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. Fund performance shown is based on Class F Share total return at net asset value, including the reinvestment of all distributions,but excludes sales charges which are not applicable to Class F Shares. The performance of other share classes may be lower than the performance shown, particularly share classes with applicable sales charges. Indexes are unmanaged, do not reflect the deduction of fees or expenses, and are not available for direct investment. The Average Yield to Maturity (YTM) and Average Effective Duration are based on a weighted average of the YTM and Effective Duration of the bonds held in the portfolio.
Yields Have Gone Down Over the Past 4 Decades
Market Yield on U.S. Treasury Securities
Data as of 12/31/2021. Source: FRED. For illustrative purposes only and does not represent any specific portfolio managed by Lord Abbett or any particular investment.
U.S. Cash Balances Remain High
Cash & Short-Term Assets vs. Money Market Assets
Data as of 09/30/2021. Source: Investment Company Institute data, Federal Reserve, and Bloomberg. For illustrative purposes only and does not represent any specific portfolio managed by Lord Abbett or any particular investment. *Total cash and short-term assets include money market assets (ICI), large time deposits, all commercial banks, NSA (not seasonally adjusted), savings deposits, and small time deposits.
Historically High Income Relative to Duration
Data as of 09/30/2021. Past performance is not a reliable indicator or guarantee of future results. With the core and intermediate term bond categories being the largest river of fixed income for retail clients, the above shows our Short Duration Income Fund compared to the index of the aforementioned categories, the Bloomberg U.S. Aggregate Bond Index.
With historically low yields on longer-term, government-related securities, coupled with elevated duration risk, investors may want to consider reallocating a portion of their core bond allocations to short duration credit. In this webinar, Andrew O’Brien, CFA, lead Portfolio Manager for the firm’s taxable fixed income strategies joins Joseph Graham, CFA, Investment Strategist, as they examine how short duration credit may potentially provide an attractive investment opportunity in an environment of inflation and interest-rate uncertainty.
While credit spreads have tightened, we believe lower default risk to come, and the resulting, reasonable liquidity compensation means valuations are well supported by fundamentals.
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Positive Returns During Rising Rates
Returns when the 10-year U.S. Treasury Yield Rose more than 100 bps (month-end annualized returns)
1FTSE 10 Year Treasury Bond Index. 2Returns based on F share class at NAV. Source: Morningstar. The Short Duration Fund’s Class F share performance at net asset value excludes sales charges, which are not applicable to Class F Shares. Past performance is not a reliable indicator or guarantee of future results. Other indexes may not have performed in the same manner under similar conditions. Performance during other time periods may have been different or negative. Indexes are unmanaged, do not reflect the deduction of fees or expenses, and are not available for direct investment. "bps" refers to basis points. One basis point equals .01% (100 bps = 1.00%). With the core and intermediate term bond categories being the largest river of fixed income for retail clients, the above shows our Short Duration Income Fund compared to the index of the aforementioned categories, the Bloomberg U.S. Aggregate Bond Index.
Strong Long-term Performance through Volatile Markets
Source: Morningstar. *Morningstar Short-Term Bond Category. Past performance is not a reliable indicator or guarantee of future results. Morningstar peer group average returns and 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. The fund performance is based on total return at net asset value, including the reinvestment of all distributions, if any, but excludes the deduction of sales charges which are not applicable to Class F Shares. Number of funds in the Morningstar Short-Term Bond Bond Category as of 12/31/2021 for calendar year 2020, (574), 2019, (569); 2018, (530); 2017, (513); 2016, (522); 2015, (559); 2014, (524); 2013, (458), 2012, (413), 2011, (405); 2010, (432), 2009, (432) and 2008, (439).
Time Horizon: Over 12 months Use: Not intended for specific expenditures Objective: Total return, incremental yield Risk: Conservative
Ask your advisor about our Short Duration Income Fund.
