We strive to provide the highest level of client satisfaction, and handle each request with the utmost importance. We expect to respond to each request we receive within one business day of receipt.
Please note that trades cannot be processed via e-mail for security reasons. If your inquiry requires immediate assistance, please call us at
1-800-821-5129 (8:30 a.m.-6:00 p.m. EST, Mon-Fri).
Thank you for contacting Lord Abbett. A member of our staff will contact you between X:XXpm EST and XX:XXpm EST [today OR XX/XX/XXXX]. A confirmation has been sent to your email address.Close
Use this form to give us your feedback or report any problems you experienced finding information on our Website.
* Indicates Required Fields
Thank you for providing feedback.
Emerging markets (EMs) have been the major beneficiaries of a tide of global liquidity since the financial crisis of 2008–09, as central banks, led by the U.S. Federal Reserve, inundated markets with more than $12 trillion, according to the Financial Times. At a time when economic growth stumbled in developed markets, investors poured funds into EM assets, attracted to the return potential of the rapidly growing economies of some emerging markets.
But on the first hints in May that the Fed might reduce its $85 billion-a-month bond purchases by year-end (the so-called "tapering") and on renewed worries of an economic slowdown in China that could spread to other EMs, the tide seemed to turn. EM debt-dedicated funds experienced net outflows of $5.6 billion in the week ended June 26, 2013, the largest outflows from EM-dedicated funds ever recorded by data provider EPFR Global.
Both the upward momentum since 2009 and the fierce sell-off this past June had one thing in common: a strong directional trend that painted all EMs with one broad brush. EMs were either all good investments or, very suddenly, they were all bad investments. And that is unfortunate, because the sell-off in June tossed the good out with the bad. The point here is that the asset class is far from homogeneous. At any given time, individual nations and issuers can have dramatically different growth prospects and risks. And we believe it's worth the trouble to distinguish the investment opportunities from the investment traps.
In the months ahead, until the uncertainty around Fed policy and growth-related issues are resolved, we are likely to see continued bouts of volatility in the markets. But we think it's important that investors not lose sight of the factors that attracted them in the first place to EMs, because many of those factors are still in place, such as:
As market concerns over Fed tapering receded in July, cash was slowly put back to work in EMs, fueling a broad-based rally and jump-starting the new issue bond pipeline. As of July 25, 2013, sovereign and corporate bond issuance totaled $12.5 billion, up from $3.1 billion for the whole month of June, according to the Financial Times. (The record was $51.1 billion in January 2013.)
There is no doubt that we are entering an active manager's market. One can no longer buy EMs en masse, as an asset class. That is the way the sector pumped up over the past decade, as investors poured into passive funds that tracked the EM indexes. The days of investing indiscriminately in EMs and expecting double-digit returns are probably over for now. The case for differentiation based on careful research and analysis of individual investment opportunities is emerging.
Risks to Consider: Foreign investments generally pose greater risks than domestic investments, including greater price fluctuations and higher transaction costs. Special risks are inherent in international investing, including those related to currency fluctuations and foreign, political, and economic events. The securities markets of emerging countries tend to be less liquid, especially subject to greater price volatility, have a smaller market capitalization, have less government regulation and may not be subject to as extensive and frequent accounting, financial and other reporting requirements as securities markets in more developed countries. Further, investing in the securities of issuers located in certain emerging countries may present a greater risk of loss resulting from problems in security registration and custody or substantial economic or political disruptions. Bonds issued or guaranteed by foreign governments and governmental entities (commonly referred to as sovereign debt) present risks not associated with investments in other types of bonds. The sovereign government or governmental entity issuing or guaranteeing the debt may be unable or unwilling to make interest payments and/or repay the principal owed. The value of an investment in fixed-income securities will change as interest rates fluctuate and in response to market movements. As interest rates fall, the prices of debt securities tend to rise. As rates rise, prices tend to fall. No investing strategy can overcome all market volatility or guarantee future results.
Treasuries are debt securities issued by the U.S. government and secured by its full faith and credit. Income from Treasury securities is exempt from state and local taxes.
Emerging markets may not perform in a similar manner under similar conditions in the future.
Glossary of Terms
A basis point is 1/100 of a percent, so 100 basis points is 1%.
Debt-to-GDP ratio is a measure of a country's federal debt in relation to its gross domestic product (GDP).
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.