweightings worked well for the fund, which was a strong year for high yield. It's critical to evaluate expenses, as they come directly out of returns. The share class on this report levies a fee that ranks in its Morningstar category's costliest quintile. Such high fees stack the odds heavily against investors. Based on our assessment of the fund's People, Process and Parent pillars in the context of these fees, we don't think this share class will be able to deliver positive alpha relative to the category benchmark index, explaining its Morningstar Analyst Rating of Neutral. F00000Q0UP Stuck in the middle. Neuberger Berman High Yield Bond sports a deep and experienced team, but its process lacks a clear advantage over its high-yield bond Morningstar Category peers, leading to a downgrade of its Process Pillar rating to Average and a downgrade of its Morningstar Analyst Rating to Neutral from Bronze on its clean I USD share class, and Negative on its most expensive share classes.

Despite some turnover, the team supporting this strategy remains experienced and deep. In 2019, lead manager and head of non-investment-grade credit Tom O'Reilly retired as planned. Then in April 2019, comanager Patrick Flynn passed away suddenly. Despite this turnover, two of the fund's four remaining comanagers, Russ Covode and Dan Doyle, have worked alongside O'Reilly for several years, and veteran high-yield analyst Chris Kocinski was promoted to comanager. The group relies on a team of 22 high-yield research analysts, most with more than a decade of experience.

The team's process prizes downside protection, starting with the research analysts' methodical approach to credit analysis. The managers also avoid the market's smallest issues, which can suffer from bouts of illiquidity; tend to underweight the lowest-quality companies; and keep the fund well-diversified. A yield near the category median also suggests the team isn't taking excessive risks.

Unfortunately, this approach hasn't stood out versus peers in some time: Its returns have hovered around the category average in each year over the past decade. The strategy's more restrained style shouldn't lead the pack in credit rallies, such as 2016 and 2017's rebound, but it also hasn't helped during credit sell-offs, such as mid-2015 to early 2016 and 2018's fourth quarter. The last time the strategy outperformed significantly was in 2008's global financial crisis, when its prior management team had substantially upgraded the portfolio's credit quality. It remains to be seen whether the current team will fare as well in the next downturn. 2099 2099 Tony Thomas, Ph.D. Tony Thomas, Ph.D. Neuberger Berman's steady approach to its evolution earns the firm a Positive Parent rating.

The firm, founded in 1939, emerged from the collapse of Lehman Brothers with new capabilities and a new ownership structure. Lehman's fixed-income and private-equity acquisitions became part of Neuberger Berman in the wake of Lehman's 2008 collapse, when chairman and CEO George Walker led employees in taking the more diversified firm private. Over 460 employees now own the business, which manages $270 billion in assets.

Once known primarily as a U.S. value equities shop, the new Neuberger Berman sees growth opportunities in Europe and Asia. Clients in those regions own 30% of the firm's assets under management. Although solely an investment manager, its retail mutual funds make up only one fifth of business. The rest is institutional and private client money, long bastions of the firm's identity.

The firm has lifted a few teams out of other firms to expand its circle of competence, including a talented emerging-markets-debt team from ING in 2013. While the firm has been selective in its acquisitions, its hands-off approach lets the new teams do what they do best. Meanwhile, the firm's partnership structure allows these new teams to integrate more fully into Neuberger by becoming managing partners over time.

Building one piece at a time. 2018-03-29T11:52:00 2018-03-29T16:52:00Z Underwhelming. The last time this fund outshone its peers significantly was during the financial crisis. However, there are new managers at the helm, and the fund's performance has been uninspiring since.

From January 2010 through December 2019, the fund's 6.45% annualized return beat the category median by 82 basis points but underperformed its ICE Bank of America Merrill Lynch High Yield Constrained Index benchmark by 104 basis points while enduring more volatility than both.

It's understandable that the strategy's restrained approach wouldn't lead peers during credit market rallies, such as 2016 and 2017's rebound. But some execution stumbles kept the fund from outperforming during recent credit market downturns. For instance, the fund was tripped up by a 2014 overweighting in energy, and its weakness spilled into 2015. The team also had several issue-specific misses that dragged on performance in 2017 and into 2018. The fund ended 2018--a negative year for high yield overall--only marginally above its median peer, despite its cautious bent and underweighting to the poor-performing CCC market. In 2019, however, CCC and energy sector underweightings worked well for the fund, which was a strong year for high yield. It's critical to evaluate expenses, as they come directly out of returns. The share class on this report levies a fee that ranks in its Morningstar category's second-costliest quintile. That's poor, and based on our assessment of the fund's People, Process and Parent pillars in the context of these fees, we don't think this share class will be able to deliver positive alpha relative to the category benchmark index, explaining its Morningstar Analyst Rating of Neutral. F00000OV7W Stuck in the middle. Neuberger Berman High Yield Bond sports a deep and experienced team, but its process lacks a clear advantage over its high-yield bond Morningstar Category peers, leading to a downgrade of its Process Pillar rating to Average and a downgrade of its Morningstar Analyst Rating to Neutral from Bronze on its clean I USD share class, and Negative on its most expensive share classes.

Despite some turnover, the team supporting this strategy remains experienced and deep. In 2019, lead manager and head of non-investment-grade credit Tom O'Reilly retired as planned. Then in April 2019, comanager Patrick Flynn passed away suddenly. Despite this turnover, two of the fund's four remaining comanagers, Russ Covode and Dan Doyle, have worked alongside O'Reilly for several years, and veteran high-yield analyst Chris Kocinski was promoted to comanager. The group relies on a team of 22 high-yield research analysts, most with more than a decade of experience.

The team's process prizes downside protection, starting with the research analysts' methodical approach to credit analysis. The managers also avoid the market's smallest issues, which can suffer from bouts of illiquidity; tend to underweight the lowest-quality companies; and keep the fund well-diversified. A yield near the category median also suggests the team isn't taking excessive risks.

Unfortunately, this approach hasn't stood out versus peers in some time: Its returns have hovered around the category average in each year over the past decade. The strategy's more restrained style shouldn't lead the pack in credit rallies, such as 2016 and 2017's rebound, but it also hasn't helped during credit sell-offs, such as mid-2015 to early 2016 and 2018's fourth quarter. The last time the strategy outperformed significantly was in 2008's global financial crisis, when its prior management team had substantially upgraded the portfolio's credit quality. It remains to be seen whether the current team will fare as well in the next downturn. 2099 2099 Tony Thomas, Ph.D. Tony Thomas, Ph.D. Neuberger Berman's steady approach to its evolution earns the firm a Positive Parent rating.

The firm, founded in 1939, emerged from the collapse of Lehman Brothers with new capabilities and a new ownership structure. Lehman's fixed-income and private-equity acquisitions became part of Neuberger Berman in the wake of Lehman's 2008 collapse, when chairman and CEO George Walker led employees in taking the more diversified firm private. Over 460 employees now own the business, which manages $270 billion in assets.

Once known primarily as a U.S. value equities shop, the new Neuberger Berman sees growth opportunities in Europe and Asia. Clients in those regions own 30% of the firm's assets under management. Although solely an investment manager, its retail mutual funds make up only one fifth of business. The rest is institutional and private client money, long bastions of the firm's identity.

The firm has lifted a few teams out of other firms to expand its circle of competence, including a talented emerging-markets-debt team from ING in 2013. While the firm has been selective in its acquisitions, its hands-off approach lets the new teams do what they do best. Meanwhile, the firm's partnership structure allows these new teams to integrate more fully into Neuberger by becoming managing partners over time.

Building one piece at a time. 2018-03-29T11:52:00 2018-03-29T16:52:00Z Underwhelming. The last time this fund outshone its peers significantly was during the financial crisis. However, there are new managers at the helm, and the fund's performance has been uninspiring since.

From January 2010 through December 2019, the fund's 6.45% annualized return beat the category median by 82 basis points but underperformed its ICE Bank of America Merrill Lynch High Yield Constrained Index benchmark by 104 basis points while enduring more volatility than both.

It's understandable that the strategy's restrained approach wouldn't lead peers during credit market rallies, such as 2016 and 2017's rebound. But some execution stumbles kept the fund from outperforming during recent credit market downturns. For instance, the fund was tripped up by a 2014 overweighting in energy, and its weakness spilled into 2015. The team also had several issue-specific misses that dragged on performance in 2017 and into 2018. The fund ended 2018--a negative year for high yield overall--only marginally above its median peer, despite its cautious bent and underweighting to the poor-performing CCC market. In 2019, however, CCC and energy sector underweightings worked well for the fund, which was a strong year for high yield. It's critical to evaluate expenses, as they come directly out of returns. The share class on this report levies a fee that ranks in its Morningstar category's costliest quintile. Such high fees stack the odds heavily against investors. Based on our assessment of the fund's People, Process and Parent pillars in the context of these fees, we think this share class's alpha relative to the category benchmark index will be materially negative, explaining its Morningstar Analyst Rating of Negative. F00000P94Q Stuck in the middle. Neuberger Berman High Yield Bond sports a deep and experienced team, but its process lacks a clear advantage over its high-yield bond Morningstar Category peers, leading to a downgrade of its Process Pillar rating to Average and a downgrade of its Morningstar Analyst Rating to Neutral from Bronze on its clean I USD share class, and Negative on its most expensive share classes.

Despite some turnover, the team supporting this strategy remains experienced and deep. In 2019, lead manager and head of non-investment-grade credit Tom O'Reilly retired as planned. Then in April 2019, comanager Patrick Flynn passed away suddenly. Despite this turnover, two of the fund's four remaining comanagers, Russ Covode and Dan Doyle, have worked alongside O'Reilly for several years, and veteran high-yield analyst Chris Kocinski was promoted to comanager. The group relies on a team of 22 high-yield research analysts, most with more than a decade of experience.

The team's process prizes downside protection, starting with the research analysts' methodical approach to credit analysis. The managers also avoid the market's smallest issues, which can suffer from bouts of illiquidity; tend to underweight the lowest-quality companies; and keep the fund well-diversified. A yield near the category median also suggests the team isn't taking excessive risks.

Unfortunately, this approach hasn't stood out versus peers in some time: Its returns have hovered around the category average in each year over the past decade. The strategy's more restrained style shouldn't lead the pack in credit rallies, such as 2016 and 2017's rebound, but it also hasn't helped during credit sell-offs, such as mid-2015 to early 2016 and 2018's fourth quarter. The last time the strategy outperformed significantly was in 2008's global financial crisis, when its prior management team had substantially upgraded the portfolio's credit quality. It remains to be seen whether the current team will fare as well in the next downturn. 2099 2099 Tony Thomas, Ph.D. Tony Thomas, Ph.D. Neuberger Berman's steady approach to its evolution earns the firm a Positive Parent rating.

The firm, founded in 1939, emerged from the collapse of Lehman Brothers with new capabilities and a new ownership structure. Lehman's fixed-income and private-equity acquisitions became part of Neuberger Berman in the wake of Lehman's 2008 collapse, when chairman and CEO George Walker led employees in taking the more diversified firm private. Over 460 employees now own the business, which manages $270 billion in assets.

Once known primarily as a U.S. value equities shop, the new Neuberger Berman sees growth opportunities in Europe and Asia. Clients in those regions own 30% of the firm's assets under management. Although solely an investment manager, its retail mutual funds make up only one fifth of business. The rest is institutional and private client money, long bastions of the firm's identity.

The firm has lifted a few teams out of other firms to expand its circle of competence, including a talented emerging-markets-debt team from ING in 2013. While the firm has been selective in its acquisitions, its hands-off approach lets the new teams do what they do best. Meanwhile, the firm's partnership structure allows these new teams to integrate more fully into Neuberger by becoming managing partners over time.

Building one piece at a time. 2018-03-29T11:52:00 2018-03-29T16:52:00Z Underwhelming. The last time this fund outshone its peers significantly was during the financial crisis. However, there are new managers at the helm, and the fund's performance has been uninspiring since.

From January 2010 through December 2019, the fund's 6.45% annualized return beat the category median by 82 basis points but underperformed its ICE Bank of America Merrill Lynch High Yield Constrained Index benchmark by 104 basis points while enduring more volatility than both.

