US investment manager Neuberger Berman has launched a Ucits fund investing primarily in collateralised loan obligations (CLO) mezzanine debt securities.
The Neuberger Berman CLO Income Fund launched with $77m of seed client investment, the group said.
The fund is managed by Pim van Schie, Joseph Lynch, and Stephen Casey, senior portfolio managers in Neuberger Berman’s $43bn non-investment grade and structured credit team.
The fund aims to generate an attractive risk-adjusted return relative to comparably rated corporates with minimal duration by investing primarily in US dollar and euro-denominated floating rate CLO mezzanine debt securities, as well as US high yield securities.
CLOs – a derivative debt investment that invests in leveraged loans similar to products that led to the housing bubble a decade ago – are highly diversified pools of primarily first-lien senior secured bank loans, with diversified exposure to typically at least 150-200 issuers.
“CLO debt can offer economic and fundamental advantages over other asset classes and is typically issued with significant credit enhancement to absorb credit losses in the underlying loan portfolios,” van Schie said.
Dik van Lomwel, head of EMEA and Latin America at Neuberger Berman, added: “We have seen significant interest from clients who are comfortable with non-investment grade credit and are looking to capture the additional yield and fundamental credit enhancement offered by CLO debt.”
The fund is a sub-fund of Neuberger Berman’s Irish-domiciled Ucits fund umbrella. It is registered for sale in the UK and across the European Union and is in the process of being registered in Switzerland.