Executives of Neuberger Berman Group LLC, now running the $155 billion money manager as an independent firm, plan to share some of their institutional-only investment strategies with investment advisers and individuals for the first time.
The company may offer a portion of its sophisticated institutional products to advisers this year, including some of its quantitative-investment products — such as its global-tactical-asset-allocation strategy or its multistrategy offering — as well as hedge fund and private-equity products, said George Walker, the New York-based company's chairman and chief executive.
“These types of strategies have been overwhelmingly utilized by institutions,” he said. “But they have real appeal for advisers and their clients now too.”
In an interview last week after they completed a spinoff from Lehman Brothers Holdings Inc., Neuberger executives noted that they plan to help investment advisers provide a broad range of investment products to clients during these trying times.
“If you only have a hammer, everything looks like a nail,” Mr. Walker said. “If you're simply working with a toolbox of stocks and bonds, then it's more difficult than ever to give good advice to your clients.”
Specific details on how the institutional strategies will be structured and offered to advisers are not yet available, but David Kathman, an analyst at Chicago-based Morningstar Inc., said that the concept is a logical one for Neuberger to implement in the current market environment.
“On the surface, it sounds like it could definitely be attractive to advisers who are looking for some new capabilities and new ideas,” he said. “And it's a natural extension of what Neuberger's been doing on the institutional side, so it's a pretty logical step forward.”
At the end of March, Neuberger ran roughly $90 billion in institutional assets, with the remaining $65 billion of its assets under management split nearly evenly between its high-net-worth and intermediary businesses.
Mr. Kathman added that Neuberger began transitioning away from no-load funds last year and is slated to introduce load shares for several of its mutual funds this year. The shift, Mr. Walker said, was made to make the firm's investment products more attractive to advisers.
This strategy of pushing deeper into the adviser marketplace is made possible in part by Neuberger's new status as an independently owned investment firm, said Joe Amato, the firm's president.
The majority of the firm — 51% — is now owned by Neuberger's senior management and portfolio managers, with the remainder held by the estate of New York-based Lehman Brothers, a vehicle overseen by Alvarez & Marsal Holdings LLC of New York that is being used to pay Lehman's creditors.
As a result of the buyout, Neuberger returns to its roots as an independent money manager. Being tied to a financial giant meant it had to compete against rivals with major brokerage operations — a factor that may have dissuaded competitors from distributing Neuberger Berman funds when Lehman Brothers encountered financial difficulties, which eventually led to bankruptcy.
The new ownership structure also frees Neuberger from potential conflicts in Lehman brokers' product sales. “Being fully independent gives us more purity,” Mr. Amato said.
It also catapults Neuberger to fourth place among independently owned asset management companies, behind
Fidelity Investments of Boston, The
Capital Group Cos. of Los Angeles and Boston-based Wellington Management Co. LLP.
“We're extremely fortunate,” said Mr. Walker, noting that there was a great deal of uncertainty about his firm's fate after Lehman filed for bankruptcy protection last September. “It wasn't always clear what the future would be for us, but this is an ideal outcome.”
E-mail Mark Bruno at [email protected].
