Neuberger Next Generation Connectivity Fund Inc. (NBXG)

Neuberger Next Generation Connectivity Fund Inc. (NYSE: NBXG) is a closed-end investment fund that buys and holds stocks in companies building the next generation of telecommunications and connectivity infrastructure. The fund invests globally in telecommunications carriers, tower companies, fiber-optic network builders, and equipment makers — businesses involved in deploying 5G networks, fiber-to-the-home services, satellite communications, and related technologies. It is designed for investors who believe telecommunications infrastructure is a long-term growth theme and want to own a diversified basket of such companies through a single fund.

What problem does the fund try to solve?

The fund exists because investing directly in telecommunications and connectivity infrastructure companies requires expertise and diversification that many individual investors lack. A person might believe that 5G deployment and fiber build-outs represent a multiyear investment opportunity, but picking which carriers, tower companies, fiber-network owners, and equipment makers will win is difficult. The space is global, spans multiple sub-industries, involves complex regulatory environments, and requires understanding both the capital intensity of network building and the competitive dynamics within each segment. The Neuberger Next Generation Connectivity Fund provides a single vehicle to gain exposure to the theme while relying on professional managers to select individual companies.

The fund’s thesis is straightforward: telecommunications infrastructure is essential and growing. The world is using more data than ever before, and every year that growth accelerates. Networks built to handle yesterday’s traffic cannot handle today’s, and tomorrow’s will require still more capacity. This perpetual undersupply of network capacity creates recurring investment opportunities for companies building, upgrading, and maintaining networks. Unlike consumer tech, which is cyclical, infrastructure is structural. There will always be demand for more fiber, more towers, and more spectrum.

Why is this theme relevant now?

The fund was launched during a period of rapid global 5G deployment. After spectrum auctions and regulatory approvals in the late 2010s, carriers worldwide spent heavily upgrading networks to 5G standards. This capital spending cycle created attractive opportunities for tower operators (who build cell sites), fiber-network companies (who lay cable), and equipment makers (who sell the radios, antennas, and software that power networks). Fiber-to-the-home initiatives also accelerated globally as governments and private companies invested in alternatives to legacy copper telephone lines and cable television infrastructure.

These trends are not temporary. Fiber networks last decades, and 5G deployment will take 5 to 10 years or more to complete globally. Even as new technologies emerge (6G research is underway), the need to maintain and upgrade existing 4G and 5G networks is permanent. This gives the connectivity infrastructure theme a multi-decade horizon, which appeals to long-term investors.

What kinds of companies does the fund own?

Neuberger’s fund holds companies across the connectivity value chain. Integrated carriers like Vodafone, Deutsche Telekom, and Telenor offer both retail telecom services and network infrastructure. Pure-play tower companies like American Tower, Crown Castle, or Cellnex Telecom own the physical infrastructure that carriers lease. Fiber-network builders like Zayo or Altafiber are dedicated to laying and operating optical-fiber cables for broadband and carrier backhaul. Equipment makers like Nokia and Ericsson supply the active electronics that make networks function. The fund may also hold cable companies like Comcast that are upgrading their own networks, and satellite operators building next-generation satellite internet systems.

The geographic diversity means the fund owns companies across North America, Europe, Asia, and emerging markets. This diversification reduces single-country regulatory risk and gives exposure to growth rates that vary by region. Emerging markets, for instance, often see faster adoption of 5G and faster fiber expansion because older networks are less entrenched and regulatory hurdles can be lower.

How is this different from a telecoms index fund?

A traditional telecommunications index fund — tracking the MSCI Telecom Index or similar — typically holds integrated carriers weighted by market capitalization. That means it is mostly large, mature incumbent carriers like Verizon, AT&T, and Vodafone. Those companies have stable, mature networks and generate cash for dividends. They are low-growth and low-risk.

Neuberger’s connectivity fund is thematically tilted toward infrastructure and growth. It overweights tower operators and fiber builders relative to a telecom index and may exclude or underweight legacy cable companies and old-line carriers. This tilt increases exposure to companies whose businesses are driven by network expansion and capital spending cycles rather than by the cyclical ups and downs of consumer retail telecom services.

