To our Clients and Strategic Business Partners,
As we reflect on 2024 – a truly remarkable year – I am deeply grateful for your trust and partnership. This year, we celebrated Lord Abbett’s 95th anniversary as a private, independent firm. We remain guided by the foundational principle that has defined Lord Abbett since our founding in 1929: “An investment firm worthy of the name fosters a sound relationship between the house and the client.” This enduring philosophy has cemented our passion for putting the interests of our clients first and foremost in everything we do. It shapes our principles-based, performance-oriented, and purpose-driven culture and inspires us to embody our core values of excellence, responsibility, transparency, and collaboration.
We compete in one of the most dynamic industries in the world, and our strategy is exceedingly simple: we aim to invest in areas of the capital markets where we can add value consistently over market cycles, and partner with clients who understand and appreciate the power of active management. We compete every day by generating alpha in three ways: investment alpha – achieving superior performance, operating alpha – aligning resources to execute on strategic initiatives, and relationship alpha – delivering a client experience that exceeds expectations.
This model is built on the idea that each Lord Abbett employee’s contribution is critical, and when we succeed, it is because everyone is rowing in the same direction with the same intensity on behalf of our clients.
Reflections on a Dynamic Market Environment
After 30 years in the investment business, I’ve learned the axiom “Don’t fight the Fed” is one of the most insightful pieces of advice in this industry. From 2009 to 2021, as the Federal Reserve (“the Fed”) had rates pinned close to zero, investors needed to take additional risk to achieve yield in their fixed income portfolios. Meanwhile, simply being invested in broad stock market indices often led to favorable results for equity investors.
The same axiom would have steered you in a very different direction during the Fed’s intense policy tightening between 2021 and 2023. With short rates rising from zero to over 5%, cash became more attractive relative to traditional fixed income allocations. Since the end of the hiking cycle, we’ve witnessed yet another market shift. A positive real yield environment offers investors the ability to earn a return above inflation in fixed income across the risk spectrum. We believe a normalization of yields and the end of the free money era will lower correlations and increase dispersion of market returns – making active security selection within fixed income and equities more valuable. Given Lord Abbett’s focus on generating returns through deep fundamental research and individual security selection, we are highly optimistic about the year ahead. This is an environment in which active managers like Lord Abbett thrive.
Building from Strength
At Lord Abbett, we pride ourselves on the long tenure of our investment leadership. Each of our most senior investment leaders has been with the firm for over 20 years, demonstrating an exceptional level of dedication, expertise and experience. As the CEO & Managing Partner, I am inspired every single day to work alongside these seasoned professionals – individuals who embody our values and who have devoted their careers to delivering outstanding results for our clients. It’s this collective drive and passion that empowers us to continuously innovate, grow, and expand our investment capabilities in ways that meaningfully serve our clients and press our advantage as a leader in the industry.
This year, we took decisive steps to advance our expansion into alternatives, focusing on four key areas:
- Opportunistic Credit, which is the fullest expression of our skill in security selection across credit markets – building high-conviction portfolios to capitalize on idiosyncratic opportunities. We now can claim a six-year performance track record and over $3 billion in AUM in this space.
- Private Credit, where we are investing nearly $2 billion of capital, primarily in middle market direct lending, and actively raising additional funds to expand further.
- The upcoming launch of our Collateralized Loan Obligation (CLO) platform, which is a natural extension of our core competencies in CLO tranche and bank loan investing.
- Our strategic partnership with Apollo Global Management, which will allow us to launch a public-private credit offering in the first quarter of 2025.
This thoughtful and integrated approach strengthens our position as a leader in fixed income, and as one of the few firms capable of delivering alpha across both public and private fixed income markets.
A Commitment to Our Clients and Our Future
This year also brought exciting updates to our physical space as we embrace the future of work. We moved our global headquarters to a state-of-the-art facility that has further invigorated our collaborative and innovative work environment. We remain deeply rooted in Jersey City, and this new space reflects our forward-looking approach to leadership, talent, and culture.
Additionally, we are committed to achieving our vision of being the most respected asset manager in the world, admired for our people, our performance, our relationships, and our organizational agility. That is why I’m especially proud that we have been recognized for the fifth consecutive year as a 2024 Best Places to Work in Money Management by Pensions & Investments.
When I think about our end-to-end fixed income capabilities – from municipal bonds to public fixed income to private credit – and our high-performing platform in value, global, and innovation growth equities, I could not be more excited for our future. We remain relevant to our clients by delivering quality products that we are proud to take to market, and by maintaining a fiercely independent mindset that allows us to invest for the long term in an industry that often focuses too much on the short term.
As we look ahead to 2025, I want to assure you that we will never rest. We will continue to seek new alpha-generating opportunities to protect and grow the assets you have entrusted to us. This is not just our job – it is our purpose, and it drives every decision we make.
Thank you for your trust and partnership. Together, we will build on this year’s success and reach even greater heights in the years ahead.
With gratitude and relentless determination,
Doug