Innovation Growth Has Displayed Resiliency Amid Volatility
A Note about Risk: The value of investments in equity securities will fluctuate in response to general economic conditions and to changes in the prospects of particular companies and/or sectors in the economy. While growth stocks are subject to the daily ups and downs of the stock market, their long-term potential as well as their volatility can be substantial. Value investing involves the risk that the market may not recognize that securities are undervalued, and they may not appreciate as anticipated. Smaller companies tend to be more volatile and less liquid than larger companies. Small cap companies may also have more limited product lines, markets, or financial resources and typically experience a higher risk of failure than large cap companies. 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.
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This article may contain assumptions that are “forward-looking statements,” which are based on certain assumptions of future events. Actual events are difficult to predict and may differ from those assumed. There can be no assurance that forward-looking statements will materialize or that actual returns or results will not be materially different from those described here.
Statements concerning financial market trends are based on current market conditions, which will fluctuate. There is no guarantee that markets will perform in a similar manner under similar conditions in the future.
Glossary and Index Definitions
Price momentum is a concept in technical analysis that price trends for a security or defined group of securities have the tendency to persist, in either direction.
The Dow Jones Industrial Average is an index that tracks 30 large, publicly-owned blue chip companies trading on the New York Stock Exchange and the NASDAQ.
The S&P 500® Index is widely regarded as the best single gauge of large-cap U.S. equities. The index includes 500 leading companies and captures approximately 80% coverage of available market capitalization.
The S&P 500® Equal Weight Index (EWI) is the equal-weight version of the widely-used S&P 500 Index.
The index includes the same constituents as the capitalization weighted S&P 500 Index, but each company in the S&P 500 EWI is allocated a fixed weight - or 0.2% of the index total at each quarterly rebalance.
The S&P 500® Quality Index is designed to track high-quality stocks in the S&P 500 Index by quality score, which is calculated based on return on equity, accruals ratio, and financial leverage ratio. .
The S&P 500® Momentum Index is designed to measure the performance of securities in the S&P 500 Index universe that exhibit persistence in their relative performance.
The S&P 500® Low Volatility Index measures performance of the 100 least volatile stocks in the S&P 500 Index. The index benchmarks low volatility or low variance.
S&P Dividend Aristocrats is a subset of the S&P 500 Index consisting of dividend-paying companies that have increased their annual payouts in each of the past 25 consecutive years.
S&P Style Indexes divide the complete market capitalization of each parent index into growth and value segments. Constituents are drawn from the S&P 500 Index.
The CBOE Volatility Index, or VIX, is a real-time market index created by the Chicago Board Options Exchange that represents the market's expectation of 30-day forward-looking volatility. Derived from the price inputs of the S&P 500 index options, it provides a measure of market risk and investors' sentiments.
Indexes are unmanaged, do not reflect the deduction of fees or expenses, and are not available for direct investment.
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The opinions in this commentary are as of the date of publication, are subject to change based on subsequent developments, and may not reflect the views of the firm as a whole. The material is not intended to be relied upon as a forecast, research, or investment advice, is not a recommendation or offer to buy or sell any securities or to adopt any investment strategy, and is not intended to predict or depict the performance of any investment. Readers should not assume that investments in companies, securities, sectors, and/or markets described were or will be profitable. Investing involves risk, including possible loss of principal. This document is prepared based on the information Lord Abbett deems reliable; however, Lord Abbett does not warrant the accuracy and completeness of the information. Investors should consult with a financial advisor prior to making an investment decision.