Inflation Focused Fund | Lord Abbett

 

Inflation Focused Fund

Seeks to deliver inflation protection while providing lower duration risk and volatility.

LIFIX (As of 03/31/2021)

 
 
LIFIX
TIPS*
Average Yield to Maturity
2.14%
1.11%
Average Effective Duration
2.08 years
7.40 years
Expense Ratio
0.50%
0.19%
*iShare TIPS Bond ETF

Why Inflation Focused?

Potential for Higher Income, Lower Duration, and True Inflation Protection

This strategy has provided a high income stream while offering inflation protection with one-third the duration of the average TIPS-based portfolio

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Inflation Focused Fund I Share Data as of 03/31/2021. Performance is based on total return at net asset value, including the reinvestment of all distributions, but excludes sales charges which are not applicable to Class I Shares. The performance of other share classes may be lower than the performance shown, particularly share classes with applicable sales charges. *Category: Morningstar Inflation-Protected 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 (205); three-year (198); and five-year (175). 1Ratings (other than U.S. Treasury securities or securities issued or backed by U.S. agencies) provided by Standard & Poor's, Moody's, and Fitch. For certain securities that are not rated by any of these three agencies, credit ratings from other agencies may be used.  2"Other" may include municipal bonds and non-index holdings.

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.

Insights

U.S. Manufacturing Is Accelerating. Will Inflation Do the Same?

With activity increasing, manufacturers are paying higher prices for inputs. History suggests the impact on inflation will be limited.

Inflation Expectations and the Commercial Real Estate Sector

Heightened inflation fears, coupled with an upward move in rates, has various implications across property types and geographies.

Evaluating Nominal versus Real Rates

A closer look at nominal yields, a sharp rise in inflation expectations and the real interest rate.

How Do We Do It?

Our Strategic Design

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Strategically creating a portfolio targeted to deliver:

  • Higher yield - generating higher returns if inflation remains low
  • Low duration - providing less interest rate risk if inflation increases

Inflation Focused Design vs. TIPS

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The Result...

Performing as ExpectedBar ChartSource: FRED, Morningstar. As of 2/12/2021.  Past performance is not a reliable indicator or guarantee of future results. Lord Abbett Inflation Focused Fund performance is based on total return of Class I Shares at net asset value and includes the reinvestment of all distributions, but excludes sales charges which are not applicable to Class I Shares. The performance of other share classes may be lower than the performance shown, particularly share classes with applicable sales charges. The red lines indicate periods of visual increase in the 10-Year Breakeven Inflation Rate. Category: Morningstar Inflation-Protected Bond Funds Average. Number of Funds in each time period shown: 9/20/2011- 9/14/2012 (rank 5 of 165 funds); 1/13/2015-4/27/2015 (rank 9 of 195 funds); 2/11/2016-2/3/2017 (rank 2 of 199 funds); 6/20/2017 – 2/15/2018 (rank 3 of 205 funds); 3/9/2020-2/12/2021 (rank 22 of 214 funds).  

The 10-Year Breakeven Inflation Rate rose 348% from a bottom of 0.50 in March to 2.24Bar ChartAs of 2/16/2021. Source: FRED, Morningstar, Y Charts. Past performance is not a reliable indicator or guarantee of future results.  Lord Abbett Inflation Focused Fund performance is based on total return at net asset value and includes the reinvestment of all distributions. Morningstar Category: Inflation Protected Bond. Number of Funds in category for time period shown: 211. The performance shown above only represents specific time periods in which inflation was rising. The Fund may not have performed similarly during other periods, especially periods of deflation or lower than expected inflation.

 

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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 Inflation Focused Fund.

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This website has been prepared exclusively for use by analysts, institutional investors and their consultants, registered investment advisors, broker-dealers, and sponsors of plans with a minimum of 100 participants. It is not intended for, and should not be used with, small plan sponsors, plan participants, or the public in written or oral form or for any other purpose.

I Share Performance as of 03/31/2021 for Inflation Focused Fund for the one-year period was 29.82%; three-year, 4.55%; five-year, 4.31% ; and since inception (04/29/2011) was 1.74%. The Inflation Focused Fund I share rankings within the Morningstar Inflation-Protected Bond Category as of 03/31/2021 for the one-year time period was 1% (5/205); three-year, 64% (129/198); five-year, 9% (15/175).

A Note about Risk: Although the Fund invests in inflation-linked investments, there is no guarantee that the Fund will generate returns that exceed the rate of inflation in the U.S. over time. During periods of deflation or when inflation is lower than anticipated, the Fund is likely to underperform funds that hold fixed income securities similar to those held by the Fund but do not hold inflation-linked investments. The Fund may invest substantially in inflation-linked derivatives and other types of derivatives and is exposed to the risk that the value of a derivative instrument does not move in correlation to the value of any underlying securities, market index or interest rate, or moves in an opposite direction than anticipated by the Fund. Investing in derivatives also involves greater liquidity, leverage, and counterparty risk. Because derivatives may involve a small amount of cash relative to the total amount of the transaction, the magnitude of losses from derivatives may be greater than the amount originally invested by the Fund. In addition, the Fund must also be able to correctly forecast market movements and other factors to be successful with its derivatives investments. The Fund is subject to the general risks associated with investing in fixed income securities, including market, credit, liquidity, and interest rate risk. These factors can affect the Fund’s performance.

Diversification does not protect against losses in a declining market.

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.

We are providing the comparison because the TIP etf is the closest proxy that we can get to for performance of a standard TIPS portfolio. Mutual funds and exchange-traded funds (ETFs) have a lot in common. Both types of funds consist of a mix of many different assets and represent a common way for investors to diversify. There are key differences, though, in the way they are managed. ETFs can be traded like stocks, while mutual funds only can be purchased at the end of each trading day based on a calculated price. Mutual funds also are actively managed, meaning a fund manager makes decisions about how to allocate assets in the fund. ETFs, on the other hand, usually are passively managed and based more simply on a particular market index.

Where the rating agencies rate a security differently, Lord Abbett uses the average rating based on numeric values assigned to each rating. 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. A portion of the portfolio's securities may not be rated. Breakdown is not an S&P credit rating or an opinion of S&P as to the creditworthiness of such portfolio. Ratings apply to the creditworthiness of the issuers of the underlying securities and not the fund or its shares. Ratings may be subject to change.