Image alt tag

Error!

X

There was a problem contacting the server. Please try after sometime.

Sorry, we are unable to process your request.

Error!

X

We're sorry, but the Insights and Intelligence Tool is temporarily unavailable

If this problem persists, or if you need immediate assistance, please contact Customer Service at 1-888-522-2388.

Error!

X

We're sorry, but the Literature Center checkout function is temporarily unavailable.

If this problem persists, or if you need immediate assistance, please contact Customer Service at 1-888-522-2388.

Tracked Funds

You have 0 funds on your mutual fund watch list.

Begin by selecting funds to create a personalized watch list.

(as of 12/05/2015)

Pending Orders

You have 0 items in your cart.

Subscribe and order forms, fact sheets, presentations, and other documents that can help advisers grow their business.

A verification Email Has Been Sent

Close

An email verification email has been sent to .
Follow the instructions to complete the email validation process.

I have not received my verification email

Check your SPAM mailbox and make sure that twelcome@lordabbett.com is allowed to send you mail.

I'm still having trouble

If you're still having trouble verifying your email address. feel free to contact us.

1-888-522-2388
clientservices@lordabbett.com


OK

We're sorry. We found no record of the email address you provided.

Close

Register For a LordAbbett.com Account
Using Your Email Address.

  • Registered Financial Advisors gain access to:
  • Our data mining tool, Insight & Intelligence
  • Best in-class practice management content
  • Educational events, videos and podcasts.
  • The Lord Abbett Review - Subscribe now!

Registered but Having Problems?

If you believe you are registered and are having problems verifying your email address, feel free to contact us.

1-888-522-2388 clientservices@lordabbett.com

Terms & Condition

X

These Terms of Use ("Terms of Use") are made between the undersigned user ("you") and Lord, Abbett & Co. ("we" or "us"). They become effective on the date that you electronically execute these Terms of Use ("Effective Date").

A. You are a successful financial consultant that markets securities, including the Lord Abbett Family of Funds;

B. We have developed the Lord Abbett Intelligence System (the "Intelligence System"), a state of the art information resource that we make available to a limited community of broker/dealers through the Internet at a secure Web site (the "LAIS Site"); and

C. We wish to provide access to the Intelligence System to you as an information tool responsive to the demands of your successful business pursuant to these Terms of Use. Accordingly, you and we, intending to be legally bound, hereby agree as follows:]

1. Overview. · Scope. These Terms of Use (which we may amend from time to time) govern your use of the Intelligence System. · Revisions; Changes. We may amend these Terms of Use at any time by posting amended Terms of Use ("Amended Terms of Use") on the LAIS Site. Any Amended Terms of Use will become effective immediately upon posting. Your use of the Intelligence System after any Amended Terms of Use become effective will be deemed to constitute your acceptance of those Amended Terms of Use.We may modify or discontinue the Intelligence System at any time, temporarily or permanently, with or without notice to you. Purpose of the Intelligence System. The Intelligence System is intended to be an information resource that you may use to contribute to your business research. The Intelligence System is for broker/dealer use only; it is not to be used with the public in oral, written or electronic form. The information on the Intelligence System and LAIS Site is for your information only and is neither the tax, legal or investment advice of Lord Abbett or its third-party sources nor their recommendation to purchase or sell any security.

2. Your Privileges. · Personal Use. Your use of the Intelligence System is a nontransferable privilege granted by us to you and that we may deny, suspend or revoke at any time, with or without cause or notice. · Access to and Use of the Intelligence System. The User ID and password (together, an "Access ID") issued by us to you (as subsequently changed by you from time to time) is for your exclusive access to and use of the Intelligence System. You will: (a) be responsible for the security and use of your Access ID, (b) not disclose your Access ID to anyone and (c) not permit anyone to use your Access ID. Any access or use of the Intelligence System through the use of your Access ID will be deemed to be your actions, for which you will be responsible. · Required Technology. You must provide, at your own cost and expense, the equipment and services necessary to access and use the Intelligence System. At any time, we may change the supporting technology and services necessary to use the Intelligence System. · Availability. We make no guarantee that you will be able to access the Intelligence System at any given time or that your access will be uninterrupted, error-free or free from unauthorized security breaches.

