Today Neuberger Berman completed the conversion of its Neuberger Berman U.S. Equity Index PutWrite Strategy Fund into the Neuberger Berman Option Strategy ETF (NYSE Arca: NBOS).
“Our ETF suite complements our mutual fund, closed-end fund, and separately managed account businesses to expand investor choice when selecting the vehicles that best align with how they build portfolios. NBOS joins the group and is an option-based strategy that seeks long-term, structured, risk-efficient returns with less volatility than broad equity markets,” Neuberger Berman said in a statement.
The fund mainly sells put options on the S&P 500, which allows it to generate income while providing similar returns to the index with less risk. That can mean the investor gives up some upside potential, but they also have some protection against downside performance.
Options Strategy + Fixed Income Portfolio
NBOS also owns a portfolio of mainly high-quality, short-term Treasury debt, which serves as collateral for the options portfolio while providing income, according to its prospectus. A fact sheet provided by Neuberger Berman suggests that the fund could be an attractive investment when markets are stagnant or on a downward trend — or when volatility is high.
“NBOS aims to solve common portfolio challenges including market stagnation/decline, sustained volatility, higher interest rates, and higher portfolio cash levels,” the firm said.
In terms of cost, NBOS’s expense ratio of 0.56% is lower than even the expense ratio for the institutional class shares from when it was a mutual fund. After a waiver, the total expense ratio was 0.66%, while the expense ratios for the other share classes were more than 1.00%, even after a fee waiver.
The new ETF comes to market with roughly $480 million in assets under management, which makes it the largest fund in the Neuberger Berman ETF lineup. The addition of NBOS brings the total assets under management for the issuer to about $790 million spread across seven ETFs.
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