Like Founder, Like Firm? Not QuiteBy
Walking into the offices of old-line money-management firm Neuberger & Berman can give visitors a shock. Instead of the usual tasteful antiques, you see a chandelier created from what looks like dripping wax, a uall assemblage involving criss-crossed wood and eggs, and gold-framed paintings in Day-Glo colors.
Don't let the art fool you. "Neuberger & Berman is not a story of new things," says Lawrence Zicklin, the firm's managing partner. While the founder, Roy R. Neuberger, has covered the walls with contemporary art, Neuberger & Berman is a place where a tried-and-true value approach reigns supreme. The firm manages some $30 billion in client assets, including $8 billion for wealthy individuals and $7 billion in mutual funds.
The 55-year-old firm's philosophy has yielded solid, but less than stellar, results in its no-load mutual funds (table). The funds' below-average expense ratios are what helps them stand out from the crowd. The $611 million Selected Sectors Fund, for example, boasts a ratio of 0.92%, compared with an average 1.34% for similar funds.
FRENCH ALLIANCE. The firm's conservative bent runs deep, influencing even the partners' risk arbitrage fund, created in 1972 as a way to use the firm's capital without coming into competition with clients. The fund has done "reasonably well," says Zicklin. "We'd never take enough risk to make it an enormous loser or a big winner."
Neuberger & Berman is broadening its scope to compete in the global market. One of its most significant moves was the formation in 1992 of a joint venture with Banque Nationale de Paris (BNP), France's largest commercial bank, to create a firm that provides global investment-management services. The alliance gives Neuberger a global presence--BNP has offices in 84 countries--and access to BNP's analysts.
But the expanded global presence won't detract from the firm's main mission: to invest, conservatively. The average age of portfolio managers, Zicklin observes, is 56. Of course, as Roy Neuberger demonstrates, age and conservatism are not always synonymous.