Spotlight on Ray Carroll, Chief Investment Officer – Breton Hill Group, Neuberger Berman
Global Thought Leader Spotlight
Ray Carroll, Chief Investment Officer – Breton Hill Group, Neuberger Berman
In my role as Chief Investment Officer for Breton Hill, the quantitative investing team at Neuberger Berman, I am responsible for the performance of US$11.7 billion in investment strategies. Our team is comprised of 17 portfolio managers supported by the firm’s Data Science, Fundamental Research, Sustainable Investing, and Portfolio Solutions teams.
Our mission is to identify sources of alpha so we can improve return and risk for our clients. Our approach is to systematise sound fundamental analysis so we have a repeatable and rigorous process that operates at speed and scale – we can analyse nearly all publicly listed companies across the globe on a daily basis. Our analysis includes integrating information from alternative data sets, as well as applying machine learning techniques to traditional data.
Rising demand for ‘Enhanced Equity’ mandates
We see investor interest moving away from pooled vehicles toward customised separately managed accounts (SMAs) for institutional, family office and high-net-worth clients. Specifically, we see demand for ‘Enhanced Equity’ mandates where the performance objective fits within a strictly defined tracking risk level, together with a custom overlay.
In fact, about 70% of our assets are managed with a custom overlay that fits into three main categories:
(1) Sustainability or ESG objectives,
(2) After-Tax objectives, or
(3) Options Enhancement
(1) Sustainability overlays: A key challenge that we see institutional investors struggling with is how to incorporate Sustainability and ESG objectives without impairing returns.
My view is that many net zero carbon commitments are doomed to fail due to inconsistent objectives, such as a risk constraint that is simply too tight to realistically achieve the carbon objective. Or a program that focuses on backward-looking carbon emissions at the expense of forward-looking engagement and supporting innovation in carbon-intensive industries. We work with clients to design a risk-budgeted overlay that can balance these trade-offs in a transparent way that is customised to their objectives.
(2) Tax management overlay: I believe it is a common pitfall for investors to focus on pre-tax returns. But for family offices or taxable institutions such as insurance companies, the long-term outcome for a tax-efficient strategy versus a tax-inefficient strategy can be very material. We offer tax-optimised overlays on our strategies that aim to improve performance on an after-tax basis.
(3) Options overlays: We see the trend of massive flows into options-enhanced ETFs starting to spread to SMAs. Sophisticated family offices and institutions are becoming more comfortable with using options strategies to tailor the risk/reward of their equity program. Typically, the objective is to enhance income or create more persistent returns by foregoing participation in certain upside scenarios.
Implications for sophisticated investors
All investors have multiple investment objectives that can potentially conflict with one another. Our experience is that investors are savvy at balancing the trade-off between risk and reward, but can benefit from guidance on how to manage other trade-offs such as sustainability objectives or tax objectives. The key ingredient for success is a sound underlying alpha proposition, and a deliberate risk budget for any custom overlays.
Our value proposition is to deliver our alpha signals in a way that can be customised to our client’s specific objectives, which may involve custom benchmarks, risk levels, and overlays.
Ray will be presenting at Global Investment Institute’s upcoming Family Office Investment Forum, and the Equities Investment Forum taking place on Tuesday, 9 September 2025 and Wednesday, 10 September 2025, respectively, at the Grand Hyatt Melbourne, Victoria. To register your interest in attending, click here or for more information email zlatan@globalii.com.au.
Ray Carroll, Chief Investment Officer – Breton Hill Group, Neuberger Berman
Ray is a Managing Director at Neuberger Berman. He joined the firm in 2017. As Chief Investment Officer for the Breton Hill quantitative investing team, Ray is responsible for active equity strategies, tax-managed strategies, and diversifying alternative strategies.
Previously, Ray was a co-founder and the Chief Executive Officer of Breton Hill Capital before it was acquired by Neuberger Berman. He was formerly the Chief Investment Officer for the Mosaic division of Diversified Global Asset Management (DGAM), an alternative investment firm that was subsequently acquired by The Carlyle Group.
Ray started his career as Senior Manager at RBC Royal Bank and Vice President at RBC Capital Markets. Ray holds a PhD in Mathematics from the University of Florida in the field of Inverse Problems and both an MSc and BSc in Mathematics from Dalhousie University.
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