Neuberger Berman US MltCp Opps £ I3 Inc |
Morningstar's Take
|14/08/2023by David Kathman
| Neuberger Berman US Multi-Cap Opportunities remains a pretty good multi-cap stock fund, despite some rough patches in the past few years. The fund maintains its Pillar scores of Above Average for both People and Process. This fund is run by an experienced team using a distinctive, generally sensible strategy. Rich Nackenson has been in charge of the strategy since 2006 and this fund since its 2012 inception, helped by three dedicated analysts who have all been with him for more than a decade. Nackenson’s stock-picking methodology centers around in-depth cash-flow analysis, and the core of the portfolio consists of stable cash cows such as top holdings Berkshire Hathaway BRK.B and Microsoft MSFT. Nackenson also holds some opportunistic names that are cheap for temporary reasons, though the focus on cash flow keeps the most speculative names out. Portfolio construction is another distinctive element of the fund's process. Its sector weightings can differ significantly from those of the S&P 500 benchmark, and its average market cap is much lower, due to its ability to draw stocks from the entire market-cap spectrum. It only holds 30 to 40 stocks, meaning that a few holdings can have a big effect on returns, for better or for worse. As a result, the fund's active share has averaged around 80, much higher than the large-blend category median. For most of the fund’s history, this approach worked quite well thanks to Nackenson’s skilled stock picking. Through the end of 2019, the fund’s since-inception returns had easily beaten the US flex-cap equity Morningstar category, and its rolling three-year returns had beaten the category about 90% of the time. However, it badly underperformed in the coronavirus bear market of early 2020 when several consumer-oriented holdings got hammered, temporarily dragging down its three- and five-year trailing returns. Since then Nackenson has stuck with his strategy and the fund has been a solid performer, easily beating the category for the trailing three years through July 31, 2023. There have been some more rough patches, of the type that are inevitable with a concentrated fund like this, but the good times have outnumbered the bad times here, and long-term investors have been rewarded. |
To find out how Morningstar rates a fund click here.
| Morningstar Pillars | |
| People | Above Average |
| Parent | Above Average |
| Process | Above Average |
Morningstar Medalist RatingMorningstar assigns the Medalist Rating to funds that are qualitatively and quantitatively assessed through manager research and algorithmic processes. The assessment turns on three key “pillars” – People, Process, and Parent – that yield an estimate of how well a fund will perform before fees but after adjusting for risk.
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