Here's the sweet spot for fixed income right now

The Neuberger Berman Strategic Income Fund's objective is to solve for maximising the total return you can receive, generating good current income, but all with an investment grade volatility assumption of how the fund's going to behave. So right now, given the opportunity set in the fixed income markets, we've been migrating more of the portfolio to higher quality assets versus lower quality. That's a function of the relative value we see in higher quality parts of the market, in particular areas like agency mortgage-backed securities, which are not only highly liquid and high quality assets, AA quality, but also are generating great levels of income and have some interesting low dollar price opportunities that can pull to par.

The other thing we've been doing is, extending duration. We've gone from a very conservative stance on duration coming into 2022, rightly so in hindsight, to now stepping into duration and getting more intermediate in our overall portfolio duration stance, given the valuation is more attractive, a bit further out on the curve.

So those are the two main things we've been doing is, building more defence, higher quality, and extending duration in the overall portfolio.

In pursuit of total return, how do you balance capital and income? 

There's a pretty interesting opportunity set in the fixed interest markets today where you have this kind of secondary market of bonds that were issued with low coupons from the post-GFC up to COVID and during COVID era. Those are, in many cases, trading at discounts to par. So a selection and discerning selection of names where dollar prices are low, albeit coupons are low and you feel like you can have some additional price performance, I think is an interesting opportunity set. The other side of it is working in the primary market and new issuance in coupons where there's high current income, but prices are more in line with par. So I think there's something for everybody in our funds, in our strategies that are total return seeking and balancing income with that. We're combining those two exposures to build income that's attractive for investors today, but additional potential total return as the bonds are called and pulled towards n maturity values at par.

Exploiting mispriced sectors

Investing in the Neuberger Berman Strategic Income Fund provides access to a diversified, multi-sector fixed income strategy that seeks high income and an attractive total return from flexible sector and intra-sector asset allocation across global fixed income markets.

Managed Fund

Neuberger Berman Strategic Income Fund

Global Fixed Income

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