The trade-off is concentration risk. A focused strategy on connectivity infrastructure is more exposed to downturns in network-infrastructure spending. If carriers hit a spending plateau or capital budgets tighten due to recession or regulatory changes, the fund feels it more acutely than a diversified telecom fund would. The fund is also exposed to the equipment makers, and if a company like Nokia or Ericsson stumbles, that affects the fund. A broad telecom index would feel that impact but diluted across many holdings.

What are the persistent risks?

Capital intensity is the first concern. Building and maintaining telecommunications networks requires enormous capital investment. If a carrier, tower company, or fiber operator cannot raise capital at reasonable cost, growth slows. This makes the fund sensitive to interest rates and credit-market conditions. During periods of rising rates or tightening credit, funding costs for infrastructure companies rise, which compresses margins or forces slower investment cycles.

Regulatory risk is the second. Telecom is among the most heavily regulated industries globally. Spectrum auctions can drive up the cost of accessing wireless frequencies. Price regulation and net-neutrality rules can limit pricing power. Foreign-ownership restrictions can bar investment in certain markets. A shift in any major economy’s regulatory stance can materially affect companies and the fund’s portfolio returns.

Competition and consolidation comprise the third risk category. In many markets, carriers consolidate, which can reduce capital spending (fewer companies means less redundant infrastructure build). In others, new entrants take share, pressuring margins. The fiber-build industry is becoming increasingly competitive as multiple players enter the same markets. Equipment makers face intense pressure from Chinese manufacturers. These competitive pressures can erode profitability even as volumes grow.

Technological disruption is a longer-term concern. Satellite internet (Starlink, Amazon Kuiper, OneWeb) could provide a low-cost alternative to terrestrial networks in some regions. Wireless technology could eventually make fiber-optic cables less essential in some use cases. Free-space optical communications and terahertz could change the competitive landscape. While these are not imminent threats, a fund betting on the durability of fiber and cellular networks faces uncertainty about whether those technologies remain dominant across the next 15 to 20 years.

Why a closed-end fund structure?

NBXG is a closed-end fund, which means the fund raised a set amount of capital, and shares trade on an exchange like stocks. You cannot redeem shares directly from the fund at net asset value; you buy and sell on the market like any stock. This structure gives the fund manager capital stability. As opposed to a mutual fund where investors can redeem daily, the manager does not have to maintain liquid reserves or manage cash flows. The fund can make longer-term, less-liquid investments and does not need to raise cash quickly to meet redemptions.

For shareholders, closed-end structure creates a secondary consideration: the discount or premium at which the fund trades. The fund’s shares might trade at 95 percent of net asset value (a discount) or at 105 percent (a premium) based on market demand. This gap can move substantially and does not track the underlying holdings. A shareholder can capture gains from a widening premium or face losses from a widening discount, independent of whether the underlying stocks perform well.

How to track and evaluate the fund

An investor considering NBXG should start by reviewing Neuberger Berman’s fund documentation, which details the investment strategy and the portfolio composition. Then, monitor three things regularly.

First, the net asset value and the market price. Calculate the discount or premium, and watch how it trends. A fund trading at a 10 percent discount is cheaper than one at a 5 percent discount on a per-share basis, even if the underlying holdings are identical.

Second, the performance of the underlying portfolio relative to benchmarks. The fund should outperform a broad telecom index or a connectivity-focused benchmark (if one is available) by enough to justify the fund’s fees. Compare returns over rolling one-, three-, and five-year periods.

Third, the composition and rebalancing of the portfolio. Check the latest fact sheet and quarterly reports to see which companies are held, the allocations, and any recent trades. Has the manager been adding to fiber builders or pulling back? Are they rotating toward equipment makers or away? Changes in the portfolio composition signal the manager’s view of the sector’s evolution.

Beyond the fund itself, understanding the broader theme matters. Follow news on 5G deployment pace, fiber-build-out announcements, and spectrum auctions. Monitor capital-spending guidance from major carriers and tower operators. Watch regulatory developments in major markets. A fund built on a thesis about connectivity infrastructure will perform best when that thesis is playing out and worst when structural assumptions are wrong. The fund is a thematic bet as much as a diversified holding, and that requires an informed view of where telecommunications infrastructure is headed.