On this episode of the “ETF of the Week” podcast, VettaFi’s Head of Research Todd Rosenbluth discussed the Neuberger Berman Short Duration Income ETF (NBSD) with Chuck Jaffe of Money Life. The pair discussed several topics related to the fund to give investors a deeper understanding of the ETF overall.

Chuck Jaffe: One fund, on point for today. The expert to talk about it. Welcome to the ETF of the Week. Yes, this is the ETF of the Week, where we get the latest take from Todd Rosenbluth, the Head of Research at VettaFi. And if you go to VettaFi.com you’ll find all the tools you need to be a savvier, smarter investor in exchange traded funds, and to get more details on the new newsworthy trending and timely ETFs that we talk about here.

Todd Rosenbluth, it’s great to chat with you again!

Todd Rosenbluth: It’s great to be back, Chuck!

Chuck Jaffe: Your ETF of the Week is…

Todd Rosenbluth: The Neuberger Berman Short Duration Income ETF, NBSD.

Chuck Jaffe: NBSD, the Neuberger Berman Short Duration Income ETF. An interesting pick right now Todd, given where interest rates are and are likely to be going. So, why this fund now?

Todd Rosenbluth: You’re right. So, we’ve seen the Fed cut interest rates multiple times. They are likely to do so again in December, soon or just before many folks are hearing this. We think now is a good time to take a closer look at your fixed income allocation. We think money is going to continue to move out of money market funds and take on a little bit of risk.

This Neuberger Berman fund is relatively new as an ETF, but was converted from a mutual fund. So, it has a longer track record to go off of. It takes a little bit of interest rate risk. It’s not as conservative as some of the ultra short funds that we’ve talked about. We think this is a good, actively managed fixed income ETF to move – to take on a little bit of risk in the in the credit market.

Chuck Jaffe: When it comes to fixed income ETFs, et cetera, you know, we got active ETFs on the bond side of things before we got them on the equity side of things. And you’ve been talking a lot about why you wanted active management in these market conditions. But why active management on the bond side of things, now?

Todd Rosenbluth: So it’s not clear exactly how the Fed is going to move. If they’re going to cut interest rates when when they meet in the coming days. And certainly what’s going to happen in 2025. So the benefits of an active manager is helping you as an investor sort through that universe, understand the interest rate risk implications that could be undergoing, and then find those best bond opportunities.

So this ETF, NBSD, takes on credit risk. In fact it owns – its’ a multi sector strategy. So it’ll offer you exposure across the fixed income landscape, including a little bit of high yield exposure. So it’s got an appealing yield. We think active management can make sense in the fixed income marketplace, if you’re wanting to make sure you’re nimble.

The team here can move in and out based on bond sectors, based on taking on a little bit more or little bit less interest rate risk. And they’ve got a history of showing that they can do so.

Chuck Jaffe: When somebody hears you talk up the management team like that, and Neuberger Berman, great classic fund company, et cetera. When they hear you talk up the management team, a lot of people have some sort of a short duration kind of income fund in their portfolio. Do you double up, or do you say, wait, hold it. Let me look at fund structure, because maybe they don’t have the active management in the space, et cetera.

Todd Rosenbluth: So, I think if you’re asking you if you own a short duration fund, is this one to complement with it or how do you compare and contrast? You want to do your homework. You want to learn about the management team that’s behind it. You want to see the track record that they have.

And again, this has a longer track record. previously as a mutual fund, you want to have comfort that the firm is committed to the active space. That they didn’t just – they’re not an index provider that’s launching their first active ETF, but that they have an active pedigree behind them. There’s lots of positive characteristics about Neuberger Berman, but they are not the only one that has an active short term fixed income ETF.

So you got to do your homework, and compare and contrast the funds that are out there on a variety of metrics.

Chuck Jaffe: But is there any benefit to having two in the space?

Todd Rosenbluth: Well, not all funds are going to perform the same. So your allocation – if you already have an active short term fixed income ETF, then and you’re happy with how it’s performing, you’re happy with how it’s structured, then that’s okay. This you know, this new fund isn’t the right time for everybody.

If you’re owning – if you’ve been in money markets, and you’re looking to move out of money markets and invest beyond that cash exposure and into something that takes on – offers you a little bit more return potential, takes on a little bit more risk.