It's understandable that the strategy's restrained approach wouldn't lead peers during credit market rallies, such as 2016 and 2017's rebound. But some execution stumbles kept the fund from outperforming during recent credit market downturns. For instance, the fund was tripped up by a 2014 overweighting in energy, and its weakness spilled into 2015. The team also had several issue-specific misses that dragged on performance in 2017 and into 2018. The fund ended 2018--a negative year for high yield overall--only marginally above its median peer, despite its cautious bent and underweighting to the poor-performing CCC market. In 2019, however, CCC and energy sector underweightings worked well for the fund, which was a strong year for high yield. It's critical to evaluate expenses, as they come directly out of returns. The share class on this report levies a fee that ranks in its Morningstar category's costliest quintile. Such high fees stack the odds heavily against investors. Based on our assessment of the fund's People, Process and Parent pillars in the context of these fees, we don't think this share class will be able to deliver positive alpha relative to the category benchmark index, explaining its Morningstar Analyst Rating of Neutral. F00000WVHW Stuck in the middle. Neuberger Berman High Yield Bond sports a deep and experienced team, but its process lacks a clear advantage over its high-yield bond Morningstar Category peers, leading to a downgrade of its Process Pillar rating to Average and a downgrade of its Morningstar Analyst Rating to Neutral from Bronze on its clean I USD share class, and Negative on its most expensive share classes.

Despite some turnover, the team supporting this strategy remains experienced and deep. In 2019, lead manager and head of non-investment-grade credit Tom O'Reilly retired as planned. Then in April 2019, comanager Patrick Flynn passed away suddenly. Despite this turnover, two of the fund's four remaining comanagers, Russ Covode and Dan Doyle, have worked alongside O'Reilly for several years, and veteran high-yield analyst Chris Kocinski was promoted to comanager. The group relies on a team of 22 high-yield research analysts, most with more than a decade of experience.

The team's process prizes downside protection, starting with the research analysts' methodical approach to credit analysis. The managers also avoid the market's smallest issues, which can suffer from bouts of illiquidity; tend to underweight the lowest-quality companies; and keep the fund well-diversified. A yield near the category median also suggests the team isn't taking excessive risks.

Unfortunately, this approach hasn't stood out versus peers in some time: Its returns have hovered around the category average in each year over the past decade. The strategy's more restrained style shouldn't lead the pack in credit rallies, such as 2016 and 2017's rebound, but it also hasn't helped during credit sell-offs, such as mid-2015 to early 2016 and 2018's fourth quarter. The last time the strategy outperformed significantly was in 2008's global financial crisis, when its prior management team had substantially upgraded the portfolio's credit quality. It remains to be seen whether the current team will fare as well in the next downturn. 2099 2099 Tony Thomas, Ph.D. Tony Thomas, Ph.D. Neuberger Berman's steady approach to its evolution earns the firm a Positive Parent rating.

The firm, founded in 1939, emerged from the collapse of Lehman Brothers with new capabilities and a new ownership structure. Lehman's fixed-income and private-equity acquisitions became part of Neuberger Berman in the wake of Lehman's 2008 collapse, when chairman and CEO George Walker led employees in taking the more diversified firm private. Over 460 employees now own the business, which manages $270 billion in assets.

Once known primarily as a U.S. value equities shop, the new Neuberger Berman sees growth opportunities in Europe and Asia. Clients in those regions own 30% of the firm's assets under management. Although solely an investment manager, its retail mutual funds make up only one fifth of business. The rest is institutional and private client money, long bastions of the firm's identity.

The firm has lifted a few teams out of other firms to expand its circle of competence, including a talented emerging-markets-debt team from ING in 2013. While the firm has been selective in its acquisitions, its hands-off approach lets the new teams do what they do best. Meanwhile, the firm's partnership structure allows these new teams to integrate more fully into Neuberger by becoming managing partners over time.

Building one piece at a time. 2018-03-29T11:52:00 2018-03-29T16:52:00Z Underwhelming. The last time this fund outshone its peers significantly was during the financial crisis. However, there are new managers at the helm, and the fund's performance has been uninspiring since.

From January 2010 through December 2019, the fund's 6.45% annualized return beat the category median by 82 basis points but underperformed its ICE Bank of America Merrill Lynch High Yield Constrained Index benchmark by 104 basis points while enduring more volatility than both.

It's understandable that the strategy's restrained approach wouldn't lead peers during credit market rallies, such as 2016 and 2017's rebound. But some execution stumbles kept the fund from outperforming during recent credit market downturns. For instance, the fund was tripped up by a 2014 overweighting in energy, and its weakness spilled into 2015. The team also had several issue-specific misses that dragged on performance in 2017 and into 2018. The fund ended 2018--a negative year for high yield overall--only marginally above its median peer, despite its cautious bent and underweighting to the poor-performing CCC market. In 2019, however, CCC and energy sector underweightings worked well for the fund, which was a strong year for high yield. It's critical to evaluate expenses, as they come directly out of returns. The share class on this report levies a fee that ranks in its Morningstar category's second-cheapest quintile. Even so, based on our assessment of the fund's People, Process and Parent pillars in the context of these fees, we don't think this share class will be able to deliver positive alpha relative to the category benchmark index, explaining its Morningstar Analyst Rating of Neutral. F00000OZ5O Stuck in the middle. Neuberger Berman High Yield Bond sports a deep and experienced team, but its process lacks a clear advantage over its high-yield bond Morningstar Category peers, leading to a downgrade of its Process Pillar rating to Average and a downgrade of its Morningstar Analyst Rating to Neutral from Bronze on its clean I USD share class, and Negative on its most expensive share classes.

Despite some turnover, the team supporting this strategy remains experienced and deep. In 2019, lead manager and head of non-investment-grade credit Tom O'Reilly retired as planned. Then in April 2019, comanager Patrick Flynn passed away suddenly. Despite this turnover, two of the fund's four remaining comanagers, Russ Covode and Dan Doyle, have worked alongside O'Reilly for several years, and veteran high-yield analyst Chris Kocinski was promoted to comanager. The group relies on a team of 22 high-yield research analysts, most with more than a decade of experience.

The team's process prizes downside protection, starting with the research analysts' methodical approach to credit analysis. The managers also avoid the market's smallest issues, which can suffer from bouts of illiquidity; tend to underweight the lowest-quality companies; and keep the fund well-diversified. A yield near the category median also suggests the team isn't taking excessive risks.

Unfortunately, this approach hasn't stood out versus peers in some time: Its returns have hovered around the category average in each year over the past decade. The strategy's more restrained style shouldn't lead the pack in credit rallies, such as 2016 and 2017's rebound, but it also hasn't helped during credit sell-offs, such as mid-2015 to early 2016 and 2018's fourth quarter. The last time the strategy outperformed significantly was in 2008's global financial crisis, when its prior management team had substantially upgraded the portfolio's credit quality. It remains to be seen whether the current team will fare as well in the next downturn. 2099 2099 Tony Thomas, Ph.D. Tony Thomas, Ph.D. Neuberger Berman's steady approach to its evolution earns the firm a Positive Parent rating.

The firm, founded in 1939, emerged from the collapse of Lehman Brothers with new capabilities and a new ownership structure. Lehman's fixed-income and private-equity acquisitions became part of Neuberger Berman in the wake of Lehman's 2008 collapse, when chairman and CEO George Walker led employees in taking the more diversified firm private. Over 460 employees now own the business, which manages $270 billion in assets.

Once known primarily as a U.S. value equities shop, the new Neuberger Berman sees growth opportunities in Europe and Asia. Clients in those regions own 30% of the firm's assets under management. Although solely an investment manager, its retail mutual funds make up only one fifth of business. The rest is institutional and private client money, long bastions of the firm's identity.

The firm has lifted a few teams out of other firms to expand its circle of competence, including a talented emerging-markets-debt team from ING in 2013. While the firm has been selective in its acquisitions, its hands-off approach lets the new teams do what they do best. Meanwhile, the firm's partnership structure allows these new teams to integrate more fully into Neuberger by becoming managing partners over time.

Building one piece at a time. 2018-03-29T11:52:00 2018-03-29T16:52:00Z Underwhelming. The last time this fund outshone its peers significantly was during the financial crisis. However, there are new managers at the helm, and the fund's performance has been uninspiring since.

From January 2010 through December 2019, the fund's 6.45% annualized return beat the category median by 82 basis points but underperformed its ICE Bank of America Merrill Lynch High Yield Constrained Index benchmark by 104 basis points while enduring more volatility than both.

It's understandable that the strategy's restrained approach wouldn't lead peers during credit market rallies, such as 2016 and 2017's rebound. But some execution stumbles kept the fund from outperforming during recent credit market downturns. For instance, the fund was tripped up by a 2014 overweighting in energy, and its weakness spilled into 2015. The team also had several issue-specific misses that dragged on performance in 2017 and into 2018. The fund ended 2018--a negative year for high yield overall--only marginally above its median peer, despite its cautious bent and underweighting to the poor-performing CCC market. In 2019, however, CCC and energy sector underweightings worked well for the fund, which was a strong year for high yield. It's critical to evaluate expenses, as they come directly out of returns. The share class on this report levies a fee that ranks in its Morningstar category's second-cheapest quintile. Even so, based on our assessment of the fund's People, Process and Parent pillars in the context of these fees, we don't think this share class will be able to deliver positive alpha relative to the category benchmark index, explaining its Morningstar Analyst Rating of Neutral. F00000OV7V Stuck in the middle. Neuberger Berman High Yield Bond sports a deep and experienced team, but its process lacks a clear advantage over its high-yield bond Morningstar Category peers, leading to a downgrade of its Process Pillar rating to Average and a downgrade of its Morningstar Analyst Rating to Neutral from Bronze on its clean I USD share class, and Negative on its most expensive share classes.

Despite some turnover, the team supporting this strategy remains experienced and deep. In 2019, lead manager and head of non-investment-grade credit Tom O'Reilly retired as planned. Then in April 2019, comanager Patrick Flynn passed away suddenly. Despite this turnover, two of the fund's four remaining comanagers, Russ Covode and Dan Doyle, have worked alongside O'Reilly for several years, and veteran high-yield analyst Chris Kocinski was promoted to comanager. The group relies on a team of 22 high-yield research analysts, most with more than a decade of experience.

The team's process prizes downside protection, starting with the research analysts' methodical approach to credit analysis. The managers also avoid the market's smallest issues, which can suffer from bouts of illiquidity; tend to underweight the lowest-quality companies; and keep the fund well-diversified. A yield near the category median also suggests the team isn't taking excessive risks.

Unfortunately, this approach hasn't stood out versus peers in some time: Its returns have hovered around the category average in each year over the past decade. The strategy's more restrained style shouldn't lead the pack in credit rallies, such as 2016 and 2017's rebound, but it also hasn't helped during credit sell-offs, such as mid-2015 to early 2016 and 2018's fourth quarter. The last time the strategy outperformed significantly was in 2008's global financial crisis, when its prior management team had substantially upgraded the portfolio's credit quality. It remains to be seen whether the current team will fare as well in the next downturn. 2099 2099 Tony Thomas, Ph.D. Tony Thomas, Ph.D. Neuberger Berman's steady approach to its evolution earns the firm a Positive Parent rating.

The firm, founded in 1939, emerged from the collapse of Lehman Brothers with new capabilities and a new ownership structure. Lehman's fixed-income and private-equity acquisitions became part of Neuberger Berman in the wake of Lehman's 2008 collapse, when chairman and CEO George Walker led employees in taking the more diversified firm private. Over 460 employees now own the business, which manages $270 billion in assets.

Once known primarily as a U.S. value equities shop, the new Neuberger Berman sees growth opportunities in Europe and Asia. Clients in those regions own 30% of the firm's assets under management. Although solely an investment manager, its retail mutual funds make up only one fifth of business. The rest is institutional and private client money, long bastions of the firm's identity.

The firm has lifted a few teams out of other firms to expand its circle of competence, including a talented emerging-markets-debt team from ING in 2013. While the firm has been selective in its acquisitions, its hands-off approach lets the new teams do what they do best. Meanwhile, the firm's partnership structure allows these new teams to integrate more fully into Neuberger by becoming managing partners over time.

Building one piece at a time. 2018-03-29T11:52:00 2018-03-29T16:52:00Z Underwhelming. The last time this fund outshone its peers significantly was during the financial crisis. However, there are new managers at the helm, and the fund's performance has been uninspiring since.

From January 2010 through December 2019, the fund's 6.45% annualized return beat the category median by 82 basis points but underperformed its ICE Bank of America Merrill Lynch High Yield Constrained Index benchmark by 104 basis points while enduring more volatility than both.

