Yesterday, the manager, Neuberger Berman, announced plans to de-list the NB Global Corporate Income Trust from the ASX following a review of the trading activity on the listed fund. NBI manages ~$700m, holding 663 corporate bonds with a weighted average yield of 6.65%. 58% of the fund is held in American companies, with 8% of the holdings in both Services and Telecommunications. While Neuberger Berman is an exceptional manager, the fund has underperformed our expectations since listing, and the fund never quite recovered from the ~40% drawdown early in 2020. We held NBI in the portfolio from 2018 to 2021, selling from around breakeven.
NBI has been trading well below net tangible assets (NTA) for some time now, meaning securities in the fund could be bought on the market for a lower value than what the holding represents in the fund. NTA was sitting at $1.56 on Monday afternoon, a 15.56% premium to the close price of the shares on Monday. Even after yesterday’s announcement, shares closed at $1.44, with NTA unchanged. If/when the fund delists from the ASX, holders will still remain in the fund, however, investments will have to be redeemed through the manager. Unitholders will receive the NTA value for redeemed units at that time, potentially realising a higher value than selling on the market if NTA remains around current levels, though the redemption process will be staggered to ensure an orderly sell-down of assets if needed.
