This is a sponsored advertorial from Neuberger.

A shifting rate environment and narrowing margins for error are raising the bar for fixed income investors and rewarding those with the breadth and skill to navigate it. The question facing allocators is no longer whether to own bonds, but which ones to own and which to avoid. 

The easy gains are behind us. After a broad-based rally, fixed income entered 2026 with a sharp change in direction: the Middle East conflict, a spike in oil prices, and AI-driven credit volatility sent rates higher across the curve, forcing investors to reset expectations on both the rate path and the credit cycle. Alpha now demands precision.

For Toby Bracey, a client portfolio manager in Neuberger’s fixed income team, precision in this environment means three things: knowing which credits to avoid, building income through breadth, and being ready to act when volatility creates opportunities. 

Active credit selection

The current fixed income cycle rewards manager skill rather than broad market exposure. In sectors where spread compression has already run its course, the cost of owning the wrong credit rises disproportionately. Avoiding that starts with identifying where the market has become dangerously crowded.

Bracey points to the AI investment boom as one such area. Hyperscale technology companies have flooded the investment-grade market with new issuance to fund capital expenditure programmes at relatively tight spreads. 

Rather than compete for the same securities at stretched valuations, Neuberger’s fixed income team seeks exposures with comparable credit quality but better compensation and meaningfully less disruption risk: financial institutions with strong balance sheets and improving profitability, and securitised assets backed by tangible infrastructure such as data centre structures. 

“The goal is not to avoid risk,” said Bracey. “It is to ensure you are being paid appropriately for the risk you take.”

Income through breadth

The same discipline that governs credit selection also applies to where income is sourced. Rather than concentrating on a single source of income, breadth across yield curves, geography and sectors builds resilience. In a market environment defined by cross-currents — from central bank divergence to geopolitical stress — no investor is immune, making breadth not just a preference, but a necessity.

Emerging market debt adds a further dimension. Improved fundamentals, supportive flows over the past 12 to 18 months, and a potentially weaker US dollar bolster the case for both hard- and local-currency EM bonds. Commodity-linked economies and parts of the Middle East and Latin America hold particular appeal.

Turning volatility into opportunity

Breadth of exposure positions a portfolio well. What converts that positioning into returns is the willingness to move decisively when opportunity opens.

Policy shocks and geopolitical headlines create short-lived dislocations. For teams with the research depth to distinguish temporary repricing from genuine deterioration, these moments represent entry points to add risk at better valuations, not reasons to retreat.

Acting on that conviction depends on having already done the fundamental work before volatility arrives. Neuberger’s fixed income platform is built for exactly that: 202 investment professionals and 88 research analysts spanning regions, sectors and capital structures, with the scale and depth to act decisively.

“Our fixed income capability is built around scale and bottom-up analysis,” said Bracey. “The goal is to pick the right securities that have a meaningful yield contribution and upside potential, and to avoid credit deterioration.”

From principle to portfolio outcomes

The performance of Neuberger’s award-winning funds offers the most compelling evidence of this framework at work. 

The Neuberger Berman Strategic Income Fund, the firm’s flagship multi-sector fixed income strategy, is designed to navigate shifting market conditions through the flexibility to allocate across a broad range of sectors. By applying a diversified, relative-value approach, the team identifies and capitalises on mispricing as they emerge, rotating dynamically across sectors and yield curves to capture opportunity wherever it appears within a framework of liquidity and transparency.

The Neuberger Berman Global Flexible Credit Income Fund, by contrast, targets returns comparable to or higher than those of public high-yield markets, but with a smoother path. Allocations shift across best opportunities within predominantly non-investment grade sectors, securitised credit and emerging markets, generating high single-digit income and strong total returns with lower volatility through diversification and security selection. 

“Some investors use it as a complement, or partial substitute, for equity exposure rather than purely a bond allocation, because it captures upside in risk-on periods yet has historically held up better in drawdowns,” said Bracey.

That resilience matters, as not every income vehicle holds up when tested, for instance, in vehicles where private assets are held in publicly traded vehicles such as Business Development Companies. Here, NAV dislocations and liquidity constraints could have the potential to turn an income allocation into an equity-like drawdown. The Neuberger Berman Global Flexible Credit Income Fund offers daily liquidity, clearer price discovery, and dynamic management across the full credit spectrum. 

Beyond multi-sector credit, the platform applies the same discipline to a dedicated emerging-market mandate. The Neuberger Berman Emerging Market Debt – Hard Currency Fund is built around country and security selection rather than market beta, supported by a specialist team operating across global time zones with extensive sovereign and corporate research coverage. In a recovering asset class where dispersions can be wide, that depth of coverage translates directly into alpha.

All three funds have won Lipper recognition: the Neuberger Berman Strategic Income Fund for a fourth consecutive year, the Neuberger Berman Global Flexible Credit Income Fund for a second, and the Neuberger Berman Emerging Market Debt – Hard Currency Fund for the first time — a milestone for the strategy.

These results are not incidental. They reflect what happens when scale, specialisation and an investment culture built over decades are directed with precision toward a market that is demanding exactly that. 

In a fixed income cycle that rewards skill over exposure, the question is no longer whether to own bonds. It is whether you have the research depth, the geographic breadth and the conviction to own the right ones, and act on that view when it matters most.

Explore our fixed income capabilities

 

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Neuberger Berman Investment Funds plc (the “Fund”) is authorised by the Central Bank of Ireland (the “Central Bank”) as an Undertaking for Collective Investment in Transferable Securities under the European Communities (“UCITS”) Regulations 2011 (S.I. 352 of 2011) of Ireland, as amended. Neuberger Berman Asset Management Ireland Limited may decide to terminate the arrangements made for the marketing of its funds in all or a particular country. The Fund mentioned in this document may not be eligible for sale in some countries and it may not be suitable for all types of investor. Shares in the fund may not be offered or sold directly or indirectly into the United States or to U.S. Persons; for further information see the current prospectus.

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This is a sponsored advertorial from Neuberger.