Neuberger Berman to close ETF that failed to shine since conversion #NewsMarket

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Neuberger Berman is closing its $6mn Global Real Estate ETF on January 6, following its conversion from a mutual fund last year.

The manager’s board of trustees approved the liquidation, because the fund had not “reached sufficient scale”, according to a regulatory filing.

Neuberger confirmed it was its first ETF liquidation — it launched its first ETFs in 2022.

This article was previously published by Ignites, a title owned by the FT Group.

The ETF’s proceeds would be distributed to shareholders on January 16, the filing indicated.

“The small size of this fund makes it challenging to efficiently pursue its investment strategy. Therefore, we have made the decision to close the fund to best serve existing shareholders,” Neuberger said.

The Global Real Estate ETF recorded more than $3mn in net inflows over the course of its lifetime in the new wrapper, data from Morningstar Direct showed.

At the time of its conversion in the third quarter of 2023, the Global Real Estate mutual fund had $2.8mn in assets, Morningstar data showed.

But the mutual fund, which the firm launched in 2014, bled assets, shedding more than $648,000 for the year ended September 30 2024, the data revealed.

The ETF’s closure was not likely to indicate additional issues with Neuberger’s ETFs, Morningstar analyst Max Curtin said.

“I don’t think it’s a real sign of anything. Even with a well-established mutual fund track record, I think the one-year marker for a vehicle is a threshold that, if [the firm is unhappy]shutting it is always part of the equation,” Curtin said.

The firm offers 12 ETFs with a combined $1.4bn in assets as of October 31, according to Morningstar data. The ETFs netted $369mn in combined flows for the year ended the same date, Morningstar Direct data showed.

Neuberger said in April 2023 that it would also refashion its Greater China Equity fund, which is now a $6mn ETF.

That mutual fund had also encountered outflows, bleeding $30mn for the year ended September 30 2023, according to Morningstar data.

As an ETF, it had more than $4.2mn in inflows for the year ended last month.

Neuberger has closed or converted 39 open-end mutual funds over the past 25 years, Morningstar Direct data indicates.

*Ignites is a news service published by FT Specialist for professionals working in the asset management industry. Trials and subscriptions are available at ignites.com.