It's understandable that the strategy's restrained approach wouldn't lead peers during credit market rallies, such as 2016 and 2017's rebound. But some execution stumbles kept the fund from outperforming during recent credit market downturns. For instance, the fund was tripped up by a 2014 overweighting in energy, and its weakness spilled into 2015. The team also had several issue-specific misses that dragged on performance in 2017 and into 2018. The fund ended 2018--a negative year for high yield overall--only marginally above its median peer, despite its cautious bent and underweighting to the poor-performing CCC market. In 2019, however, CCC and energy sector underweightings worked well for the fund, which was a strong year for high yield. It's critical to evaluate expenses, as they come directly out of returns. The share class on this report levies a fee that ranks in its Morningstar category's second-cheapest quintile. Even so, based on our assessment of the fund's People, Process and Parent pillars in the context of these fees, we don't think this share class will be able to deliver positive alpha relative to the category benchmark index, explaining its Morningstar Analyst Rating of Neutral. F00000T4JQ Stuck in the middle. Neuberger Berman High Yield Bond sports a deep and experienced team, but its process lacks a clear advantage over its high-yield bond Morningstar Category peers, leading to a downgrade of its Process Pillar rating to Average and a downgrade of its Morningstar Analyst Rating to Neutral from Bronze on its clean I USD share class, and Negative on its most expensive share classes.

Despite some turnover, the team supporting this strategy remains experienced and deep. In 2019, lead manager and head of non-investment-grade credit Tom O'Reilly retired as planned. Then in April 2019, comanager Patrick Flynn passed away suddenly. Despite this turnover, two of the fund's four remaining comanagers, Russ Covode and Dan Doyle, have worked alongside O'Reilly for several years, and veteran high-yield analyst Chris Kocinski was promoted to comanager. The group relies on a team of 22 high-yield research analysts, most with more than a decade of experience.

The team's process prizes downside protection, starting with the research analysts' methodical approach to credit analysis. The managers also avoid the market's smallest issues, which can suffer from bouts of illiquidity; tend to underweight the lowest-quality companies; and keep the fund well-diversified. A yield near the category median also suggests the team isn't taking excessive risks.

Unfortunately, this approach hasn't stood out versus peers in some time: Its returns have hovered around the category average in each year over the past decade. The strategy's more restrained style shouldn't lead the pack in credit rallies, such as 2016 and 2017's rebound, but it also hasn't helped during credit sell-offs, such as mid-2015 to early 2016 and 2018's fourth quarter. The last time the strategy outperformed significantly was in 2008's global financial crisis, when its prior management team had substantially upgraded the portfolio's credit quality. It remains to be seen whether the current team will fare as well in the next downturn. 2099 2099 Tony Thomas, Ph.D. Tony Thomas, Ph.D. Neuberger Berman's steady approach to its evolution earns the firm a Positive Parent rating.

The firm, founded in 1939, emerged from the collapse of Lehman Brothers with new capabilities and a new ownership structure. Lehman's fixed-income and private-equity acquisitions became part of Neuberger Berman in the wake of Lehman's 2008 collapse, when chairman and CEO George Walker led employees in taking the more diversified firm private. Over 460 employees now own the business, which manages $270 billion in assets.

Once known primarily as a U.S. value equities shop, the new Neuberger Berman sees growth opportunities in Europe and Asia. Clients in those regions own 30% of the firm's assets under management. Although solely an investment manager, its retail mutual funds make up only one fifth of business. The rest is institutional and private client money, long bastions of the firm's identity.

The firm has lifted a few teams out of other firms to expand its circle of competence, including a talented emerging-markets-debt team from ING in 2013. While the firm has been selective in its acquisitions, its hands-off approach lets the new teams do what they do best. Meanwhile, the firm's partnership structure allows these new teams to integrate more fully into Neuberger by becoming managing partners over time.

Building one piece at a time. 2018-03-29T11:52:00 2018-03-29T16:52:00Z Underwhelming. The last time this fund outshone its peers significantly was during the financial crisis. However, there are new managers at the helm, and the fund's performance has been uninspiring since.

From January 2010 through December 2019, the fund's 6.45% annualized return beat the category median by 82 basis points but underperformed its ICE Bank of America Merrill Lynch High Yield Constrained Index benchmark by 104 basis points while enduring more volatility than both.

It's understandable that the strategy's restrained approach wouldn't lead peers during credit market rallies, such as 2016 and 2017's rebound. But some execution stumbles kept the fund from outperforming during recent credit market downturns. For instance, the fund was tripped up by a 2014 overweighting in energy, and its weakness spilled into 2015. The team also had several issue-specific misses that dragged on performance in 2017 and into 2018. The fund ended 2018--a negative year for high yield overall--only marginally above its median peer, despite its cautious bent and underweighting to the poor-performing CCC market. In 2019, however, CCC and energy sector underweightings worked well for the fund, which was a strong year for high yield. It's critical to evaluate expenses, as they come directly out of returns. The share class on this report levies a fee that ranks in its Morningstar category's costliest quintile. Such high fees stack the odds heavily against investors. Based on our assessment of the fund's People, Process and Parent pillars in the context of these fees, we think this share class's alpha relative to the category benchmark index will be materially negative, explaining its Morningstar Analyst Rating of Negative. F00000P94L Stuck in the middle. Neuberger Berman High Yield Bond sports a deep and experienced team, but its process lacks a clear advantage over its high-yield bond Morningstar Category peers, leading to a downgrade of its Process Pillar rating to Average and a downgrade of its Morningstar Analyst Rating to Neutral from Bronze on its clean I USD share class, and Negative on its most expensive share classes.

Despite some turnover, the team supporting this strategy remains experienced and deep. In 2019, lead manager and head of non-investment-grade credit Tom O'Reilly retired as planned. Then in April 2019, comanager Patrick Flynn passed away suddenly. Despite this turnover, two of the fund's four remaining comanagers, Russ Covode and Dan Doyle, have worked alongside O'Reilly for several years, and veteran high-yield analyst Chris Kocinski was promoted to comanager. The group relies on a team of 22 high-yield research analysts, most with more than a decade of experience.

The team's process prizes downside protection, starting with the research analysts' methodical approach to credit analysis. The managers also avoid the market's smallest issues, which can suffer from bouts of illiquidity; tend to underweight the lowest-quality companies; and keep the fund well-diversified. A yield near the category median also suggests the team isn't taking excessive risks.

Unfortunately, this approach hasn't stood out versus peers in some time: Its returns have hovered around the category average in each year over the past decade. The strategy's more restrained style shouldn't lead the pack in credit rallies, such as 2016 and 2017's rebound, but it also hasn't helped during credit sell-offs, such as mid-2015 to early 2016 and 2018's fourth quarter. The last time the strategy outperformed significantly was in 2008's global financial crisis, when its prior management team had substantially upgraded the portfolio's credit quality. It remains to be seen whether the current team will fare as well in the next downturn. 2099 2099 Tony Thomas, Ph.D. Tony Thomas, Ph.D. Neuberger Berman's steady approach to its evolution earns the firm a Positive Parent rating.

The firm, founded in 1939, emerged from the collapse of Lehman Brothers with new capabilities and a new ownership structure. Lehman's fixed-income and private-equity acquisitions became part of Neuberger Berman in the wake of Lehman's 2008 collapse, when chairman and CEO George Walker led employees in taking the more diversified firm private. Over 460 employees now own the business, which manages $270 billion in assets.

Once known primarily as a U.S. value equities shop, the new Neuberger Berman sees growth opportunities in Europe and Asia. Clients in those regions own 30% of the firm's assets under management. Although solely an investment manager, its retail mutual funds make up only one fifth of business. The rest is institutional and private client money, long bastions of the firm's identity.

The firm has lifted a few teams out of other firms to expand its circle of competence, including a talented emerging-markets-debt team from ING in 2013. While the firm has been selective in its acquisitions, its hands-off approach lets the new teams do what they do best. Meanwhile, the firm's partnership structure allows these new teams to integrate more fully into Neuberger by becoming managing partners over time.

Building one piece at a time. 2018-03-29T11:52:00 2018-03-29T16:52:00Z Underwhelming. The last time this fund outshone its peers significantly was during the financial crisis. However, there are new managers at the helm, and the fund's performance has been uninspiring since.

From January 2010 through December 2019, the fund's 6.45% annualized return beat the category median by 82 basis points but underperformed its ICE Bank of America Merrill Lynch High Yield Constrained Index benchmark by 104 basis points while enduring more volatility than both.

It's understandable that the strategy's restrained approach wouldn't lead peers during credit market rallies, such as 2016 and 2017's rebound. But some execution stumbles kept the fund from outperforming during recent credit market downturns. For instance, the fund was tripped up by a 2014 overweighting in energy, and its weakness spilled into 2015. The team also had several issue-specific misses that dragged on performance in 2017 and into 2018. The fund ended 2018--a negative year for high yield overall--only marginally above its median peer, despite its cautious bent and underweighting to the poor-performing CCC market. In 2019, however, CCC and energy sector underweightings worked well for the fund, which was a strong year for high yield. It's critical to evaluate expenses, as they come directly out of returns. The share class on this report levies a fee that ranks in its Morningstar category's costliest quintile. Such high fees stack the odds heavily against investors. Based on our assessment of the fund's People, Process and Parent pillars in the context of these fees, we think this share class's alpha relative to the category benchmark index will be materially negative, explaining its Morningstar Analyst Rating of Negative. F00000P94M Stuck in the middle. Neuberger Berman High Yield Bond sports a deep and experienced team, but its process lacks a clear advantage over its high-yield bond Morningstar Category peers, leading to a downgrade of its Process Pillar rating to Average and a downgrade of its Morningstar Analyst Rating to Neutral from Bronze on its clean I USD share class, and Negative on its most expensive share classes.

Despite some turnover, the team supporting this strategy remains experienced and deep. In 2019, lead manager and head of non-investment-grade credit Tom O'Reilly retired as planned. Then in April 2019, comanager Patrick Flynn passed away suddenly. Despite this turnover, two of the fund's four remaining comanagers, Russ Covode and Dan Doyle, have worked alongside O'Reilly for several years, and veteran high-yield analyst Chris Kocinski was promoted to comanager. The group relies on a team of 22 high-yield research analysts, most with more than a decade of experience.

The team's process prizes downside protection, starting with the research analysts' methodical approach to credit analysis. The managers also avoid the market's smallest issues, which can suffer from bouts of illiquidity; tend to underweight the lowest-quality companies; and keep the fund well-diversified. A yield near the category median also suggests the team isn't taking excessive risks.

Unfortunately, this approach hasn't stood out versus peers in some time: Its returns have hovered around the category average in each year over the past decade. The strategy's more restrained style shouldn't lead the pack in credit rallies, such as 2016 and 2017's rebound, but it also hasn't helped during credit sell-offs, such as mid-2015 to early 2016 and 2018's fourth quarter. The last time the strategy outperformed significantly was in 2008's global financial crisis, when its prior management team had substantially upgraded the portfolio's credit quality. It remains to be seen whether the current team will fare as well in the next downturn. 2099 2099 Tony Thomas, Ph.D. Tony Thomas, Ph.D. Neuberger Berman's steady approach to its evolution earns the firm a Positive Parent rating.

The firm, founded in 1939, emerged from the collapse of Lehman Brothers with new capabilities and a new ownership structure. Lehman's fixed-income and private-equity acquisitions became part of Neuberger Berman in the wake of Lehman's 2008 collapse, when chairman and CEO George Walker led employees in taking the more diversified firm private. Over 460 employees now own the business, which manages $270 billion in assets.

Once known primarily as a U.S. value equities shop, the new Neuberger Berman sees growth opportunities in Europe and Asia. Clients in those regions own 30% of the firm's assets under management. Although solely an investment manager, its retail mutual funds make up only one fifth of business. The rest is institutional and private client money, long bastions of the firm's identity.

The firm has lifted a few teams out of other firms to expand its circle of competence, including a talented emerging-markets-debt team from ING in 2013. While the firm has been selective in its acquisitions, its hands-off approach lets the new teams do what they do best. Meanwhile, the firm's partnership structure allows these new teams to integrate more fully into Neuberger by becoming managing partners over time.

Building one piece at a time. 2018-03-29T11:52:00 2018-03-29T16:52:00Z Underwhelming. The last time this fund outshone its peers significantly was during the financial crisis. However, there are new managers at the helm, and the fund's performance has been uninspiring since.

From January 2010 through December 2019, the fund's 6.45% annualized return beat the category median by 82 basis points but underperformed its ICE Bank of America Merrill Lynch High Yield Constrained Index benchmark by 104 basis points while enduring more volatility than both.

