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5 Funds from an 82-Year Street Veteran
08/01/2011 12:30 pm EST
In markets like these it pays to have perspective and few have as much perspective than this industry icon, notes Tom Taulli of InvestorPlace.com.
After realizing he was not going to make a great living as an artist, Roy Neuberger started a career on Wall Street-in 1929. Terrible? Not really. Roy Neuberger made a bundle when he shorted the stock of high-flier, RCA. It went from $570 to $2 per share.
In fact, this great trade was not a fluke. Neuberger had a knack for finding values and timing the market (even in March 2009, he called the bottom of the stock market).
And yes, it was in 1939 that Roy Neuberger co-founded Neuberger Berman, with a focus on wealthy individuals. Although, over time, the firm would broaden its mandate and provide a wide offering of mutual funds. Now Neuberger Berman is a top Wall Street firm and has $180 billion under management.
So what are some of its top mutual funds? Let's take a look:
It is tough to find strong yields in today's markets. But the portfolio managers at Neuberger Berman Equity Income (NBHAX) mutual fund are certainly trying hard to do so-while still maintaining a fairly low-risk profile. Currently, the fund has a yield of 3.87%.
To get this, it invests in companies like utilities, convertibles, and real estate investment trusts. They also use derivatives to help juice things.
The Neuberger Berman Genesis (NBGNX) mutual fund has a focus on mid-cap companies. While the opportunities are strong, it usually means that investors should take a long-term perspective.
So, in the case of the Genesis fund, its turnover is only 16%. What's more, the managers-Judy Vale and Bob D'Alelio-have been at the helm since the mid-1990s.
All in all, the track record has been strong. The 15-year average annual return is 12.28%. Actually, the volatility has been fairly tame as well. It certainly helps that the fund tends to focus on companies with strong barriers to entry and solid balance sheets.
Junk bonds provide a good way to get strong yields. However, as has been the case recently, the volatility can be substantial. This is why it is important to have strong portfolio managers.
As for the Neuberger Berman High Income Bond (NHICX) fund, it fits the bill. The co-managers-Ann Benjamin and Tom O'Reilly-have posted an average annual return of 8.86% for the past five years.
Then again, they have about two dozen analysts, who do tremendous numbers-crunching on credit risks. This has been a critical factor for success.
The Neuberger Berman Guardian (NGDAX) mutual fund has $1.2 billion in assets, invests primarily in large cap companies. Moreover, its criteria is highly selective as the portfolio usually has about 30 to 40 stocks.
Despite all this, the fund is able to achieve a good level of diversification because it invests in an assortment of industries. The top holdings include Danaher (DHR), BG Group (BG), Texas Instruments (TXN), Proctor & Gamble (PG), and Newfield Exploration (NFX).
There seems to be no good news when it comes to real estate. But the market is huge and definitely has many investment opportunities. Just look at the Neuberger Berman Real Estate (NREAX) fund. Over the past year, it has returned 36.01%.
The fund is definitely nimble. If a certain category of real estate is showing weakness, the portfolio managers will dump holdings.
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