The fund aims to offer the liquidity and accessibility of a mutual fund and the underlying investments of hedge fund strategies. The fund’s managers, Neuberger Berman’s fund of hedge funds team, are looking for capital appreciation with absolute returns by allocating its assets to multiple hedge fund advisers that employ a mix of alternative investment strategies.
Unlike traditional hedge funds, the fund provides daily liquidity, lower investment minimums ($1,000 for Class A and C shares), will deliver 1099s to shareholders, offers full transparency of portfolio holdings and has no performance-based management fee. The fund employs the risk management and monitoring, mix of managers and strategies, and operational due diligence previously available only to institutional and high-net-worth investors through traditional hedge funds.
“We are strong believers that alternative mutual fund solutions—‘liquid alternatives’—are applicable to investors who have historically not been able to access hedge fund strategies as well as institutions that seek liquid and cost-effective solutions,” said David Kupperman, the team’s managing director. “We see a future where defined contribution plans embrace alternative investments in providing 401(k) plan participants a full investment solution.”
The fund’s sub-advisers are The Boston Company for long/short and mid-cap equities; Cramer Rosenthal McGlynn for global long/short equities; GAMCO Asset Management for merger arbitrage; Levin Capital Strategies for event driven investments; Sound Point Capital for distressed and event-driven credit; Turner Investments for long/short health care equity; and Visium Asset Management for event-driven investments. MacKay Shields is sub-adviser for long/short credit arbitrage.
“We believe alternative investments can play an important role alongside long-only equities and fixed income, and we are delighted to offer these strategies in a mutual fund structure,” said Eric Weinstein, chief investment officer and managing director of Neuberger Berman Alternative Investment Management LLC.
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