It's understandable that the strategy's restrained approach wouldn't lead peers during credit market rallies, such as 2016 and 2017's rebound. But some execution stumbles kept the fund from outperforming during recent credit market downturns. For instance, the fund was tripped up by a 2014 overweighting in energy, and its weakness spilled into 2015. The team also had several issue-specific misses that dragged on performance in 2017 and into 2018. The fund ended 2018--a negative year for high yield overall--only marginally above its median peer, despite its cautious bent and underweighting to the poor-performing CCC market. In 2019, however, CCC and energy sector underweightings worked well for the fund, which was a strong year for high yield. It's critical to evaluate expenses, as they come directly out of returns. The share class on this report levies a fee that ranks in its Morningstar category's costliest quintile. Such high fees stack the odds heavily against investors. Based on our assessment of the fund's People, Process and Parent pillars in the context of these fees, we don't think this share class will be able to deliver positive alpha relative to the category benchmark index, explaining its Morningstar Analyst Rating of Neutral. F00000P8DZ Stuck in the middle. Neuberger Berman High Yield Bond sports a deep and experienced team, but its process lacks a clear advantage over its high-yield bond Morningstar Category peers, leading to a downgrade of its Process Pillar rating to Average and a downgrade of its Morningstar Analyst Rating to Neutral from Bronze on its clean I USD share class, and Negative on its most expensive share classes.

Despite some turnover, the team supporting this strategy remains experienced and deep. In 2019, lead manager and head of non-investment-grade credit Tom O'Reilly retired as planned. Then in April 2019, comanager Patrick Flynn passed away suddenly. Despite this turnover, two of the fund's four remaining comanagers, Russ Covode and Dan Doyle, have worked alongside O'Reilly for several years, and veteran high-yield analyst Chris Kocinski was promoted to comanager. The group relies on a team of 22 high-yield research analysts, most with more than a decade of experience.

The team's process prizes downside protection, starting with the research analysts' methodical approach to credit analysis. The managers also avoid the market's smallest issues, which can suffer from bouts of illiquidity; tend to underweight the lowest-quality companies; and keep the fund well-diversified. A yield near the category median also suggests the team isn't taking excessive risks.

Unfortunately, this approach hasn't stood out versus peers in some time: Its returns have hovered around the category average in each year over the past decade. The strategy's more restrained style shouldn't lead the pack in credit rallies, such as 2016 and 2017's rebound, but it also hasn't helped during credit sell-offs, such as mid-2015 to early 2016 and 2018's fourth quarter. The last time the strategy outperformed significantly was in 2008's global financial crisis, when its prior management team had substantially upgraded the portfolio's credit quality. It remains to be seen whether the current team will fare as well in the next downturn. 2099 2099 Tony Thomas, Ph.D. Tony Thomas, Ph.D. Neuberger Berman's steady approach to its evolution earns the firm a Positive Parent rating.

The firm, founded in 1939, emerged from the collapse of Lehman Brothers with new capabilities and a new ownership structure. Lehman's fixed-income and private-equity acquisitions became part of Neuberger Berman in the wake of Lehman's 2008 collapse, when chairman and CEO George Walker led employees in taking the more diversified firm private. Over 460 employees now own the business, which manages $270 billion in assets.

Once known primarily as a U.S. value equities shop, the new Neuberger Berman sees growth opportunities in Europe and Asia. Clients in those regions own 30% of the firm's assets under management. Although solely an investment manager, its retail mutual funds make up only one fifth of business. The rest is institutional and private client money, long bastions of the firm's identity.

The firm has lifted a few teams out of other firms to expand its circle of competence, including a talented emerging-markets-debt team from ING in 2013. While the firm has been selective in its acquisitions, its hands-off approach lets the new teams do what they do best. Meanwhile, the firm's partnership structure allows these new teams to integrate more fully into Neuberger by becoming managing partners over time.

Building one piece at a time. 2018-03-29T11:52:00 2018-03-29T16:52:00Z Underwhelming. The last time this fund outshone its peers significantly was during the financial crisis. However, there are new managers at the helm, and the fund's performance has been uninspiring since.

From January 2010 through December 2019, the fund's 6.45% annualized return beat the category median by 82 basis points but underperformed its ICE Bank of America Merrill Lynch High Yield Constrained Index benchmark by 104 basis points while enduring more volatility than both.

It's understandable that the strategy's restrained approach wouldn't lead peers during credit market rallies, such as 2016 and 2017's rebound. But some execution stumbles kept the fund from outperforming during recent credit market downturns. For instance, the fund was tripped up by a 2014 overweighting in energy, and its weakness spilled into 2015. The team also had several issue-specific misses that dragged on performance in 2017 and into 2018. The fund ended 2018--a negative year for high yield overall--only marginally above its median peer, despite its cautious bent and underweighting to the poor-performing CCC market. In 2019, however, CCC and energy sector underweightings worked well for the fund, which was a strong year for high yield. It's critical to evaluate expenses, as they come directly out of returns. The share class on this report levies a fee that ranks in its Morningstar category's second-costliest quintile. That's poor, and based on our assessment of the fund's People, Process and Parent pillars in the context of these fees, we don't think this share class will be able to deliver positive alpha relative to the category benchmark index, explaining its Morningstar Analyst Rating of Neutral. F00000PI2Z Stuck in the middle. Neuberger Berman High Yield Bond sports a deep and experienced team, but its process lacks a clear advantage over its high-yield bond Morningstar Category peers, leading to a downgrade of its Process Pillar rating to Average and a downgrade of its Morningstar Analyst Rating to Neutral from Bronze on its clean I USD share class, and Negative on its most expensive share classes.

Despite some turnover, the team supporting this strategy remains experienced and deep. In 2019, lead manager and head of non-investment-grade credit Tom O'Reilly retired as planned. Then in April 2019, comanager Patrick Flynn passed away suddenly. Despite this turnover, two of the fund's four remaining comanagers, Russ Covode and Dan Doyle, have worked alongside O'Reilly for several years, and veteran high-yield analyst Chris Kocinski was promoted to comanager. The group relies on a team of 22 high-yield research analysts, most with more than a decade of experience.

The team's process prizes downside protection, starting with the research analysts' methodical approach to credit analysis. The managers also avoid the market's smallest issues, which can suffer from bouts of illiquidity; tend to underweight the lowest-quality companies; and keep the fund well-diversified. A yield near the category median also suggests the team isn't taking excessive risks.

Unfortunately, this approach hasn't stood out versus peers in some time: Its returns have hovered around the category average in each year over the past decade. The strategy's more restrained style shouldn't lead the pack in credit rallies, such as 2016 and 2017's rebound, but it also hasn't helped during credit sell-offs, such as mid-2015 to early 2016 and 2018's fourth quarter. The last time the strategy outperformed significantly was in 2008's global financial crisis, when its prior management team had substantially upgraded the portfolio's credit quality. It remains to be seen whether the current team will fare as well in the next downturn. 2099 2099 Tony Thomas, Ph.D. Tony Thomas, Ph.D. Neuberger Berman's steady approach to its evolution earns the firm a Positive Parent rating.

The firm, founded in 1939, emerged from the collapse of Lehman Brothers with new capabilities and a new ownership structure. Lehman's fixed-income and private-equity acquisitions became part of Neuberger Berman in the wake of Lehman's 2008 collapse, when chairman and CEO George Walker led employees in taking the more diversified firm private. Over 460 employees now own the business, which manages $270 billion in assets.

Once known primarily as a U.S. value equities shop, the new Neuberger Berman sees growth opportunities in Europe and Asia. Clients in those regions own 30% of the firm's assets under management. Although solely an investment manager, its retail mutual funds make up only one fifth of business. The rest is institutional and private client money, long bastions of the firm's identity.

The firm has lifted a few teams out of other firms to expand its circle of competence, including a talented emerging-markets-debt team from ING in 2013. While the firm has been selective in its acquisitions, its hands-off approach lets the new teams do what they do best. Meanwhile, the firm's partnership structure allows these new teams to integrate more fully into Neuberger by becoming managing partners over time.

Building one piece at a time. 2018-03-29T11:52:00 2018-03-29T16:52:00Z Underwhelming. The last time this fund outshone its peers significantly was during the financial crisis. However, there are new managers at the helm, and the fund's performance has been uninspiring since.

From January 2010 through December 2019, the fund's 6.45% annualized return beat the category median by 82 basis points but underperformed its ICE Bank of America Merrill Lynch High Yield Constrained Index benchmark by 104 basis points while enduring more volatility than both.

It's understandable that the strategy's restrained approach wouldn't lead peers during credit market rallies, such as 2016 and 2017's rebound. But some execution stumbles kept the fund from outperforming during recent credit market downturns. For instance, the fund was tripped up by a 2014 overweighting in energy, and its weakness spilled into 2015. The team also had several issue-specific misses that dragged on performance in 2017 and into 2018. The fund ended 2018--a negative year for high yield overall--only marginally above its median peer, despite its cautious bent and underweighting to the poor-performing CCC market. In 2019, however, CCC and energy sector underweightings worked well for the fund, which was a strong year for high yield. It's critical to evaluate expenses, as they come directly out of returns. The share class on this report levies a fee that ranks in its Morningstar category's second-costliest quintile. That's poor, and based on our assessment of the fund's People, Process and Parent pillars in the context of these fees, we don't think this share class will be able to deliver positive alpha relative to the category benchmark index, explaining its Morningstar Analyst Rating of Neutral. F00000O6J0 Stuck in the middle. Neuberger Berman High Yield Bond sports a deep and experienced team, but its process lacks a clear advantage over its high-yield bond Morningstar Category peers, leading to a downgrade of its Process Pillar rating to Average and a downgrade of its Morningstar Analyst Rating to Neutral from Bronze on its clean I USD share class, and Negative on its most expensive share classes.

Despite some turnover, the team supporting this strategy remains experienced and deep. In 2019, lead manager and head of non-investment-grade credit Tom O'Reilly retired as planned. Then in April 2019, comanager Patrick Flynn passed away suddenly. Despite this turnover, two of the fund's four remaining comanagers, Russ Covode and Dan Doyle, have worked alongside O'Reilly for several years, and veteran high-yield analyst Chris Kocinski was promoted to comanager. The group relies on a team of 22 high-yield research analysts, most with more than a decade of experience.

The team's process prizes downside protection, starting with the research analysts' methodical approach to credit analysis. The managers also avoid the market's smallest issues, which can suffer from bouts of illiquidity; tend to underweight the lowest-quality companies; and keep the fund well-diversified. A yield near the category median also suggests the team isn't taking excessive risks.

Unfortunately, this approach hasn't stood out versus peers in some time: Its returns have hovered around the category average in each year over the past decade. The strategy's more restrained style shouldn't lead the pack in credit rallies, such as 2016 and 2017's rebound, but it also hasn't helped during credit sell-offs, such as mid-2015 to early 2016 and 2018's fourth quarter. The last time the strategy outperformed significantly was in 2008's global financial crisis, when its prior management team had substantially upgraded the portfolio's credit quality. It remains to be seen whether the current team will fare as well in the next downturn. 2099 2099 Tony Thomas, Ph.D. Tony Thomas, Ph.D. Neuberger Berman's steady approach to its evolution earns the firm a Positive Parent rating.

The firm, founded in 1939, emerged from the collapse of Lehman Brothers with new capabilities and a new ownership structure. Lehman's fixed-income and private-equity acquisitions became part of Neuberger Berman in the wake of Lehman's 2008 collapse, when chairman and CEO George Walker led employees in taking the more diversified firm private. Over 460 employees now own the business, which manages $270 billion in assets.

Once known primarily as a U.S. value equities shop, the new Neuberger Berman sees growth opportunities in Europe and Asia. Clients in those regions own 30% of the firm's assets under management. Although solely an investment manager, its retail mutual funds make up only one fifth of business. The rest is institutional and private client money, long bastions of the firm's identity.

The firm has lifted a few teams out of other firms to expand its circle of competence, including a talented emerging-markets-debt team from ING in 2013. While the firm has been selective in its acquisitions, its hands-off approach lets the new teams do what they do best. Meanwhile, the firm's partnership structure allows these new teams to integrate more fully into Neuberger by becoming managing partners over time.

Building one piece at a time. 2018-03-29T11:52:00 2018-03-29T16:52:00Z Underwhelming. The last time this fund outshone its peers significantly was during the financial crisis. However, there are new managers at the helm, and the fund's performance has been uninspiring since.

From January 2010 through December 2019, the fund's 6.45% annualized return beat the category median by 82 basis points but underperformed its ICE Bank of America Merrill Lynch High Yield Constrained Index benchmark by 104 basis points while enduring more volatility than both.

