Investors looking to the reliability of bonds in a challenging economic environment would do well to consider the Neuberger Berman Short Duration Income ETF (NBSD ). The fund combines lower rate risk with lower default risk in one strategy that offers diversified bond exposure.
The actively managed NBSD seeks to generate reliable income while providing an investment-grade, short duration profile for portfolios. Short-term bonds often prove appealing for their reduced interest rate risk in challenging rate environments. In addition, investment-grade bonds generally carry a low credit risk. Combining the two creates reliable income potential for portfolios when market volatility and uncertainty rise.
NBSD invests across a variety of sectors and bond types, including fixed- and floating-rate investment-grade bonds, both foreign and domestic. These can include asset- and mortgage-backed securities, collateralized debt obligations (including CLOs), and credit risk transfer securities.
The ETF currently outperforms the benchmark Bloomberg 1-3 Year U.S. Government/Credit Bond Index on a total returns basis as of March 25, 2025. Notably, it offers differentiated performance from the benchmark short duration index.
The strategy creates a portfolio of diversified, short duration bond exposures across sectors and credit quality. Top bond sector exposures included investment-grade credit (37.7%), securitized credit (35.5%), and noninvestment-grade credit (11.5%) as of December 31, 2024 according to Neuberger Berman data. Top credit quality weights were BBB at 30.4%, A at 19.2%, and AAA at 16.0% over the same period.
See also: "ETF of the Week: Neuberger Berman Short Duration Income ETF (NBSD)":https://www.etftrends.com/megatrends-channel/neuberger-berman-short-duration-income-etf-nbsd-etf-of-the-week/
The management team considers both qualitative and quantitative factors when selecting securities. They search for underpriced bonds, both on a sector level as well as within peer groups. While 80% of the fund comprises investment-grade bonds, up to 20% may be below investment-grade. When investing in these junk bonds, the fund managers seek issuers in relatively strong financial health and whose credit scores may increase.
The strategy also works to reduce credit risk through its diversified exposures. NBSD currently offers a 30-day SEC yield of 5.39%, as of February 28, 2024. The fund also offers a distribution rate of 4.81% over the same period. Distribution rate annualizes the most recent distribution and then divides by the most recent NAV. The weighted average duration of the fund was 1.88 years, as of February 28, 2025.
NBSD carries an expense ratio of 0.35%.
For more news, information, and analysis, visit the Invest Beyond Cash Channel.