3. Rights in Data. Our use of information collected from you will be in accordance with our Privacy Policy posted on the LAIS Site. Our compliance with our Privacy Policy will survive any termination of these Terms of Use or of your use of the Intelligence System.

4. Your Conduct in the Use of the Intelligence System. You may access, search, view and store a personal copy of the information contained on the LAIS Site for your use as a broker/dealer. Any other use by you of the Intelligence System and the information contained on the LAIS Site these Terms of Use is strictly prohibited. Without limiting the preceding sentence, you will not: · Engage in or permit any reproduction, copying, translation, modification, adaptation, creation of derivative works from, distribution, transmission, transfer, republication, compilation or decompilation, reverse engineering, display, removal or deletion of the Intelligence System, any portion thereof, or any data, content or information provided by us or any of our third-party sources in any form, media or technology now existing or hereafter developed, that is not specifically authorized under these Terms of Use.

· Remove, obscure or alter any notice, disclaimer or other disclosure affixed to or contained within the Intelligence System, including any copyright notice, trademark and other proprietary rights notices and any legal notices regarding the data, content or information provided through the Intelligence System.

· Create a hyperlink to, frame or use framing techniques to enclose any information found anywhere on the LAIS Site without our express prior written consent.

· Impersonate any person, or falsely state or otherwise misrepresent his or her affiliation with any person in connection with any use of the Intelligence System.

· Breach or attempt to breach the security of the Intelligence System or any network, servers, data, or computers or other hardware relating to or used in connection with the Intelligence System; nor (b) use or distribute through the Intelligence System software or other tools or devices designed to interfere with or compromise the privacy, security or use of the Intelligence System by others or the operations or assets of any person.

· Violate any applicable law, including, without limitation, any state federal securities laws. 5. Your Representations and Warranties. You hereby represent and warrant to us, for our benefit, as of the time of these Terms of Use and for so long as you continue to use the Intelligence System, that (a) you are, and will continue to be, in compliance with these Terms of Use and any applicable laws and (b) you are authorized to provide to us the information we collect, as described in our Privacy Policy.

6. Disclaimer of Warranties.

· General Disclaimers.

THE INTELLIGENCE SYSTEM, THE LAIS SITE AND ALL DATA, INFORMATION AND CONTENT ON THE LAIS SITE ARE PROVIDED "AS IS" AND “AS AVAILABLE” AND WITHOUT ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND. WITHOUT LIMITING THE PRECEDING SENTENCE, LORD ABBETT, ITS AFFILIATES, AGENTS, THIRD-PARTY SUPPLIERS AND LICENSORS, AND THEIR RESPECTIVE EMPLOYEES, CONTRACTORS, DIRECTORS, OFFICERS AND SHAREHOLDERS (COLLECTIVELY, THE “LORD ABBETT GROUP”) EXPRESSLY DISCLAIM ALL WARRANTIES, WHETHER EXPRESS, IMPLIED OR STATUTORY, INCLUDING THE WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, AND NONINFRINGEMENT. YOU EXPRESSLY AGREE THAT YOUR USE OF THE LAIS SITE, THE INTELLIGENCE SYSTEM, AND THE DATA, INFORMATION AND CONTENT PRESENTED THERE ARE AT YOUR SOLE RISK AND THAT THE LORD ABBETT GROUP WILL NOT BE RESPONSIBLE FOR ANY (A) ERRORS OR INACCURACIES IN THE DATA, CONTENT AND INFORMATION ON THE LAIS SITE AND THE INTELLIGENCE SYSTEM OR (B) ANY TERMINATION, SUSPENSION, INTERRUPTION OF SERVICES, OR DELAYS IN THE OPERATION OF THE LAIS SITE OR THE INTELLIGENCE SYSTEM.

· Disclaimer Regarding Investment Research.

