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Equity Perspectives

Lord Abbett Portfolio Manager Darnell Azeez shares his perspective on the U.S. equity market in the week ahead.

Transcript

Darnell Azeez, CFA

Portfolio Manager

Air Date: January 27, 2021

00:02:22:23

Good morning. My name is Darnell Azeez, head of value equities at Lord Abbett and portfolio manager for our dividend focus strategies.

Title: Thoughts on Value Equities

00:11:24:10

As value investors we-- clearly are keenly aware of the difficulty that-- that value investing has had over the better part of-- of ten years. And the real reason behind that is that we've been in a situation of low global growth, low interest rates, low inflation.

00:11:39:26

The thing that we're very excited about, and you began to see this post-- the announcement of the vaccine, is that the year over year-- jump in-- in growth-- you know, granted, off of depressed levels-- will be quite significant. In many estimates, GDP growth in-- at least U.S. GDP growth, at least north of 6% in-- by some estimates.

00:11:59:10

And what we think is attractive about this is again-- value names have underpor-- performed for-- a number of years, in particular last year. But as the global economy begins to recover, a lotta these companies that are healthy and able to survive have probably cut expenses, have probably done things during the recession, invested in technology to become more productive.

00:12:21:20

So as the markets return, that rising tide lifts all boats. We're potentially lookin' at a collection of companies that are trading at good valuations, that have stronger business prospects, that have higher earnings potential in out years.

00:12:35:04

We think that that-- makes a lot of-- a lot of these value names that have somewhat-- that have outperformed for a number of years, we think that makes them potentially more attractive-- in the out years. And if you think about just the dispersion of performance-- you know, for the-- the-- it's been a very top-heavy, growth-driven market.

00:12:54:10

And as people look to maybe reallocate money out of some of their strong growth winners that have great fundamentals, I think people will increasingly be comfortable in buying value names and good companies, companies that can survive, that have strong balance sheets-- that are just bein' mispriced by the market. And our job and what we do as value investors is to identify those companies and make sure we're there when that tide turns.

00:13:15:22

So we do feel that there's some space to go and there's value rotation. Course it's unknowable, but we think we have the backdrop of stronger companies, better global growth environment, interest rates that are-- still anchored-- at low levels, and importantly, incredible amount of fiscal stimulus-- potentially-- on the way-- potentially in waves given the new administration and the democratically-- Democratic control of the-- government.

00:15:32:17

Thank you for listening and thank you for your continued interest in Lord Abbett.

________________________________________

Unless otherwise noted, all discussions are based on U.S. markets and U.S. monetary and fiscal policies.

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