Neuberger Berman, the former Lehman Brothers Asset Management, announced late yesterday that it will outsource the management of its taxable money market funds to SSgA. The release, "Neuberger Berman Selects State Street to Provide Taxable Money Market Funds to Its Clients", says, Neuberger Berman has chosen State Street Global Advisors (SSgA) "as a provider of taxable money market funds to Neuberger Berman fund shareholders and clients commencing next month."
Neuberger has seen its money fund assets decline precipitously, falling from 22nd to 38th in market share over the past year and a half. The former LBAM at one point (Feb. 2008) managed over $30 billion in domestic U.S. money market funds, but it has since shrunk to below $6 billion. (Totals include domestic money funds tracked by Crane Data's Money Fund Intelligence XLS.) The company lost over 42% of its assets, falling from $21.0 billion to $12.1 billion, during the September 2008 Lehman Brothers- and Reserve Primary Fund-induced market panic. Neuberger also recently had its taxable portfolio management team, led by John Donohue, depart to Dwight Asset Management (see our "People" news below and see also P&I's "Dwight gets Neuberger cash team in 'friendly' liftout").
NB's press release says, "The firm said it is focusing on its longstanding equity, fixed income and alternative investment strategies to best serve its clients goals and objectives over the long term. On or about Aug. 14, shareholders of Neuberger Berman taxable money market funds will acquire shares of State Street Institutional Trust funds with comparable investment objectives. Shareholders will receive letters informing them of the change."
"After extensive due diligence and analysis, we have decided to engage State Street as a provider of these products to our clients," said George Walker, chairman and CEO of Neuberger Berman. "With nearly $500 billion (as of March 31, 2009) in liquidity assets under management, we believe State Street Global Advisors, one of the largest global cash managers in the industry, has the necessary expertise and financial resources to fulfill this role, with a portfolio management style that follows a conservative, prudent approach to investing."
SSgA Senior Managing Director James Ross says, "Neuberger Berman is one of State Street's longstanding clients and we are delighted that they have opted to build on the strength of this relationship by awarding SSgA with this new mandate for our money market funds. We look forward to helping Neuberger Berman and its clients by demonstrating our expertise in managing money market funds that seek to preserve capital and liquidity for investors."
The funds involved are: Neuberger Berman Government Money Fund, NB Institutional Cash Fund, NB Cash Reserves, and NB Treasury Fund, which held approximately $4.6 billion as of June 30, 2009. "Neuberger Berman continues to manage four municipal money market funds and also offers cash management to institutional separate account clients," says the release.