This could be a very good and appealing fund for you. If you own an index based strategy, you might find the yield being a little bit more appealing and attractive with NBSD. So there’s lots of reasons to take a closer look at this Neuberger Berman Fund.

Chuck Jaffe: You mentioned the conversion that this fund existed, but it wasn’t an ETF form until earlier this year. So I want to ask 1 or 2 questions about that in terms of just not necessarily always specific to the fund, but for fund investors who go through something like that or are looking. Now one, I know that you are not a trend follower, unlike your predecessor here on ETF of the Week, Tom Lydon, who was a trend follower. But yeah, this fund doesn’t have a 200 day moving average.

It’s got a 50 day moving average, and it is below the 50 day moving average. But I don’t know what the average would be if you said, wait, what was it in the days before it, you know, if I attach the longer track record, do you throw out any of those sorts of metrics until it’s had a good, long stretch? Like because it’s a pain, you know. You can’t – it’s not easy to go find what was a fund’s track record in its old form, right?

You can’t just go, oh, let’s put in the old ticker symbol and see what it is. That fund doesn’t exist anymore. It’s not coming up if you’re using pretty much any site to check it. It’s now a dead fund in its old ticker form. So how does somebody get information and how do they say, okay, I trust that if I’m looking at anything that’s measuring how this fund has done recently, that it’s accurate?

Todd Rosenbluth: So, Neuberger Berman’s website has some great information, about the fund and the ETF and the predecessor fund. And it shows how the fund, the total portfolio, has performed relative to the index, that it’s being compared to, on a one, three, five, ten year, and even since inception, this is a strategy that has a very long track record.

And so comparing apples to apples, you can see that the Neuberger Berman strategy has outperformed that index, the benchmark that it’s using as a reference point. And that should give you comfort in terms of the experience, the expertise that Neuberger Berman is bringing to the table as an ETF. But you’re correct. If you’re going to look at the ticker of the ETF on anybody else’s website, including our own that we have, we’re using the ETF ticker, then you’re not going to find such information. And you certainly aren’t going to be able to do trend following.

I’d have to also make the case that I’m not sure trend following is the best metric to use within a short term bond ETF. I just don’t think there’s going to be enough volatility in the performance of of the fund, the ETF. Even one that has 200 days of trading to go off of.

But I’m also not a trend follower, as you mentioned.

Chuck Jaffe: Well, I would think with short duration that you would want to follow a shorter time. Like a 200 day moving average, which is basically a year’s worth of trading days, you know, is long in a short duration fund, I would think that if you were using. But I’m not a trend follower either. But interesting tools and interesting times. And Todd, one last question, which is – this fund, admittedly, we’re talking about it for the times you’ve got.

But is this a core kind of holding? I mean, short duration income is something that a lot of people have a slug of in their portfolio. Is this, you know, a bedrock kind of thing?

Todd Rosenbluth: This very much can be a strategic position. So we think people are moving out of cash and looking for a home. This could certainly be that home. You’re getting stable income. The yield is roughly 5%. We think people, and many investors have a short term outlook – short term fixed income allocation. This Neuberger Berman fund can fit very easily into that allocation.

Chuck Jaffe: It’s NBSD, the Neuberger Berman Short Duration Income ETF, the ETF of the Week from Todd Rosenbluth at VettaFi Todd great stuff. Go blue! See you next week.

Todd Rosenbluth: Go Blue, Chuck!

Chuck Jaffe: The ETF of the Week is a joint production of VettaFi and Money Life with Chuck Jaffe. And yep, I’m Chuck Jaffe. And you can learn all about my hour long weekday show by going to MoneyLifeShow.com, or by searching for it wherever you find great podcasts.

And if you’re searching for great information on exchange traded funds, well, look no further than VettaFi.com, where they have the tools you need to make yourself a better investor. There on X at @Vetta_Fi. and Todd Rosenbluth, their Head of Research, my guest here. He’s on X too, at @ToddRosenbluth.

The ETF of the Week is here for you every Thursday. Follow along on your favorite podcast app to make sure you don’t miss an episode. And we’ll introduce you to another great ETF next week. And until then, happy investing everybody!