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A Note about Risk: The Fund is subject to the general risks associated with investing in debt securities, including market, credit, liquidity, and interest rate risk. The value of an investment will change as interest rates fluctuate and in response to market movements. When interest rates fall, the prices of debt securities tend to rise, and when interest rates rise, the prices of debt securities are likely to decline. Debt securities are subject to credit risk, which is the risk that the issuer will fail to make timely payments of interest and principal to the Fund. The Fund may invest in high yield, lower-rated debt securities, sometimes called junk bonds and may involve greater risks than higher rated debt securities. These securities carry increased risks of price volatility, illiquidity, and the possibility of default in the timely payment of interest and principal. The Fund may invest in foreign or emerging market securities, which may be adversely affected by economic, political, or regulatory factors and subject to currency volatility and greater liquidity risk. The Fund may invest in derivatives, which are subject to greater liquidity, leverage, and counterparty risk. These factors can affect Fund performance. Past performance is no guarantee of future results.
Dividend Yield is a financial ratio that shows how much a mutual fund pays out in dividends each year relative to value with maximum sales charges and without sales charges. The dividend yield is calculated by annualizing the last dividend and dividing it by the fund’s net asset value with maximum sales charges and without sales charges.
The 30-Day Standardized Yield represents net investment income earned by a fund over a 30-day period. It is expressed as an annual percentage rate using a method of calculation adopted by the Securities and Exchange Commission (SEC). Yields for other share classes will vary.
Effective Duration is the change in the value of a fixed income security that will result from a 1% change in market interest rates, taking into account anticipated cash flow fluctuations from mortgage prepayments, puts, adjustable coupons, and potential call dates. Duration is expressed as a number of years, and generally, the larger a duration, the greater the interest-rate risk or reward for a portfolio's underlying bond prices. Where applicable, securities, such as common or preferred stock, convertible bonds and convertible preferred stock, ETFs and ADRs, and CPI swaps and related futures, are excluded from these calculations.
Yield to Maturity is the rate of return anticipated on a bond if held until it matures. Yield to maturity assumes all the coupon payments are reinvested at an interest rate that equals the yield-to-maturity. The yield to maturity is the long-term yield expressed as an annual rate.
The ICE BofA 1-3 year U.S. Corporate Index is an unmanaged index comprised of U.S. dollar denominated investment grade corporate debt securities publicly issued in the U.S. domestic market with between one and three years remaining to final maturity.
Source: ICE Data Indices, LLC. Source ICE Data Indices, LLC (“ICE”), used with permission. ICE PERMITS USE OF THE ICE BofA INDICES AND RELATED DATA ON AN "AS IS" BASIS, MAKES NO WARRANTIES REGARDING SAME, DOES NOT GUARANTEE THE SUITABILITY, QUALITY, ACCURACY, TIMELINESS, AND/OR COMPLETENESS OF THE ICE BofA INDICES OR ANY DATA INCLUDED IN, RELATED TO, OR DERIVED THEREFROM, ASSUMES NO LIABILITY IN CONNECTION WITH THE USE OF THE FOREGOING, AND DOES NOT SPONSOR, ENDORSE, OR RECOMMEND LORD ABBETT, OR ANY OF ITS PRODUCTS OR SERVICES.
The Bloomberg U.S. Aggregate Bond Index represents securities that are SEC-registered, taxable, and dollar denominated. The index covers the U.S. investment grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities. Total return comprises price appreciation/depreciation and income as a percentage of the original investment.
Source: Bloomberg Index Services Limited. BLOOMBERG® is a trademark and service mark of Bloomberg Finance L.P. and its affiliates (collectively “Bloomberg”). Bloomberg owns all proprietary rights in the Bloomberg Indices. Bloomberg does not approve or endorse this material, or guarantee the accuracy or completeness of any information herein, or make any warranty, express or implied, as to the results to be obtained therefrom and, to the maximum extent allowed by law, shall not have any liability or responsibility for injury or damages arising in connection therewith.