THE INTELLIGENCE SYSTEM INCORPORATES DATA, CONTENT AND INFORMATION FROM VARIOUS SOURCES THAT WE BELIEVE TO BE ACCURATE AND RELIABLE. HOWEVER, THE LORD ABBETT GROUP MAKES NO CLAIMS, REPRESENTATIONS OR WARRANTIES AS TO THE ACCURACY, TIMELINESS, COMPLETENESS OR TRUTHFULNESS OF SUCH DATA, CONTENT AND INFORMATION. YOU EXPRESSLY AGREE THAT YOU ARE RESPONSIBLE FOR INDEPENDENTLY VERIFYING YOUR INVESTMENT RESEARCH PRIOR TO FORMING YOUR INVESTMENT DECISIONS OR RENDERING INVESTMENT ADVICE. THE LORD ABBETT GROUP WILL NOT BE LIABLE FOR ANY INVESTMENT DECISION MADE BY YOU OR ANY OTHER PERSON BASED UPON THE DATA, CONTENT AND INFORMATION PROVIDED THROUGH THE INTELLIGENCE SYSTEM OR ON THE LAIS SITE.

· Survival.

THIS SECTION 6 SHALL SURVIVE ANY TERMINATION OF THESE TERMS OF USE OR YOUR USE OF THE INTELLIGENCE SYSTEM..

7. Limitations on Liability.

NONE OF THE MEMBERS OF THE LORD ABBETT GROUP WILL BE LIABLE TO YOU OR ANY OTHER PERSON FOR ANY DIRECT, INDIRECT, INCIDENTAL, CONSEQUENTIAL, PUNITIVE, SPECIAL OR EXEMPLARY DAMAGES (INCLUDING LOSS OF PROFITS, LOSS OF USE, TRANSACTION LOSSES, OPPORTUNITY COSTS, LOSS OF DATA, OR INTERRUPTION OF BUSINESS) RESULTING FROM, ARISING OUT OF OR IN ANY WAY RELATING TO THE INTELLIGENCE SYSTEM, THE LAIS SITE OR YOUR USE THEREOF, EVEN IF THE LORD ABBETT GROUP HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THIS SECTION 7 WILL SURVIVE ANY TERMINATION OF THESE TERMS OF USE OR YOUR USE OF THE INTELLIGENCE SYSTEM.

8. Miscellaneous Provisions.

· Governing Law. This Agreement will governed by and construed in accordance with the laws of the State of New York, without giving effect to applicable conflicts of law principles.

THE UNIFORM COMPUTER INFORMATION TRANSACTIONS ACT OR ANY VERSION THEREOF, ADOPTED BY ANY STATE, IN ANY FORM ("UCITA") WILL NOT APPLY TO THESE TERMS OF USE. TO THE EXTENT THAT UCITA IS APPLICABLE, THE PARTIES HEREBY AGREE TO OPT OUT OF THE APPLICABILITY OF UCITA PURSUANT TO THE OPT-OUT PROVISION(S) CONTAINED THEREIN.

The Intelligence System is not intended to be used by consumers, nor are the consumer protection laws of any jurisdiction intended to apply to the Intelligence System. You agree to initiate and maintain any action, suit or proceeding relating to these Terms of Use or arising out of the use of the Intelligence System exclusively in the courts, state and federal, located in or having jurisdiction over New York County, New York.

YOU HEREBY CONSENT TO THE PERSONAL JURISDICTION AND VENUE OF THE COURTS, STATE AND FEDERAL, LOCATED IN OR HAVING JURISDICTION OVER NEW YORK COUNTY, NEW YORK. YOU AGREE THAT YOU WILL NOT OBJECT TO A PROCEEDING BROUGHT IN YOUR LOCAL JURISDICTION TO ENFORCE AN ORDER OR JUDGMENT OBTAINED IN NEW YORK.

· Relationship of Parties. The parties to these Terms of Use are independent contractors and nothing in these Terms of Use will be construed as creating an employment relationship, joint venture, partnership, agency or fiduciary relationship between the parties.

· Notice. All notices provided under these Terms of Use will be in writing and will be deemed effective: (a) when delivered personally, (b) when received by electronic delivery, (c) one business day after deposit with a commercial overnight carrier specifying next day delivery, with written verification of receipt, or (d) three business days after having been sent by registered or certified mail, return receipt requested. We will only accept notices from you in English and by conventional mail addressed to: General Counsel Lord, Abbett & Co. 90 Hudson Street Jersey City, N.J. 07302-3973 We may give you notice by conventional mail or electronic mail addressed to the last mail or electronic mail address transmitted by you to us.

