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The Lord Abbett Review—Winter 2011

Manufacturing and energy development have been two bright spots in the current recovery, and in this edition of The Lord Abbett Review we address both of them.

Investment Perspective

01/09/2012

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The decline of U.S. manufacturing has been exaggerated in the past, but there is little doubt that overseas competition has taken a toll. In the economic malaise following the credit crisis, however, the sector has remained comparatively robust. In addition to a weak dollar, three factors explain the resurgence: strong demand from emerging markets, an enhancement of America's comparative advantage, and improvements in productivity driven by technological advancements. In our cover story, "America's Manufacturing Revival," we explain that these factors argue for strong investment prospects over the long term. Portfolio Managers Tom O'Halloran, Lord Abbett Partner & Director of Multi Cap Growth, and Arthur Weise weigh in with their take on the outlook for this sector.

. Highlights of the issue include:

Fossil Fuels for the Long Run

Milton Ezrati, Lord Abbett Partner, Senior Economist and Market Strategist, touches on the dynamic nature of the energy sector, reminding us that warnings about an imminent end to the world's oil reserves have always proliferated when energy prices spike, only to wane when prices return to normal. So, recent warnings notwithstanding, oil is not likely to run out anytime soon. In fact, supplies have been expanding, and combined with growing efficiencies in energy usage, this suggests that fossil fuels will play a central role in the economy for years to come.

Dodd-Frank: An Initial Look at Investment Implications

While its full impact remains unclear, the comprehensive financial reform legislation known as Dodd-Frank is likely to reduce bank lending and profits. Various aspects of the law continue to raise questions and concerns, including the restriction on proprietary trading, which has stymied regulators seeking to define it. Similarly, the "orderly liquidation authority," which provides for the shutting down of failed banks, may prove to be impractical.

The opinions in the preceding commentary are as of the date of publication and subject to change based on subsequent developments and may not reflect the views of the firm as a whole. This material is not intended to be legal or tax advice and is not to be relied upon as a forecast, or research or investment advice regarding a particular investment or the markets in general, nor is it intended to predict or depict performance of any investment. Investors should not assume that investments in the securities and/or sectors described were or will be profitable. This document is prepared based on information Lord Abbett deems reliable; however, Lord Abbett does not warrant the accuracy or completeness of the information. Investors should consult with a financial advisor prior to making an investment decision.

Investors should carefully consider the investment objectives, risks, charges, and expenses of the Lord Abbett funds. This and other important information is contained in each fund’s summary prospectus and/or prospectus. To obtain a prospectus or summary prospectus on any Lord Abbett mutual fund, contact your investment professional or Lord Abbett Distributor LLC at 888-522-2388 or visit us at www.lordabbett.com. Read the prospectus carefully before you invest.

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