It's understandable that the strategy's restrained approach wouldn't lead peers during credit market rallies, such as 2016 and 2017's rebound. But some execution stumbles kept the fund from outperforming during recent credit market downturns. For instance, the fund was tripped up by a 2014 overweighting in energy, and its weakness spilled into 2015. The team also had several issue-specific misses that dragged on performance in 2017 and into 2018. The fund ended 2018--a negative year for high yield overall--only marginally above its median peer, despite its cautious bent and underweighting to the poor-performing CCC market. In 2019, however, CCC and energy sector underweightings worked well for the fund, which was a strong year for high yield. It's critical to evaluate expenses, as they come directly out of returns. The share class on this report levies a fee that ranks in its Morningstar category's costliest quintile. Such high fees stack the odds heavily against investors. Based on our assessment of the fund's People, Process and Parent pillars in the context of these fees, we think this share class's alpha relative to the category benchmark index will be materially negative, explaining its Morningstar Analyst Rating of Negative. F00000P94K Stuck in the middle. Neuberger Berman High Yield Bond sports a deep and experienced team, but its process lacks a clear advantage over its high-yield bond Morningstar Category peers, leading to a downgrade of its Process Pillar rating to Average and a downgrade of its Morningstar Analyst Rating to Neutral from Bronze on its clean I USD share class, and Negative on its most expensive share classes.

Despite some turnover, the team supporting this strategy remains experienced and deep. In 2019, lead manager and head of non-investment-grade credit Tom O'Reilly retired as planned. Then in April 2019, comanager Patrick Flynn passed away suddenly. Despite this turnover, two of the fund's four remaining comanagers, Russ Covode and Dan Doyle, have worked alongside O'Reilly for several years, and veteran high-yield analyst Chris Kocinski was promoted to comanager. The group relies on a team of 22 high-yield research analysts, most with more than a decade of experience.

The team's process prizes downside protection, starting with the research analysts' methodical approach to credit analysis. The managers also avoid the market's smallest issues, which can suffer from bouts of illiquidity; tend to underweight the lowest-quality companies; and keep the fund well-diversified. A yield near the category median also suggests the team isn't taking excessive risks.

Unfortunately, this approach hasn't stood out versus peers in some time: Its returns have hovered around the category average in each year over the past decade. The strategy's more restrained style shouldn't lead the pack in credit rallies, such as 2016 and 2017's rebound, but it also hasn't helped during credit sell-offs, such as mid-2015 to early 2016 and 2018's fourth quarter. The last time the strategy outperformed significantly was in 2008's global financial crisis, when its prior management team had substantially upgraded the portfolio's credit quality. It remains to be seen whether the current team will fare as well in the next downturn. 2099 2099 Tony Thomas, Ph.D. Tony Thomas, Ph.D. Neuberger Berman's steady approach to its evolution earns the firm a Positive Parent rating.

The firm, founded in 1939, emerged from the collapse of Lehman Brothers with new capabilities and a new ownership structure. Lehman's fixed-income and private-equity acquisitions became part of Neuberger Berman in the wake of Lehman's 2008 collapse, when chairman and CEO George Walker led employees in taking the more diversified firm private. Over 460 employees now own the business, which manages $270 billion in assets.

Once known primarily as a U.S. value equities shop, the new Neuberger Berman sees growth opportunities in Europe and Asia. Clients in those regions own 30% of the firm's assets under management. Although solely an investment manager, its retail mutual funds make up only one fifth of business. The rest is institutional and private client money, long bastions of the firm's identity.

The firm has lifted a few teams out of other firms to expand its circle of competence, including a talented emerging-markets-debt team from ING in 2013. While the firm has been selective in its acquisitions, its hands-off approach lets the new teams do what they do best. Meanwhile, the firm's partnership structure allows these new teams to integrate more fully into Neuberger by becoming managing partners over time.

Building one piece at a time. 2018-03-29T11:52:00 2018-03-29T16:52:00Z Underwhelming. The last time this fund outshone its peers significantly was during the financial crisis. However, there are new managers at the helm, and the fund's performance has been uninspiring since.

From January 2010 through December 2019, the fund's 6.45% annualized return beat the category median by 82 basis points but underperformed its ICE Bank of America Merrill Lynch High Yield Constrained Index benchmark by 104 basis points while enduring more volatility than both.

It's understandable that the strategy's restrained approach wouldn't lead peers during credit market rallies, such as 2016 and 2017's rebound. But some execution stumbles kept the fund from outperforming during recent credit market downturns. For instance, the fund was tripped up by a 2014 overweighting in energy, and its weakness spilled into 2015. The team also had several issue-specific misses that dragged on performance in 2017 and into 2018. The fund ended 2018--a negative year for high yield overall--only marginally above its median peer, despite its cautious bent and underweighting to the poor-performing CCC market. In 2019, however, CCC and energy sector underweightings worked well for the fund, which was a strong year for high yield. It's critical to evaluate expenses, as they come directly out of returns. The share class on this report levies a fee that ranks in its Morningstar category's costliest quintile. Such high fees stack the odds heavily against investors. Based on our assessment of the fund's People, Process and Parent pillars in the context of these fees, we don't think this share class will be able to deliver positive alpha relative to the category benchmark index, explaining its Morningstar Analyst Rating of Neutral. F00000P94N Stuck in the middle. Neuberger Berman High Yield Bond sports a deep and experienced team, but its process lacks a clear advantage over its high-yield bond Morningstar Category peers, leading to a downgrade of its Process Pillar rating to Average and a downgrade of its Morningstar Analyst Rating to Neutral from Bronze on its clean I USD share class, and Negative on its most expensive share classes.

Despite some turnover, the team supporting this strategy remains experienced and deep. In 2019, lead manager and head of non-investment-grade credit Tom O'Reilly retired as planned. Then in April 2019, comanager Patrick Flynn passed away suddenly. Despite this turnover, two of the fund's four remaining comanagers, Russ Covode and Dan Doyle, have worked alongside O'Reilly for several years, and veteran high-yield analyst Chris Kocinski was promoted to comanager. The group relies on a team of 22 high-yield research analysts, most with more than a decade of experience.

The team's process prizes downside protection, starting with the research analysts' methodical approach to credit analysis. The managers also avoid the market's smallest issues, which can suffer from bouts of illiquidity; tend to underweight the lowest-quality companies; and keep the fund well-diversified. A yield near the category median also suggests the team isn't taking excessive risks.

Unfortunately, this approach hasn't stood out versus peers in some time: Its returns have hovered around the category average in each year over the past decade. The strategy's more restrained style shouldn't lead the pack in credit rallies, such as 2016 and 2017's rebound, but it also hasn't helped during credit sell-offs, such as mid-2015 to early 2016 and 2018's fourth quarter. The last time the strategy outperformed significantly was in 2008's global financial crisis, when its prior management team had substantially upgraded the portfolio's credit quality. It remains to be seen whether the current team will fare as well in the next downturn. 2099 2099 Tony Thomas, Ph.D. Tony Thomas, Ph.D. Neuberger Berman's steady approach to its evolution earns the firm a Positive Parent rating.

The firm, founded in 1939, emerged from the collapse of Lehman Brothers with new capabilities and a new ownership structure. Lehman's fixed-income and private-equity acquisitions became part of Neuberger Berman in the wake of Lehman's 2008 collapse, when chairman and CEO George Walker led employees in taking the more diversified firm private. Over 460 employees now own the business, which manages $270 billion in assets.

Once known primarily as a U.S. value equities shop, the new Neuberger Berman sees growth opportunities in Europe and Asia. Clients in those regions own 30% of the firm's assets under management. Although solely an investment manager, its retail mutual funds make up only one fifth of business. The rest is institutional and private client money, long bastions of the firm's identity.

The firm has lifted a few teams out of other firms to expand its circle of competence, including a talented emerging-markets-debt team from ING in 2013. While the firm has been selective in its acquisitions, its hands-off approach lets the new teams do what they do best. Meanwhile, the firm's partnership structure allows these new teams to integrate more fully into Neuberger by becoming managing partners over time.

Building one piece at a time. 2018-03-29T11:52:00 2018-03-29T16:52:00Z Underwhelming. The last time this fund outshone its peers significantly was during the financial crisis. However, there are new managers at the helm, and the fund's performance has been uninspiring since.

From January 2010 through December 2019, the fund's 6.45% annualized return beat the category median by 82 basis points but underperformed its ICE Bank of America Merrill Lynch High Yield Constrained Index benchmark by 104 basis points while enduring more volatility than both.

It's understandable that the strategy's restrained approach wouldn't lead peers during credit market rallies, such as 2016 and 2017's rebound. But some execution stumbles kept the fund from outperforming during recent credit market downturns. For instance, the fund was tripped up by a 2014 overweighting in energy, and its weakness spilled into 2015. The team also had several issue-specific misses that dragged on performance in 2017 and into 2018. The fund ended 2018--a negative year for high yield overall--only marginally above its median peer, despite its cautious bent and underweighting to the poor-performing CCC market. In 2019, however, CCC and energy sector underweightings worked well for the fund, which was a strong year for high yield. It's critical to evaluate expenses, as they come directly out of returns. The share class on this report levies a fee that ranks in its Morningstar category's second-cheapest quintile. Even so, based on our assessment of the fund's People, Process and Parent pillars in the context of these fees, we don't think this share class will be able to deliver positive alpha relative to the category benchmark index, explaining its Morningstar Analyst Rating of Neutral. F000000381 Stuck in the middle. Neuberger Berman High Yield Bond sports a deep and experienced team, but its process lacks a clear advantage over its high-yield bond Morningstar Category peers, leading to a downgrade of its Process Pillar rating to Average and a downgrade of its Morningstar Analyst Rating to Neutral from Bronze on its clean I USD share class, and Negative on its most expensive share classes.

Despite some turnover, the team supporting this strategy remains experienced and deep. In 2019, lead manager and head of non-investment-grade credit Tom O'Reilly retired as planned. Then in April 2019, comanager Patrick Flynn passed away suddenly. Despite this turnover, two of the fund's four remaining comanagers, Russ Covode and Dan Doyle, have worked alongside O'Reilly for several years, and veteran high-yield analyst Chris Kocinski was promoted to comanager. The group relies on a team of 22 high-yield research analysts, most with more than a decade of experience.

The team's process prizes downside protection, starting with the research analysts' methodical approach to credit analysis. The managers also avoid the market's smallest issues, which can suffer from bouts of illiquidity; tend to underweight the lowest-quality companies; and keep the fund well-diversified. A yield near the category median also suggests the team isn't taking excessive risks.

Unfortunately, this approach hasn't stood out versus peers in some time: Its returns have hovered around the category average in each year over the past decade. The strategy's more restrained style shouldn't lead the pack in credit rallies, such as 2016 and 2017's rebound, but it also hasn't helped during credit sell-offs, such as mid-2015 to early 2016 and 2018's fourth quarter. The last time the strategy outperformed significantly was in 2008's global financial crisis, when its prior management team had substantially upgraded the portfolio's credit quality. It remains to be seen whether the current team will fare as well in the next downturn. 2099 2099 Tony Thomas, Ph.D. Tony Thomas, Ph.D. Neuberger Berman's steady approach to its evolution earns the firm a Positive Parent rating.

The firm, founded in 1939, emerged from the collapse of Lehman Brothers with new capabilities and a new ownership structure. Lehman's fixed-income and private-equity acquisitions became part of Neuberger Berman in the wake of Lehman's 2008 collapse, when chairman and CEO George Walker led employees in taking the more diversified firm private. Over 460 employees now own the business, which manages $270 billion in assets.

Once known primarily as a U.S. value equities shop, the new Neuberger Berman sees growth opportunities in Europe and Asia. Clients in those regions own 30% of the firm's assets under management. Although solely an investment manager, its retail mutual funds make up only one fifth of business. The rest is institutional and private client money, long bastions of the firm's identity.

The firm has lifted a few teams out of other firms to expand its circle of competence, including a talented emerging-markets-debt team from ING in 2013. While the firm has been selective in its acquisitions, its hands-off approach lets the new teams do what they do best. Meanwhile, the firm's partnership structure allows these new teams to integrate more fully into Neuberger by becoming managing partners over time.

Building one piece at a time. 2018-03-29T11:52:00 2018-03-29T16:52:00Z Underwhelming. The last time this fund outshone its peers significantly was during the financial crisis. However, there are new managers at the helm, and the fund's performance has been uninspiring since.

From January 2010 through December 2019, the fund's 6.45% annualized return beat the category median by 82 basis points but underperformed its ICE Bank of America Merrill Lynch High Yield Constrained Index benchmark by 104 basis points while enduring more volatility than both.

