Neuberger Berman files to convert Neuberger Floating Rate Income Fund into an ETF
The Oct. 20 prospectus is still preliminary, the proposed ticker is NFRI, and the fee is not set.
Key takeaways
Neuberger Berman ETF Trust filed a preliminary prospectus on Oct. 20 to register the exchange-traded fund that would receive the assets of Neuberger Floating Rate Income Fund.
Holders own the mutual fund now. It is a series of Neuberger Berman Income Funds. The new series of Neuberger Berman ETF Trust would be named Neuberger Floating Rate Income ETF, proposed ticker NFRI.
The filing is marked subject to completion. It would add a series to a trust that already exists, and it is not an offer to sell shares. The prospectus prints the ticker in brackets and says the shares will be listed on NYSE Arca. It leaves the reorganization date blank and shows only the year 2027.
The trust elected to have this amendment become effective 75 days after filing. That is a regulatory clock, not a launch date, and a later filing can still change the terms.
What this changes for holders
On Oct. 1, a supplement to the mutual fund's Feb. 28, 2026 prospectus said the board of trustees of Neuberger Berman Income Funds had approved the conversion. It anticipates the reorganization in the first or second quarter of 2027, and anticipates that no shareholder vote will be required.
Holders are to receive a combined information statement and prospectus first.
Class A shares, ticker NFIAX, and Class C shares, ticker NFICX, are expected to convert into Institutional Class shares, ticker NFIIX, before the reorganization. The supplement does not say what Class A or Class C holders will pay after that, and it does not say they will pay the Institutional Class rate. Institutional shares are expected to stay open to new purchases until shortly before the conversion.
The same supplement waived distribution and service fees, called Rule 12b-1 fees, effective Sept. 30, on the share classes that charged them. In the Feb. 28, 2026 prospectus, that fee is 0.25% for Class A and 1.00% for Class C. Institutional Class paid none.
The waiver is already in the mutual fund. It does not set the cost of the ETF.
The supplement anticipates the conversion will be tax-free, with no gain or loss except on cash paid in place of a fractional ETF share. It expects the ETF to keep the same adviser, Neuberger Berman Investment Advisers LLC, and the same portfolio managers, Joseph P. Lynch and Stephen J. Casey, and to be managed in a substantially similar way. Lynch has managed the mutual fund since 2009, and Casey since 2010.
The mutual fund seeks high current income. It invests mainly in senior secured floating-rate loans: loans backed by collateral and ranking ahead of most other debts, with interest that resets as market rates move. Those loans are often rated below investment grade.
It had $535 million in total portfolio assets as of Sept. 30, Neuberger's fund page shows. A conversion would put that portfolio into a senior-loan ETF field that already includes Invesco Senior Loan ETF BKLN and State Street Blackstone Senior Loan ETF SRLN.
The fee is the open question
The prospectus does not say what the proposed NFRI would charge. The management fee, other expenses, the total, and the total after waivers are blank. A draft expense cap is blank too, and its date is printed in brackets.
Neuberger's fund page lists an Institutional Class net expense ratio of 0.62% and a gross ratio of 0.70%. The adviser has agreed to cap that class at 0.60% of average net assets through Oct. 31, 2029.
The cap excludes interest, brokerage commissions, acquired-fund fees, taxes and extraordinary expenses, and those excluded costs still count in the net ratio. That is why the net figure can sit above the cap. The ETF's draft cap would exclude those costs, among others, and it is written through a bracketed Oct. 31, 2030 rather than Oct. 31, 2029, at a rate the prospectus has not filled in.
The statement of additional information filed with the prospectus is the longer companion to that document, not the fee table investors use to compare funds. It sets the adviser's management compensation at 0.40% of average daily net assets and administration compensation at 0.09%, plus certain out-of-pocket administration costs. Those rates do not fill in the blank table, and they are not an all-in expense ratio.
Until the registration is effective and the reorganization happens, holders still own the mutual fund. Nothing in the filing requires them to act before the information statement arrives. It does not say whether they will pay more or less once the shares are in the ETF.
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