· Third-Party Beneficiaries. The members of the Lord Abbett Group are third-party beneficiaries of the rights and benefits provided to us under these Terms of Use. You understand and agree that any right or benefit available to us or any member of the Lord Abbett Group hereunder will also be deemed to accrue to the benefit of, and may be exercised directly by, any member of the Lord Abbett Group to the extent applicable.

· Survival. This Section 8 will survive any termination of these Terms of Use or your use of the Intelligence System. The undersigned hereby signs these Terms of Use. By electronically signing and clicking "Accept" below, these Terms of Use will be legally binding on me. To sign these Terms of Use, confirm your full name and enter your User ID and Password (as your electronic signature) in the fields indicated below and click the “I Accept” button.

Reset Your Password

Financial Professionals*

Your password must be a minimum of characters.

Confirmation Message

Your LordAbbett.com password was successully updated. This page will be refreshed after 3 seconds.

OK

 

Economic Insights

After the volatility of the past few years, conditions once again appear favorable for this asset class. 

Once an unquestioned investment favorite, emerging markets have given investors a wild ride during the past few years, and have, generally, disappointed. They could not help but do so given the expectations that had prevailed. Now, many of these markets are coming back. Interest in the area has risen accordingly, but people remain wary. That is probably healthy, though there is good reason to reconsider this asset class now. Emerging markets, of course, are no place for those who dislike volatility or for those with a short-term investment horizon. But for the longer-term investor, things look favorable. These equity markets show value that should pay off, especially for those economies adjusting to the new global environment.

A Little Historical Perspective       
Just prior to the financial crisis of 2008–09 and Great Recession, consensus saw emerging economies as the place for universally rapid growth, where equities would produce superior returns. China’s economy, for instance, had grown at a rate of 10–12% a year in real terms during the prior five years. India had shown real annual growth rates averaging near 9.0% during that time. Brazil had a much lower average growth of some 4.0%, but showed individual years where real growth approached or exceeded 6.0%.1 China’s Shanghai Composite Index2 averaged price gains of 31.1% a year during the five years leading up to 2007’s pre-crisis peak. India’s SENSEX Index3 did even better, averaging 38.0% a year. Smaller markets did well, too. Indonesia’s JKSE Composite4 showed annual price gains of 45.2%, while Brazil’s Bovespa Index5 averaged 34.4%.6 And this is just a sampling. The pattern was widespread. Consensus wisdom viewed emerging economies as on track to grow at rapid rates and produce great equity returns indefinitely.

The crisis interrupted the pattern, but it seemed to return with the initial recovery of 2009. China’s economy, for example, grew 9.2% in real terms that year, and India’s 8.5%. Brazil’s averaged a decline for the year, but more detailed quarterly and monthly figures pointed to strength. Similar growth spurts appeared throughout most of the emerging world, where the equity markets showed their old verve as well. Chinese stock prices rose almost 80% in 2009, India’s 81%, Indonesia’s 87%, and Brazil’s 73%. The attractive pattern was fairly consistent across the sector.

Disappointment set in after 2010. All these emerging economies slowed, some very abruptly, and their equity markets underperformed accordingly. China’s real annual growth rate trended down, to an annual pace of just above 7.0% by 2013. Its Shanghai stock composite averaged price declines of 9.2% a year during those four years. India’s economy grew at closer to a rate of 5.5–6.5% during much of this period, barely more than half its pre-crisis pace. Its SENSEX Stock Index saw an average annual price advance of less than 5.0%. Brazil, under tremendous economic strain, barely escaped a relapse into recession, and grew only about 2.0% a year from 2011 to 2013. Its equity market accordingly saw price gains of merely 2.3% a year. Indonesia, along with other oil-based economies, did better because of rising energy prices during that time. Even then, its equity market advance of 13.4% a year during this time paled in comparison with its pre-crisis performance.

