High Yield and Short Duration High Yield Muni | Lord Abbett

 

5 Reasons to Consider Lord Abbett's High Income Muni Funds

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F-Share: HYMFX

High Income Municipal Bond Fund

The Fund seeks to deliver a high level of income exempt from federal income tax by investing primarily in lower-rated municipal bonds.

F-Share: SDHFX

Short Duration High Income Municipal Bond Fund

The Fund seeks to deliver a high level of income exempt from federal income tax by investing primarily in short duration high-yield municipal bonds.

Investment Team Leadership

Daniel S. Solender, CFA

Partner & Portfolio Manager

33 Years of Experience

Gregory M. Shuman, CFA

Managing Director & Portfolio Manager

10 Years of Experience

Managing Municipal Portfolios since 1984.

More than $32.9 billion in municipal assets and more than 15,200 client accounts.

Managed through a collaborative effort by 17 investment professionals with an average of 14 years investment experience.

All investment team information as of 06/30/2021. Years of industry experience as of 01/01/2021.

1. Consistent Long-Term Performance and High Income

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High Yield Municipal Bond Fund Expense Ratio: 0.67%. High Yield Municipal Bond Fund F Share Data as of 09/30/2021. The performance information shown is based on total return at net asset value, including the reinvestment of dividends and capital gains, if any, but excludes sales charges which are not applicable to Class F Shares. 1Category: Morningstar High Yield Muni Bond Funds. Source: Morningstar, Inc. Morningstar peer group rankings are based on all share classes within the category and include the reinvested dividends and capital gains, if any, and exclude sales charges. The fund is ranked within a universe of funds similar in investment objectives. Number of funds in the category for the one-year time period (196); three-year (185); five-year (153); and 10-year (104).

Performance data quoted reflect past performance and are no guarantee of future results. Current performance may be higher or lower than the performance quoted. The investment return and principal value of an investment in the Fund will fluctuate so that shares, on any given day or when redeemed, may be worth more or less than their original cost. You can obtain performance data current to the most recent month-end by calling Lord Abbett at 888-522-2388 or referring to lordabbett.com.

2. Flexible Positioning Within Client Portfolios

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Source: Bloomberg. Data as of 09/30/2021. The municipal bond curves displayed in this chart represent ratings-specific segments of the Bloomberg Municipal Bond Index. The U.S. Treasury curve is based on the U.S. Treasury Actives Curve compiled by Bloomberg. Underlying bond holdings show distribution yield as of 09/30/2021. Past performance is not a reliable indicator or guarantee of future results. 

3. Major Fiscal Stimulus Supporting Various Municipal Sectors

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4. Historically Lower Default Rates Compared to Corporate Counterparts

Average 10-Year Cumulative Default Rates, 1970-2019

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Source: Moody’s, “Moody’s US Municipal Bond Defaults and Recoveries, 1970–2019,” August 2019. Data show the average 10-year cumulative default rates of Moody’s rated corporate and municipal bonds for a study covering the period 1970-2019. Data are the most recent available. High-yielding, non-investment-grade bonds (junk bonds) involve higher risk than investment-grade bonds. Adverse conditions may affect the issuer’s ability to pay interest and principal on these securities. The data does not represent defaults in 2020 or 2021 where defaults may have increased due to the pandemic. For illustrative purposes only and does not represent any specific portfolio managed by Lord Abbett or any particular investment.

5. Attractive Taxable Equivalent Returns for Investors of All Tax Brackets

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Data as of 09/30/2021. 1Bloomberg Barclays High Yield Muni Index 2Taxable Equivalent Return is calculated by summing the index’s price return with its after tax coupon return which is determined using a 22.00% tax rate. 3Taxable Equivalent Return is calculated by summing the index’s price return with its after tax coupon return which is determined using a 32.00% tax rate. 4Taxable Equivalent Return is calculated by summing the index’s price return with its after tax coupon return which is determined using a 32.00% tax rate. This tax rate does not factor in the effect of AMT (alternative minimum tax) or taxes in your individual state. Tax-equivalent yield will vary based on an investor’s tax bracket. Income from municipal bonds may be subject to the alternative minimum tax. Federal, state and local taxes may apply. For illustrative purposes only and does not represent any specific portfolio managed by Lord Abbett or any particular investment. Past performance is not a reliable indicator or guarantee of future results.

Additional Resource: Taxable Equivalent Yields

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Data as of 09/30/2021. Source: Bloomberg Index Services Limited. Tax-equivalent yield calculation for hypothetical yields above assumes the top marginal tax bracket of 40.8%, 35.0%, 32.0%, 24.0%, or 22.0% on investment income, which includes the 37.0% income tax rate and the 3.8% in Medicare tax. This tax rate does not factor in the effect of AMT (alternative minimum tax) or taxes in your individual state. Tax-equivalent yield will vary based on an investor’s tax bracket. Past performance is not a reliable indicator or guarantee of future results. For illustrative purposes only and does not represent any specific portfolio managed by Lord Abbett or any particular investment. Income from municipal bonds may be subject to the alternative minimum tax. Federal, state, and local taxes may apply.

Insights

What’s Behind Municipal Bonds’ Recent Volatility?

Concerns about rates and supply/demand factors have weighed on municipal bonds in recent weeks, but we expect that longer-term market fundamentals will remain positive.

