Neuberger Berman’s Connectivity Fund Maintains Steady Monthly Distributions Amid Market Volatility

The Neuberger Berman Next Generation Connectivity Fund (NYSE: NBXG) has solidified its reputation as a steady income generator in 2025, maintaining consistent monthly distributions of $0.10 per share despite broader market turbulence. This strategy aligns with the fund’s mandate to capitalize on long-term themes in connectivity infrastructure, including 5G networks, cloud computing, and IoT advancements. For income-focused investors, the fund’s level distribution policy offers a predictable cash flow stream, though it comes with nuances tied to its complex investment structure.

Distribution Policy and Composition

The fund’s $0.10 monthly distribution is a hallmark of its conservative approach to income generation. For the first half of 2025, distributions were paid on April 30, May 30, and February 28, with record dates falling on the 15th of each month. This timing ensures investors holding shares by the 15th receive the payout, though the ex-dividend date (also the 15th) means buyers after that date do not qualify.

Crucially, these distributions may not all stem from net investment income. As stated in its filings, NBXG can include return of capital or capital gains to maintain its steady payout. While this preserves cash flow predictability, it carries tax implications. Investors must await the fund’s annual disclosure to determine how much of their distributions are taxable as income versus return of capital, which reduces the adjusted cost basis (ACB) of their holdings.

Fund Strategy and Market Positioning

Neuberger Berman, with $515 billion under management as of March 2025, positions NBXG as a vehicle for investing in real assets tied to connectivity infrastructure. The fund targets sectors such as fiber-optic networks, data centers, and utilities enabling high-speed communication. This focus aligns with global trends: the 5G rollout, cloud migration, and IoT adoption are projected to drive $1.5 trillion in cumulative investment through 2030, per McKinsey.

The fund’s diversified holdings include equity stakes in telecom infrastructure REITs, equity stakes in cloud providers, and debt securities of utilities. This mix aims to balance growth and stability, though it introduces risks like interest rate sensitivity and regulatory changes.

Risks and Considerations

While NBXG’s steady distributions are attractive, investors must weigh several risks:
1. Distribution Sustainability: The $0.10-per-share payout is not guaranteed. If underlying investments underperform, the fund may reduce distributions, as seen in 2023 when a similar connectivity fund cut payouts by 15% due to macroeconomic headwinds.
2. Leverage and Liquidity: The fund uses leverage (typically 30% of assets) to amplify returns, which can magnify losses during downturns. Its holdings in private infrastructure assets also reduce liquidity, complicating redemptions.
3. Regulatory and Technological Shifts: Delays in 5G spectrum auctions or cybersecurity regulations could disrupt the fund’s portfolio companies.

Performance and Valuation

As of June 2025, NBXG’s share price has underperformed the broader market, down 5% year-to-date versus the S&P 500’s 2% gain. However, its 12-month total return of 8% (including distributions) compares favorably to the MSCI Global REIT Index’s 3% return. This underscores the fund’s role as a defensive income play in volatile markets.

Conclusion

The Neuberger Berman Next Generation Connectivity Fund remains a compelling option for investors prioritizing stable distributions in a high-yield environment. Its $0.10/month payout offers a 6% annualized yield (based on a $20 share price), which is competitive with dividend aristocrats and REITs. However, the fund’s reliance on return of capital and exposure to infrastructure-specific risks demands scrutiny.

For now, the fund’s alignment with secular trends in connectivity—combined with Neuberger Berman’s asset management expertise—provides a reasonable balance of income and growth. Yet, investors should monitor the fund’s distribution sustainability and valuation relative to its net asset value (NAV). If the NAV dips below the share price for an extended period, it could signal overvaluation or operational challenges.

In sum, NBXG is best suited for portfolios seeking diversification into tech-infrastructure themes with an income kicker—provided investors are willing to accept the trade-offs of its complex structure and market dependencies.