It is now apparent, even to consensus thinking, that the great growth and equity gains of 2002–07 were far from fundamental. Instead, they arose from the confluence of near perfect conditions. Global trade at the time was growing much faster than the developed economies generally, providing opportunities for the export-oriented emerging economies, which, in one way or another, was just about all of them. Commodity prices, including oil, were rising, benefiting that not insignificant portion of emerging economies that depend on commodities exports. At the same time, developed countries kept their interest rates low, providing a free flow of global liquidity and effectively giving emerging markets an abundance of investment monies that not only benefited their overall growth and productivity but also that directly supported their financial markets. And since many of these countries had liberalized their economies in the 1990s, they were perfectly positioned to realize all these special benefits.7    

Prospects
If the future cannot promise this remarkable confluence of positives, emerging markets can nonetheless still make satisfactory gains. They certainly show relative value. Emerging market multiples stand on average 20% below U.S. equity multiples and 8–10% below those in Europe and Japan.8 On that basis alone, emerging markets should generate relatively good returns, even in the absence of perfection. All they require is some slight improvement in the fundamentals that retarded performance in the 2009–13 period. And this is likely.

One such factor is policy. Tightening fiscal and monetary policies contributed much to the disappointing economic and market performances of 2009–13. Economic managers in these countries were not actively trying to slow growth during this time. The problem was that they had eased policy so much in 2008–09 to contend with the crisis that efforts to normalize things in recovery had the effect of restraint. Now that most of these policy adjustments have run their course, these economies should feel a sense of policy relief going forward, even if their economic managers simply adopt a neutral policy stance, though some, China most notably, have moved toward more stimulative policies for the time being. In part for this reason, the International Monetary Fund (IMF) expects 5.2% annual real growth rates for emerging economies as a whole during the next five years, up from the 2009–14 period and notably twice as fast as its expectations for the United States and more than three times its expectations for either the eurozone or Japan.9

Trade, too, should accelerate modestly. No one expects a return to the growth pace that prevailed before the crisis, but neither should these economies suffer the shock that beset them in the years following the crisis, when every expectation of the time faced disappointment. On the contrary, the IMF actually expects a modest uptick in world trade in part because of the U.S. dollar’s recent strength, but not exclusively for that reason. Such projections should, of course, be taken with more than a little salt, but it is indicative nonetheless that the IMF looks for emerging economy exports to accelerate, from the 5.0% annual pace they averaged between 2009 and 2014 to 6.5% during the next few years. The projected growth pace is still slower than between 2002 and 2007, but it is nonetheless a marked uptick from recent years—a 30% jump in fact.10

Even the decision by the U.S. Federal Reserve to notch back its monetary ease may not have the retarding effect some expect. To be sure, the Fed caused considerable concern among emerging-market investors in 2013 when it announced its intention to taper off its quantitative easing program, though when it actually did the tapering, these markets stood up reasonably well. Now, the Fed plans to dry up still more excess dollar liquidity by gradually raising interest rates. By itself, this policy posture would tend to hold back both growth in emerging economies and gains in their markets. But these actions are not happening by themselves. While the Fed is pulling back, both the European Central Bank (ECB) and the Bank of Japan have announced significant quantitative easing programs and have pushed interest rates down toward zero, into negative territory in some cases.11 Such new flows of liquidity should more than offset the Fed’s plans for dollar liquidity, allowing a continued robust expansion in global money flows over the next few years.

Ways to Differentiate Among Markets
Apart from these largely favorable general considerations, a number of other perspectives should help investors differentiate among emerging economies and markets. One is relative movements in the value of the dollar and the euro. Since the dollar will likely continue to rise against the euro, those that depend relatively more on American markets and less on European markets would seem to have an advantage. This is, of course, no place to list all 50-plus markets usually grouped in the asset class. Still, there are standouts. Latin America economies would seem to have the edge in this regard over the European emerging economies and those of the Middle East and North Africa. Asia offers a mixed picture. Of the economies often singled out in emerging-markets discussions, China, India, Malaysia, and Vietnam would seem to have an advantage in this regard, while Russia, Turkey, and Egypt would seem to face a disadvantage.12