It's understandable that the strategy's restrained approach wouldn't lead peers during credit market rallies, such as 2016 and 2017's rebound. But some execution stumbles kept the fund from outperforming during recent credit market downturns. For instance, the fund was tripped up by a 2014 overweighting in energy, and its weakness spilled into 2015. The team also had several issue-specific misses that dragged on performance in 2017 and into 2018. The fund ended 2018--a negative year for high yield overall--only marginally above its median peer, despite its cautious bent and underweighting to the poor-performing CCC market. In 2019, however, CCC and energy sector underweightings worked well for the fund, which was a strong year for high yield. It's critical to evaluate expenses, as they come directly out of returns. The share class on this report levies a fee that ranks in its Morningstar category's cheapest quintile. Even so, based on our assessment of the fund's People, Process and Parent pillars in the context of these fees, we don't think this share class will be able to deliver positive alpha relative to the category benchmark index, explaining its Morningstar Analyst Rating of Neutral. F00000ZOTJ Stuck in the middle. Neuberger Berman High Yield Bond sports a deep and experienced team, but its process lacks a clear advantage over its high-yield bond Morningstar Category peers, leading to a downgrade of its Process Pillar rating to Average and a downgrade of its Morningstar Analyst Rating to Neutral from Bronze on its clean I USD share class, and Negative on its most expensive share classes.

Despite some turnover, the team supporting this strategy remains experienced and deep. In 2019, lead manager and head of non-investment-grade credit Tom O'Reilly retired as planned. Then in April 2019, comanager Patrick Flynn passed away suddenly. Despite this turnover, two of the fund's four remaining comanagers, Russ Covode and Dan Doyle, have worked alongside O'Reilly for several years, and veteran high-yield analyst Chris Kocinski was promoted to comanager. The group relies on a team of 22 high-yield research analysts, most with more than a decade of experience.

The team's process prizes downside protection, starting with the research analysts' methodical approach to credit analysis. The managers also avoid the market's smallest issues, which can suffer from bouts of illiquidity; tend to underweight the lowest-quality companies; and keep the fund well-diversified. A yield near the category median also suggests the team isn't taking excessive risks.

Unfortunately, this approach hasn't stood out versus peers in some time: Its returns have hovered around the category average in each year over the past decade. The strategy's more restrained style shouldn't lead the pack in credit rallies, such as 2016 and 2017's rebound, but it also hasn't helped during credit sell-offs, such as mid-2015 to early 2016 and 2018's fourth quarter. The last time the strategy outperformed significantly was in 2008's global financial crisis, when its prior management team had substantially upgraded the portfolio's credit quality. It remains to be seen whether the current team will fare as well in the next downturn. 2099 2099 Tony Thomas, Ph.D. Tony Thomas, Ph.D. Neuberger Berman's steady approach to its evolution earns the firm a Positive Parent rating.

The firm, founded in 1939, emerged from the collapse of Lehman Brothers with new capabilities and a new ownership structure. Lehman's fixed-income and private-equity acquisitions became part of Neuberger Berman in the wake of Lehman's 2008 collapse, when chairman and CEO George Walker led employees in taking the more diversified firm private. Over 460 employees now own the business, which manages $270 billion in assets.

Once known primarily as a U.S. value equities shop, the new Neuberger Berman sees growth opportunities in Europe and Asia. Clients in those regions own 30% of the firm's assets under management. Although solely an investment manager, its retail mutual funds make up only one fifth of business. The rest is institutional and private client money, long bastions of the firm's identity.

The firm has lifted a few teams out of other firms to expand its circle of competence, including a talented emerging-markets-debt team from ING in 2013. While the firm has been selective in its acquisitions, its hands-off approach lets the new teams do what they do best. Meanwhile, the firm's partnership structure allows these new teams to integrate more fully into Neuberger by becoming managing partners over time.

Building one piece at a time. 2018-03-29T11:52:00 2018-03-29T16:52:00Z Underwhelming. The last time this fund outshone its peers significantly was during the financial crisis. However, there are new managers at the helm, and the fund's performance has been uninspiring since.

From January 2010 through December 2019, the fund's 6.45% annualized return beat the category median by 82 basis points but underperformed its ICE Bank of America Merrill Lynch High Yield Constrained Index benchmark by 104 basis points while enduring more volatility than both.

It's understandable that the strategy's restrained approach wouldn't lead peers during credit market rallies, such as 2016 and 2017's rebound. But some execution stumbles kept the fund from outperforming during recent credit market downturns. For instance, the fund was tripped up by a 2014 overweighting in energy, and its weakness spilled into 2015. The team also had several issue-specific misses that dragged on performance in 2017 and into 2018. The fund ended 2018--a negative year for high yield overall--only marginally above its median peer, despite its cautious bent and underweighting to the poor-performing CCC market. In 2019, however, CCC and energy sector underweightings worked well for the fund, which was a strong year for high yield. It's critical to evaluate expenses, as they come directly out of returns. The share class on this report levies a fee that ranks in its Morningstar category's second-cheapest quintile. Even so, based on our assessment of the fund's People, Process and Parent pillars in the context of these fees, we don't think this share class will be able to deliver positive alpha relative to the category benchmark index, explaining its Morningstar Analyst Rating of Neutral. F0GBR06TK3 Stuck in the middle. Neuberger Berman High Yield Bond sports a deep and experienced team, but its process lacks a clear advantage over its high-yield bond Morningstar Category peers, leading to a downgrade of its Process Pillar rating to Average and a downgrade of its Morningstar Analyst Rating to Neutral from Bronze on its clean I USD share class, and Negative on its most expensive share classes.

Despite some turnover, the team supporting this strategy remains experienced and deep. In 2019, lead manager and head of non-investment-grade credit Tom O'Reilly retired as planned. Then in April 2019, comanager Patrick Flynn passed away suddenly. Despite this turnover, two of the fund's four remaining comanagers, Russ Covode and Dan Doyle, have worked alongside O'Reilly for several years, and veteran high-yield analyst Chris Kocinski was promoted to comanager. The group relies on a team of 22 high-yield research analysts, most with more than a decade of experience.

The team's process prizes downside protection, starting with the research analysts' methodical approach to credit analysis. The managers also avoid the market's smallest issues, which can suffer from bouts of illiquidity; tend to underweight the lowest-quality companies; and keep the fund well-diversified. A yield near the category median also suggests the team isn't taking excessive risks.

Unfortunately, this approach hasn't stood out versus peers in some time: Its returns have hovered around the category average in each year over the past decade. The strategy's more restrained style shouldn't lead the pack in credit rallies, such as 2016 and 2017's rebound, but it also hasn't helped during credit sell-offs, such as mid-2015 to early 2016 and 2018's fourth quarter. The last time the strategy outperformed significantly was in 2008's global financial crisis, when its prior management team had substantially upgraded the portfolio's credit quality. It remains to be seen whether the current team will fare as well in the next downturn. 2099 2099 Tony Thomas, Ph.D. Tony Thomas, Ph.D. Neuberger Berman's steady approach to its evolution earns the firm a Positive Parent rating.

The firm, founded in 1939, emerged from the collapse of Lehman Brothers with new capabilities and a new ownership structure. Lehman's fixed-income and private-equity acquisitions became part of Neuberger Berman in the wake of Lehman's 2008 collapse, when chairman and CEO George Walker led employees in taking the more diversified firm private. Over 460 employees now own the business, which manages $270 billion in assets.

Once known primarily as a U.S. value equities shop, the new Neuberger Berman sees growth opportunities in Europe and Asia. Clients in those regions own 30% of the firm's assets under management. Although solely an investment manager, its retail mutual funds make up only one fifth of business. The rest is institutional and private client money, long bastions of the firm's identity.

The firm has lifted a few teams out of other firms to expand its circle of competence, including a talented emerging-markets-debt team from ING in 2013. While the firm has been selective in its acquisitions, its hands-off approach lets the new teams do what they do best. Meanwhile, the firm's partnership structure allows these new teams to integrate more fully into Neuberger by becoming managing partners over time.

Building one piece at a time. 2018-03-29T11:52:00 2018-03-29T16:52:00Z Underwhelming. The last time this fund outshone its peers significantly was during the financial crisis. However, there are new managers at the helm, and the fund's performance has been uninspiring since.

From January 2010 through December 2019, the fund's 6.45% annualized return beat the category median by 82 basis points but underperformed its ICE Bank of America Merrill Lynch High Yield Constrained Index benchmark by 104 basis points while enduring more volatility than both.

It's understandable that the strategy's restrained approach wouldn't lead peers during credit market rallies, such as 2016 and 2017's rebound. But some execution stumbles kept the fund from outperforming during recent credit market downturns. For instance, the fund was tripped up by a 2014 overweighting in energy, and its weakness spilled into 2015. The team also had several issue-specific misses that dragged on performance in 2017 and into 2018. The fund ended 2018--a negative year for high yield overall--only marginally above its median peer, despite its cautious bent and underweighting to the poor-performing CCC market. In 2019, however, CCC and energy sector underweightings worked well for the fund, which was a strong year for high yield. It's critical to evaluate expenses, as they come directly out of returns. The share class on this report levies a fee that ranks in its Morningstar category's costliest quintile. Such high fees stack the odds heavily against investors. Based on our assessment of the fund's People, Process and Parent pillars in the context of these fees, we think this share class's alpha relative to the category benchmark index will be materially negative, explaining its Morningstar Analyst Rating of Negative. F00000TW34 Stuck in the middle. Neuberger Berman High Yield Bond sports a deep and experienced team, but its process lacks a clear advantage over its high-yield bond Morningstar Category peers, leading to a downgrade of its Process Pillar rating to Average and a downgrade of its Morningstar Analyst Rating to Neutral from Bronze on its clean I USD share class, and Negative on its most expensive share classes.

Despite some turnover, the team supporting this strategy remains experienced and deep. In 2019, lead manager and head of non-investment-grade credit Tom O'Reilly retired as planned. Then in April 2019, comanager Patrick Flynn passed away suddenly. Despite this turnover, two of the fund's four remaining comanagers, Russ Covode and Dan Doyle, have worked alongside O'Reilly for several years, and veteran high-yield analyst Chris Kocinski was promoted to comanager. The group relies on a team of 22 high-yield research analysts, most with more than a decade of experience.

The team's process prizes downside protection, starting with the research analysts' methodical approach to credit analysis. The managers also avoid the market's smallest issues, which can suffer from bouts of illiquidity; tend to underweight the lowest-quality companies; and keep the fund well-diversified. A yield near the category median also suggests the team isn't taking excessive risks.

Unfortunately, this approach hasn't stood out versus peers in some time: Its returns have hovered around the category average in each year over the past decade. The strategy's more restrained style shouldn't lead the pack in credit rallies, such as 2016 and 2017's rebound, but it also hasn't helped during credit sell-offs, such as mid-2015 to early 2016 and 2018's fourth quarter. The last time the strategy outperformed significantly was in 2008's global financial crisis, when its prior management team had substantially upgraded the portfolio's credit quality. It remains to be seen whether the current team will fare as well in the next downturn. 2099 2099 Tony Thomas, Ph.D. Tony Thomas, Ph.D. Neuberger Berman's steady approach to its evolution earns the firm a Positive Parent rating.

The firm, founded in 1939, emerged from the collapse of Lehman Brothers with new capabilities and a new ownership structure. Lehman's fixed-income and private-equity acquisitions became part of Neuberger Berman in the wake of Lehman's 2008 collapse, when chairman and CEO George Walker led employees in taking the more diversified firm private. Over 460 employees now own the business, which manages $270 billion in assets.

Once known primarily as a U.S. value equities shop, the new Neuberger Berman sees growth opportunities in Europe and Asia. Clients in those regions own 30% of the firm's assets under management. Although solely an investment manager, its retail mutual funds make up only one fifth of business. The rest is institutional and private client money, long bastions of the firm's identity.

The firm has lifted a few teams out of other firms to expand its circle of competence, including a talented emerging-markets-debt team from ING in 2013. While the firm has been selective in its acquisitions, its hands-off approach lets the new teams do what they do best. Meanwhile, the firm's partnership structure allows these new teams to integrate more fully into Neuberger by becoming managing partners over time.

Building one piece at a time. 2018-03-29T11:52:00 2018-03-29T16:52:00Z Underwhelming. The last time this fund outshone its peers significantly was during the financial crisis. However, there are new managers at the helm, and the fund's performance has been uninspiring since.

From January 2010 through December 2019, the fund's 6.45% annualized return beat the category median by 82 basis points but underperformed its ICE Bank of America Merrill Lynch High Yield Constrained Index benchmark by 104 basis points while enduring more volatility than both.