Potential Tax Hikes Add to Appeal of Municipal Bonds

Proposed changes to U.S. tax rates could increase demand for tax-exempt municipal bonds. Even if taxes stay the same, we think the asset class remains attractive.

Read Our Latest Insights on the Municipal Bond Market

Download the Report to Learn More

Learn More About Lord Abbett

Lord Abbett at a Glance

We are committed to providing every client with an independent perspective, an active approach to investment management, and a range of intelligently designed products.

Ask about our High Yield Muni Funds.

Financial professionals: 888‑522‑2388.

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High Yield Municipal Bond Fund A Note about Risk: The Fund invests substantially in high-yield securities which carry increased risks of price volatility, illiquidity, and the possibility of default in the timely payment of interest and principal. High-yield municipal bonds are subject to greater risk of loss of income and principal than higher-rated securities, and are likely to be more sensitive to adverse economic changes or individual municipal developments than those of higher-rated securities. In addition, because the Fund is nondiversified, it will be more exposed to risks from a single adverse economic, political, or regulatory event than a diversified fund. A portion of the income derived from the Fund's portfolio may be subject to the alternative minimum tax. Any capital gains realized may be subject to taxation. Federal, state, and local taxes may apply. There is a risk that a bond issued as tax-exempt may be reclassified by the IRS as taxable, creating taxable rather than tax-exempt income. In addition, the Fund is subject to other types of risks, such as call, credit, liquidity, interest rate, and general market risks. The Fund may invest in Puerto Rico and other U.S. territories, commonwealths, and possessions, and may be affected by local, state, and regional factors. These may include, for example, economic or political developments, erosion of the tax base, and the possibility of credit problems. These factors can affect Fund performance.

Short Duration High Yield Municipal Bond Fund A Note about Risk:  The Fund invests substantially in lower rated municipal bonds (commonly referred to as “below investment grade”, “high yield” or “junk bonds”).  High-yield securities carry increased risks of price volatility, illiquidity, and the possibility of default in the timely payment of interest and principal.  High-yield municipal bonds are subject to greater risk of loss of income and principal than higher-rated securities, and are likely to be more sensitive to adverse economic changes or individual municipal developments than those of higher-rated securities. The Fund concentrates on high yield municipal bonds with shorter maturities and durations, which carry heightened credit risk, liquidity risk and potential for default.  In addition, because the Fund is nondiversified, it will be more exposed to risks from a single adverse economic, political, or regulatory event than a diversified fund. A portion of the income derived from the Fund's portfolio may be subject to the alternative minimum tax. Any capital gains realized may be subject to taxation. Federal, state, and local taxes may apply. There is a risk that a bond issued as tax-exempt may be reclassified by the IRS as taxable, creating taxable rather than tax-exempt income. In addition, the Fund is subject to other types of risks, such as call, credit, liquidity, interest rate, and general market risks.  The Fund may invest in derivatives, which are subject to greater liquidity, leverage, and counterparty risk.  The Fund may invest in Puerto Rico and other U.S. territories, commonwealths, and possessions, and may be affected by local, state, and regional factors. These may include, for example, economic or political developments, erosion of the tax base, and the possibility of credit problems. These factors can affect Fund performance. The fund performance history at this time is very limited; therefore, performance achieved during its initial period of investment operation may not be replicated over longer periods and may not be indicative of how the Fund will perform in the future. Past performance is no guarantee of future results. 

Diversification does not protect against losses in a declining market.

Investors should consult with a financial professional and/or tax professional regarding their particular tax situation, and whether investing in municipal bond funds is appropriate.

The credit quality of the securities in a portfolio are assigned by a nationally recognized statistical rating organization (NRSRO), such as Standard & Poor's, Moody's, or Fitch, as an indication of an issuer's creditworthiness. Ratings range from `AAA' (highest) to `D' (lowest). Bonds rated `BBB' or above are considered investment grade. Credit ratings `BB' and below are lower-rated securities (junk bonds). High-yielding, non-investment-grade bonds (junk bonds) involve higher risks than investment-grade bonds. Adverse conditions may affect the issuer's ability to pay interest and principal on these securities.

Bloomberg Barclays Index Information:

Source: Bloomberg Index Services Limited. BLOOMBERG® is a trademark and service mark of Bloomberg Finance L.P. and its affiliates (collectively “Bloomberg”). BARCLAYS® is a trademark and service mark of Barclays Bank Plc (collectively with its affiliates, “Barclays”), used under license. Bloomberg or Bloomberg’s licensors, including Barclays, own all proprietary rights in the Bloomberg Barclays Indices. Neither Bloomberg nor Barclays approves or endorses this material, or guarantees the accuracy or completeness of any information herein, or makes any warranty, express or implied, as to the results to be obtained therefrom and, to the maximum extent allowed by law, neither shall have any liability or responsibility for injury or damages arising in connection therewith.

Morningstar Information:

Morningstar, Inc. ©2021. All rights reserved. The information contained herein is the proprietary information of Morningstar, Inc., may not be copied or redistributed for any purpose and may only be used for non-commercial, personal purposes. The information contained herein is not represented or warranted to be accurate, correct, complete or timely. Morningstar, Inc., shall not be responsible for investment decisions, damages, or other losses resulting from the use of this information. Past performance is no guarantee of future performance. Morningstar, Inc. has not granted consent for it to be considered or deemed an “expert”under the Securities Act of 1933.