The ongoing slowdown in Chinese growth would seem to disadvantage economies that count on China as a major market. That would include Africa, Central Asia, Russia, Vietnam, Indonesia, Malaysia, and, in Latin America, Chile and Argentina. Those with less of a problem in this regard include India, Europe’s emerging economies, and much of the rest of Latin America, except Brazil and to a lesser extent Mexico. Since the generally slow pace of growth globally, and particularly the slowdown in China, should keep a lid on commodity prices, those emerging economies that depend a lot on sales in this area would seem to face disadvantages relative to others. In this respect, the oil economies in Latin America, Africa, the Middle East, and Central Asia look less desirable, including Russia. In addition, Peru, Brazil, Thailand, Malaysia, Indonesia, and the Philippines face disadvantages, at least in this context. The European emerging markets face the least problem in this regard.13

Longer term, the key to emerging economies, and so to the best investment returns, is their ability to make the fundamental structural changes demanded at each stage of development. In this respect, there are three key considerations to guide investment decisions. The first of these is the commitment of each economy to education and training. This in large part should determine a particular economy’s ability to leverage the technologies and the best practices of the developed economies. On this front, China, Singapore, Taiwan, and Hong Kong lead, as does India, though in a less comprehensive way. The European emerging economies score relatively high in this regard as well. A second support is each economy’s ability to receive these technologies and best practices. This requires an openness in both in trade and finance. Here the mix changes. Singapore, Hong Kong, Malaysia, Taiwan, and most of emerging Europe score high. Vietnam scores high on trade openness, but low when it comes to finance. Sadly, frequently mentioned names in emerging markets discussions—Russia, China, Brazil, India, Mexico, Indonesia, and Turkey—all score poorly on questions of trade and financial openness.14

This discussion hardly answers all the questions about this investment class. That would take a book. Clearly, many markets that look good in one respect appear less so in another. Some of the positives have a shorter-term nature than others. Three takeaways emerge from this mélange of considerations: 1) Circumstances, though not likely to return to the universally favorable environment of earlier this century, probably will support emerging market investments going forward, certainly better than in the 2009–13 period. 2) All these economies have tremendous development potential, if only they will open themselves to, and put themselves in a position to, leverage the technological and best practices on offer from the developed economies through trade and investments. 3) Except in rare cases, any single factor—favorable or unfavorable—will face balancing influences from other factors.

 

1 Economic data from the World Bank.
The Shanghai Composite Index is a capitalization-weighted index of stocks, and is comprised of all the A shares (available only to local investors) and B shares (available only to foreign investors) listed on the Shanghai Stock Exchange. The index tracks the daily price movement of all shares on the exchange.
3 The BSE Sensex (Bombay Stock Exchange Sensitive Index) is a value-weighted index composed of 30 stocks, and consists of the 30 largest and most actively traded stocks, representative of various sectors, on the Bombay Stock Exchange.
4 The JKSE Composite is a modified capitalization-weighted index of all stocks listed on the regular board of the Indonesia Stock Exchange. The index was developed with a base index value of 100 as of August 10, 1982.
5 The Bovespa Index is a market capitalization-weighted index that tracks the performance of a basket of stocks that trade on the Sao Paulo Exchange.
6 All market data herein from Bloomberg.
7 See, “Emerging Markets in Transition: Growth Prospects and Challenges, IMF Staff Discussion Note, June 2014.
8 Data from Bloomberg.
9 Data from the International Monetary Fund (IMF).
10 Ibid.
11 See Federal Reserve, the European Central Bank, and IMF websites.
12 “Emerging Markets in Transition: Growth Prospects and Challenges,” op. cit.
13 Ibid.
14 Ibid.

 

RELATED TOPICS

ABOUT THE AUTHOR

Lord Abbett's Blog

videoOur blog, The Investment Conversation, features timely commentary and analysis from Lord Abbett experts. Join the conversation.

RELATED TOPICS

Please confirm your literature shipping address

Please review the address information below and make any necessary changes.

All literature orders will be shipped to the address that you enter below. This information can be edited at any time.

Current Literature Shipping Address

* Required field