It's understandable that the strategy's restrained approach wouldn't lead peers during credit market rallies, such as 2016 and 2017's rebound. But some execution stumbles kept the fund from outperforming during recent credit market downturns. For instance, the fund was tripped up by a 2014 overweighting in energy, and its weakness spilled into 2015. The team also had several issue-specific misses that dragged on performance in 2017 and into 2018. The fund ended 2018--a negative year for high yield overall--only marginally above its median peer, despite its cautious bent and underweighting to the poor-performing CCC market. In 2019, however, CCC and energy sector underweightings worked well for the fund, which was a strong year for high yield. It's critical to evaluate expenses, as they come directly out of returns. The share class on this report levies a fee that ranks in its Morningstar category's costliest quintile. Such high fees stack the odds heavily against investors. Based on our assessment of the fund's People, Process and Parent pillars in the context of these fees, we don't think this share class will be able to deliver positive alpha relative to the category benchmark index, explaining its Morningstar Analyst Rating of Neutral. F00000P94O Stuck in the middle. Neuberger Berman High Yield Bond sports a deep and experienced team, but its process lacks a clear advantage over its high-yield bond Morningstar Category peers, leading to a downgrade of its Process Pillar rating to Average and a downgrade of its Morningstar Analyst Rating to Neutral from Bronze on its clean I USD share class, and Negative on its most expensive share classes.

Despite some turnover, the team supporting this strategy remains experienced and deep. In 2019, lead manager and head of non-investment-grade credit Tom O'Reilly retired as planned. Then in April 2019, comanager Patrick Flynn passed away suddenly. Despite this turnover, two of the fund's four remaining comanagers, Russ Covode and Dan Doyle, have worked alongside O'Reilly for several years, and veteran high-yield analyst Chris Kocinski was promoted to comanager. The group relies on a team of 22 high-yield research analysts, most with more than a decade of experience.

The team's process prizes downside protection, starting with the research analysts' methodical approach to credit analysis. The managers also avoid the market's smallest issues, which can suffer from bouts of illiquidity; tend to underweight the lowest-quality companies; and keep the fund well-diversified. A yield near the category median also suggests the team isn't taking excessive risks.

Unfortunately, this approach hasn't stood out versus peers in some time: Its returns have hovered around the category average in each year over the past decade. The strategy's more restrained style shouldn't lead the pack in credit rallies, such as 2016 and 2017's rebound, but it also hasn't helped during credit sell-offs, such as mid-2015 to early 2016 and 2018's fourth quarter. The last time the strategy outperformed significantly was in 2008's global financial crisis, when its prior management team had substantially upgraded the portfolio's credit quality. It remains to be seen whether the current team will fare as well in the next downturn. 2099 2099 Tony Thomas, Ph.D. Tony Thomas, Ph.D. Neuberger Berman's steady approach to its evolution earns the firm a Positive Parent rating.

The firm, founded in 1939, emerged from the collapse of Lehman Brothers with new capabilities and a new ownership structure. Lehman's fixed-income and private-equity acquisitions became part of Neuberger Berman in the wake of Lehman's 2008 collapse, when chairman and CEO George Walker led employees in taking the more diversified firm private. Over 460 employees now own the business, which manages $270 billion in assets.

Once known primarily as a U.S. value equities shop, the new Neuberger Berman sees growth opportunities in Europe and Asia. Clients in those regions own 30% of the firm's assets under management. Although solely an investment manager, its retail mutual funds make up only one fifth of business. The rest is institutional and private client money, long bastions of the firm's identity.

The firm has lifted a few teams out of other firms to expand its circle of competence, including a talented emerging-markets-debt team from ING in 2013. While the firm has been selective in its acquisitions, its hands-off approach lets the new teams do what they do best. Meanwhile, the firm's partnership structure allows these new teams to integrate more fully into Neuberger by becoming managing partners over time.

Building one piece at a time. 2018-03-29T11:52:00 2018-03-29T16:52:00Z Underwhelming. The last time this fund outshone its peers significantly was during the financial crisis. However, there are new managers at the helm, and the fund's performance has been uninspiring since.

From January 2010 through December 2019, the fund's 6.45% annualized return beat the category median by 82 basis points but underperformed its ICE Bank of America Merrill Lynch High Yield Constrained Index benchmark by 104 basis points while enduring more volatility than both.

It's understandable that the strategy's restrained approach wouldn't lead peers during credit market rallies, such as 2016 and 2017's rebound. But some execution stumbles kept the fund from outperforming during recent credit market downturns. For instance, the fund was tripped up by a 2014 overweighting in energy, and its weakness spilled into 2015. The team also had several issue-specific misses that dragged on performance in 2017 and into 2018. The fund ended 2018--a negative year for high yield overall--only marginally above its median peer, despite its cautious bent and underweighting to the poor-performing CCC market. In 2019, however, CCC and energy sector underweightings worked well for the fund, which was a strong year for high yield. It's critical to evaluate expenses, as they come directly out of returns. The share class on this report levies a fee that ranks in its Morningstar category's second-cheapest quintile. Even so, based on our assessment of the fund's People, Process and Parent pillars in the context of these fees, we don't think this share class will be able to deliver positive alpha relative to the category benchmark index, explaining its Morningstar Analyst Rating of Neutral. F0000109QC Stuck in the middle. Neuberger Berman High Yield Bond sports a deep and experienced team, but its process lacks a clear advantage over its high-yield bond Morningstar Category peers, leading to a downgrade of its Process Pillar rating to Average and a downgrade of its Morningstar Analyst Rating to Neutral from Bronze on its clean I USD share class, and Negative on its most expensive share classes.

Despite some turnover, the team supporting this strategy remains experienced and deep. In 2019, lead manager and head of non-investment-grade credit Tom O'Reilly retired as planned. Then in April 2019, comanager Patrick Flynn passed away suddenly. Despite this turnover, two of the fund's four remaining comanagers, Russ Covode and Dan Doyle, have worked alongside O'Reilly for several years, and veteran high-yield analyst Chris Kocinski was promoted to comanager. The group relies on a team of 22 high-yield research analysts, most with more than a decade of experience.

The team's process prizes downside protection, starting with the research analysts' methodical approach to credit analysis. The managers also avoid the market's smallest issues, which can suffer from bouts of illiquidity; tend to underweight the lowest-quality companies; and keep the fund well-diversified. A yield near the category median also suggests the team isn't taking excessive risks.

Unfortunately, this approach hasn't stood out versus peers in some time: Its returns have hovered around the category average in each year over the past decade. The strategy's more restrained style shouldn't lead the pack in credit rallies, such as 2016 and 2017's rebound, but it also hasn't helped during credit sell-offs, such as mid-2015 to early 2016 and 2018's fourth quarter. The last time the strategy outperformed significantly was in 2008's global financial crisis, when its prior management team had substantially upgraded the portfolio's credit quality. It remains to be seen whether the current team will fare as well in the next downturn. 2099 2099 Tony Thomas, Ph.D. Tony Thomas, Ph.D. Neuberger Berman's steady approach to its evolution earns the firm a Positive Parent rating.

The firm, founded in 1939, emerged from the collapse of Lehman Brothers with new capabilities and a new ownership structure. Lehman's fixed-income and private-equity acquisitions became part of Neuberger Berman in the wake of Lehman's 2008 collapse, when chairman and CEO George Walker led employees in taking the more diversified firm private. Over 460 employees now own the business, which manages $270 billion in assets.

Once known primarily as a U.S. value equities shop, the new Neuberger Berman sees growth opportunities in Europe and Asia. Clients in those regions own 30% of the firm's assets under management. Although solely an investment manager, its retail mutual funds make up only one fifth of business. The rest is institutional and private client money, long bastions of the firm's identity.

The firm has lifted a few teams out of other firms to expand its circle of competence, including a talented emerging-markets-debt team from ING in 2013. While the firm has been selective in its acquisitions, its hands-off approach lets the new teams do what they do best. Meanwhile, the firm's partnership structure allows these new teams to integrate more fully into Neuberger by becoming managing partners over time.

Building one piece at a time. 2018-03-29T11:52:00 2018-03-29T16:52:00Z Underwhelming. The last time this fund outshone its peers significantly was during the financial crisis. However, there are new managers at the helm, and the fund's performance has been uninspiring since.

From January 2010 through December 2019, the fund's 6.45% annualized return beat the category median by 82 basis points but underperformed its ICE Bank of America Merrill Lynch High Yield Constrained Index benchmark by 104 basis points while enduring more volatility than both.

It's understandable that the strategy's restrained approach wouldn't lead peers during credit market rallies, such as 2016 and 2017's rebound. But some execution stumbles kept the fund from outperforming during recent credit market downturns. For instance, the fund was tripped up by a 2014 overweighting in energy, and its weakness spilled into 2015. The team also had several issue-specific misses that dragged on performance in 2017 and into 2018. The fund ended 2018--a negative year for high yield overall--only marginally above its median peer, despite its cautious bent and underweighting to the poor-performing CCC market. In 2019, however, CCC and energy sector underweightings worked well for the fund, which was a strong year for high yield. F000014S6L Stuck in the middle. Neuberger Berman High Yield Bond sports a deep and experienced team, but its process lacks a clear advantage over its high-yield bond Morningstar Category peers, leading to a downgrade of its Process Pillar rating to Average and a downgrade of its Morningstar Analyst Rating to Neutral from Bronze on its clean I USD share class, and Negative on its most expensive share classes.

Despite some turnover, the team supporting this strategy remains experienced and deep. In 2019, lead manager and head of non-investment-grade credit Tom O'Reilly retired as planned. Then in April 2019, comanager Patrick Flynn passed away suddenly. Despite this turnover, two of the fund's four remaining comanagers, Russ Covode and Dan Doyle, have worked alongside O'Reilly for several years, and veteran high-yield analyst Chris Kocinski was promoted to comanager. The group relies on a team of 22 high-yield research analysts, most with more than a decade of experience.

The team's process prizes downside protection, starting with the research analysts' methodical approach to credit analysis. The managers also avoid the market's smallest issues, which can suffer from bouts of illiquidity; tend to underweight the lowest-quality companies; and keep the fund well-diversified. A yield near the category median also suggests the team isn't taking excessive risks.

Unfortunately, this approach hasn't stood out versus peers in some time: Its returns have hovered around the category average in each year over the past decade. The strategy's more restrained style shouldn't lead the pack in credit rallies, such as 2016 and 2017's rebound, but it also hasn't helped during credit sell-offs, such as mid-2015 to early 2016 and 2018's fourth quarter. The last time the strategy outperformed significantly was in 2008's global financial crisis, when its prior management team had substantially upgraded the portfolio's credit quality. It remains to be seen whether the current team will fare as well in the next downturn. 2099 2099 Tony Thomas, Ph.D. Tony Thomas, Ph.D. Neuberger Berman's steady approach to its evolution earns the firm a Positive Parent rating.

The firm, founded in 1939, emerged from the collapse of Lehman Brothers with new capabilities and a new ownership structure. Lehman's fixed-income and private-equity acquisitions became part of Neuberger Berman in the wake of Lehman's 2008 collapse, when chairman and CEO George Walker led employees in taking the more diversified firm private. Over 460 employees now own the business, which manages $270 billion in assets.

Once known primarily as a U.S. value equities shop, the new Neuberger Berman sees growth opportunities in Europe and Asia. Clients in those regions own 30% of the firm's assets under management. Although solely an investment manager, its retail mutual funds make up only one fifth of business. The rest is institutional and private client money, long bastions of the firm's identity.

The firm has lifted a few teams out of other firms to expand its circle of competence, including a talented emerging-markets-debt team from ING in 2013. While the firm has been selective in its acquisitions, its hands-off approach lets the new teams do what they do best. Meanwhile, the firm's partnership structure allows these new teams to integrate more fully into Neuberger by becoming managing partners over time.

Building one piece at a time. 2018-03-29T11:52:00 2018-03-29T16:52:00Z Underwhelming. The last time this fund outshone its peers significantly was during the financial crisis. However, there are new managers at the helm, and the fund's performance has been uninspiring since.

From January 2010 through December 2019, the fund's 6.45% annualized return beat the category median by 82 basis points but underperformed its ICE Bank of America Merrill Lynch High Yield Constrained Index benchmark by 104 basis points while enduring more volatility than both.

It's understandable that the strategy's restrained approach wouldn't lead peers during credit market rallies, such as 2016 and 2017's rebound. But some execution stumbles kept the fund from outperforming during recent credit market downturns. For instance, the fund was tripped up by a 2014 overweighting in energy, and its weakness spilled into 2015. The team also had several issue-specific misses that dragged on performance in 2017 and into 2018. The fund ended 2018--a negative year for high yield overall--only marginally above its median peer, despite its cautious bent and underweighting to the poor-performing CCC market. In 2019, however, CCC and energy sector underweightings worked well for the fund, which was a strong year for high yield. It's critical to evaluate expenses, as they come directly out of returns. The share class on this report levies a fee that ranks in its Morningstar category's second-cheapest quintile. Even so, based on our assessment of the fund's People, Process and Parent pillars in the context of these fees, we don't think this share class will be able to deliver positive alpha relative to the category benchmark index, explaining its Morningstar Analyst Rating of Neutral. F00000OZ5T Stuck in the middle. Neuberger Berman High Yield Bond sports a deep and experienced team, but its process lacks a clear advantage over its high-yield bond Morningstar Category peers, leading to a downgrade of its Process Pillar rating to Average and a downgrade of its Morningstar Analyst Rating to Neutral from Bronze on its clean I USD share class, and Negative on its most expensive share classes.

Despite some turnover, the team supporting this strategy remains experienced and deep. In 2019, lead manager and head of non-investment-grade credit Tom O'Reilly retired as planned. Then in April 2019, comanager Patrick Flynn passed away suddenly. Despite this turnover, two of the fund's four remaining comanagers, Russ Covode and Dan Doyle, have worked alongside O'Reilly for several years, and veteran high-yield analyst Chris Kocinski was promoted to comanager. The group relies on a team of 22 high-yield research analysts, most with more than a decade of experience.

The team's process prizes downside protection, starting with the research analysts' methodical approach to credit analysis. The managers also avoid the market's smallest issues, which can suffer from bouts of illiquidity; tend to underweight the lowest-quality companies; and keep the fund well-diversified. A yield near the category median also suggests the team isn't taking excessive risks.

Unfortunately, this approach hasn't stood out versus peers in some time: Its returns have hovered around the category average in each year over the past decade. The strategy's more restrained style shouldn't lead the pack in credit rallies, such as 2016 and 2017's rebound, but it also hasn't helped during credit sell-offs, such as mid-2015 to early 2016 and 2018's fourth quarter. The last time the strategy outperformed significantly was in 2008's global financial crisis, when its prior management team had substantially upgraded the portfolio's credit quality. It remains to be seen whether the current team will fare as well in the next downturn. 2099 2099 Tony Thomas, Ph.D. Tony Thomas, Ph.D. Neuberger Berman's steady approach to its evolution earns the firm a Positive Parent rating.

The firm, founded in 1939, emerged from the collapse of Lehman Brothers with new capabilities and a new ownership structure. Lehman's fixed-income and private-equity acquisitions became part of Neuberger Berman in the wake of Lehman's 2008 collapse, when chairman and CEO George Walker led employees in taking the more diversified firm private. Over 460 employees now own the business, which manages $270 billion in assets.

Once known primarily as a U.S. value equities shop, the new Neuberger Berman sees growth opportunities in Europe and Asia. Clients in those regions own 30% of the firm's assets under management. Although solely an investment manager, its retail mutual funds make up only one fifth of business. The rest is institutional and private client money, long bastions of the firm's identity.

The firm has lifted a few teams out of other firms to expand its circle of competence, including a talented emerging-markets-debt team from ING in 2013. While the firm has been selective in its acquisitions, its hands-off approach lets the new teams do what they do best. Meanwhile, the firm's partnership structure allows these new teams to integrate more fully into Neuberger by becoming managing partners over time.

Building one piece at a time. 2018-03-29T11:52:00 2018-03-29T16:52:00Z Underwhelming. The last time this fund outshone its peers significantly was during the financial crisis. However, there are new managers at the helm, and the fund's performance has been uninspiring since.

From January 2010 through December 2019, the fund's 6.45% annualized return beat the category median by 82 basis points but underperformed its ICE Bank of America Merrill Lynch High Yield Constrained Index benchmark by 104 basis points while enduring more volatility than both.

It's understandable that the strategy's restrained approach wouldn't lead peers during credit market rallies, such as 2016 and 2017's rebound. But some execution stumbles kept the fund from outperforming during recent credit market downturns. For instance, the fund was tripped up by a 2014 overweighting in energy, and its weakness spilled into 2015. The team also had several issue-specific misses that dragged on performance in 2017 and into 2018. The fund ended 2018--a negative year for high yield overall--only marginally above its median peer, despite its cautious bent and underweighting to the poor-performing CCC market. In 2019, however, CCC and energy sector underweightings worked well for the fund, which was a strong year for high yield. It's critical to evaluate expenses, as they come directly out of returns. The share class on this report levies a fee that ranks in its Morningstar category's costliest quintile. Such high fees stack the odds heavily against investors. Based on our assessment of the fund's People, Process and Parent pillars in the context of these fees, we think this share class's alpha relative to the category benchmark index will be materially negative, explaining its Morningstar Analyst Rating of Negative. F00000Q0UO Stuck in the middle. Neuberger Berman High Yield Bond sports a deep and experienced team, but its process lacks a clear advantage over its high-yield bond Morningstar Category peers, leading to a downgrade of its Process Pillar rating to Average and a downgrade of its Morningstar Analyst Rating to Neutral from Bronze on its clean I USD share class, and Negative on its most expensive share classes.

Despite some turnover, the team supporting this strategy remains experienced and deep. In 2019, lead manager and head of non-investment-grade credit Tom O'Reilly retired as planned. Then in April 2019, comanager Patrick Flynn passed away suddenly. Despite this turnover, two of the fund's four remaining comanagers, Russ Covode and Dan Doyle, have worked alongside O'Reilly for several years, and veteran high-yield analyst Chris Kocinski was promoted to comanager. The group relies on a team of 22 high-yield research analysts, most with more than a decade of experience.

The team's process prizes downside protection, starting with the research analysts' methodical approach to credit analysis. The managers also avoid the market's smallest issues, which can suffer from bouts of illiquidity; tend to underweight the lowest-quality companies; and keep the fund well-diversified. A yield near the category median also suggests the team isn't taking excessive risks.

Unfortunately, this approach hasn't stood out versus peers in some time: Its returns have hovered around the category average in each year over the past decade. The strategy's more restrained style shouldn't lead the pack in credit rallies, such as 2016 and 2017's rebound, but it also hasn't helped during credit sell-offs, such as mid-2015 to early 2016 and 2018's fourth quarter. The last time the strategy outperformed significantly was in 2008's global financial crisis, when its prior management team had substantially upgraded the portfolio's credit quality. It remains to be seen whether the current team will fare as well in the next downturn. 2099 2099 Tony Thomas, Ph.D. Tony Thomas, Ph.D. Neuberger Berman's steady approach to its evolution earns the firm a Positive Parent rating.

The firm, founded in 1939, emerged from the collapse of Lehman Brothers with new capabilities and a new ownership structure. Lehman's fixed-income and private-equity acquisitions became part of Neuberger Berman in the wake of Lehman's 2008 collapse, when chairman and CEO George Walker led employees in taking the more diversified firm private. Over 460 employees now own the business, which manages $270 billion in assets.

Once known primarily as a U.S. value equities shop, the new Neuberger Berman sees growth opportunities in Europe and Asia. Clients in those regions own 30% of the firm's assets under management. Although solely an investment manager, its retail mutual funds make up only one fifth of business. The rest is institutional and private client money, long bastions of the firm's identity.

The firm has lifted a few teams out of other firms to expand its circle of competence, including a talented emerging-markets-debt team from ING in 2013. While the firm has been selective in its acquisitions, its hands-off approach lets the new teams do what they do best. Meanwhile, the firm's partnership structure allows these new teams to integrate more fully into Neuberger by becoming managing partners over time.

Building one piece at a time. 2018-03-29T11:52:00 2018-03-29T16:52:00Z Underwhelming. The last time this fund outshone its peers significantly was during the financial crisis. However, there are new managers at the helm, and the fund's performance has been uninspiring since.

From January 2010 through December 2019, the fund's 6.45% annualized return beat the category median by 82 basis points but underperformed its ICE Bank of America Merrill Lynch High Yield Constrained Index benchmark by 104 basis points while enduring more volatility than both.

It's understandable that the strategy's restrained approach wouldn't lead peers during credit market rallies, such as 2016 and 2017's rebound. But some execution stumbles kept the fund from outperforming during recent credit market downturns. For instance, the fund was tripped up by a 2014 overweighting in energy, and its weakness spilled into 2015. The team also had several issue-specific misses that dragged on performance in 2017 and into 2018. The fund ended 2018--a negative year for high yield overall--only marginally above its median peer, despite its cautious bent and underweighting to the poor-performing CCC market. In 2019, however, CCC and energy sector underweightings worked well for the fund, which was a strong year for high yield. It's critical to evaluate expenses, as they come directly out of returns. The share class on this report levies a fee that ranks in its Morningstar category's second-cheapest quintile. Even so, based on our assessment of the fund's People, Process and Parent pillars in the context of these fees, we don't think this share class will be able to deliver positive alpha relative to the category benchmark index, explaining its Morningstar Analyst Rating of Neutral. F00000ZH1M Stuck in the middle. Neuberger Berman High Yield Bond sports a deep and experienced team, but its process lacks a clear advantage over its high-yield bond Morningstar Category peers, leading to a downgrade of its Process Pillar rating to Average and a downgrade of its Morningstar Analyst Rating to Neutral from Bronze on its clean I USD share class, and Negative on its most expensive share classes.

Despite some turnover, the team supporting this strategy remains experienced and deep. In 2019, lead manager and head of non-investment-grade credit Tom O'Reilly retired as planned. Then in April 2019, comanager Patrick Flynn passed away suddenly. Despite this turnover, two of the fund's four remaining comanagers, Russ Covode and Dan Doyle, have worked alongside O'Reilly for several years, and veteran high-yield analyst Chris Kocinski was promoted to comanager. The group relies on a team of 22 high-yield research analysts, most with more than a decade of experience.

The team's process prizes downside protection, starting with the research analysts' methodical approach to credit analysis. The managers also avoid the market's smallest issues, which can suffer from bouts of illiquidity; tend to underweight the lowest-quality companies; and keep the fund well-diversified. A yield near the category median also suggests the team isn't taking excessive risks.

Unfortunately, this approach hasn't stood out versus peers in some time: Its returns have hovered around the category average in each year over the past decade. The strategy's more restrained style shouldn't lead the pack in credit rallies, such as 2016 and 2017's rebound, but it also hasn't helped during credit sell-offs, such as mid-2015 to early 2016 and 2018's fourth quarter. The last time the strategy outperformed significantly was in 2008's global financial crisis, when its prior management team had substantially upgraded the portfolio's credit quality. It remains to be seen whether the current team will fare as well in the next downturn. 2099 2099 Tony Thomas, Ph.D. Tony Thomas, Ph.D. Neuberger Berman's steady approach to its evolution earns the firm a Positive Parent rating.

The firm, founded in 1939, emerged from the collapse of Lehman Brothers with new capabilities and a new ownership structure. Lehman's fixed-income and private-equity acquisitions became part of Neuberger Berman in the wake of Lehman's 2008 collapse, when chairman and CEO George Walker led employees in taking the more diversified firm private. Over 460 employees now own the business, which manages $270 billion in assets.

Once known primarily as a U.S. value equities shop, the new Neuberger Berman sees growth opportunities in Europe and Asia. Clients in those regions own 30% of the firm's assets under management. Although solely an investment manager, its retail mutual funds make up only one fifth of business. The rest is institutional and private client money, long bastions of the firm's identity.

The firm has lifted a few teams out of other firms to expand its circle of competence, including a talented emerging-markets-debt team from ING in 2013. While the firm has been selective in its acquisitions, its hands-off approach lets the new teams do what they do best. Meanwhile, the firm's partnership structure allows these new teams to integrate more fully into Neuberger by becoming managing partners over time.

Building one piece at a time. 2018-03-29T11:52:00 2018-03-29T16:52:00Z Underwhelming. The last time this fund outshone its peers significantly was during the financial crisis. However, there are new managers at the helm, and the fund's performance has been uninspiring since.

From January 2010 through December 2019, the fund's 6.45% annualized return beat the category median by 82 basis points but underperformed its ICE Bank of America Merrill Lynch High Yield Constrained Index benchmark by 104 basis points while enduring more volatility than both.

It's understandable that the strategy's restrained approach wouldn't lead peers during credit market rallies, such as 2016 and 2017's rebound. But some execution stumbles kept the fund from outperforming during recent credit market downturns. For instance, the fund was tripped up by a 2014 overweighting in energy, and its weakness spilled into 2015. The team also had several issue-specific misses that dragged on performance in 2017 and into 2018. The fund ended 2018--a negative year for high yield overall--only marginally above its median peer, despite its cautious bent and underweighting to the poor-performing CCC market. In 2019, however, CCC and energy sector underweightings worked well for the fund, which was a strong year for high yield. It's critical to evaluate expenses, as they come directly out of returns. The share class on this report levies a fee that ranks in its Morningstar category's second-cheapest quintile. Even so, based on our assessment of the fund's People, Process and Parent pillars in the context of these fees, we don't think this share class will be able to deliver positive alpha relative to the category benchmark index, explaining its Morningstar Analyst Rating of Neutral. F00000TI5N LiveNeuberger Berman U.S. High Yield