Darnell Azeez, CFA
Air Date: January 27, 2021
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
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.
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.
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.
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.
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.
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.
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.
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.
Asset allocation or diversification does not guarantee a profit or protect against loss in declining markets.
No investing strategy can overcome all market volatility or guarantee future results.
Market forecasts and projections are based on current market conditions and are subject to change without notice. Projections should not be considered a guarantee.
The value of investments in fixed-income securities will change as interest rates fluctuate and in response to market movements. Generally, when interest rates rise, the prices of debt securities fall, and when interest rates fall, prices generally rise. High-yield securities, sometimes called junk bonds, carry increased risks of price volatility, illiquidity, and the possibility of default in the timely payment of interest and principal. Bonds may also be subject to other types of risk, such as call, credit, liquidity, interest-rate, and general market risks. Longer-term debt securities are usually more sensitive to interest-rate changes; the longer the maturity of a security, the greater the effect a change in interest rates is likely to have on its price. Lower-rated bonds may be subject to greater risk than higher-rated bonds. No investing strategy can overcome all market volatility or guarantee future results.
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.
This broadcast may contain assumptions that are “forward-looking statements,” which are based on certain assumptions of future events. Actual events are difficult to predict and may differ from those assumed. There can be no assurance that forward-looking statements will materialize or that actual returns or results will not be materially different from those described here.
This broadcast serves as reference material and is provided for general educational purposes only; does not constitute an offer to acquire, solicitation for an offer to acquire, an offer to sell or solicitation for an offer to buy, any securities, nor is intended to be relied upon as a forecast, research, or investment advice on any securities, and cannot be used for any of the foregoing.
The views and opinions expressed by the Lord Abbett speaker are those of the speaker as of the date of the broadcast, and do not necessarily represent the views of the firm as a whole. Any such views are subject to change at any time based upon market or other conditions and Lord Abbett disclaims any responsibility to update such views. Neither Lord Abbett nor the Lord Abbett speaker can be responsible for any direct or incidental loss incurred by applying any of the information offered.
The value of investments and any income from them is not guaranteed and may fall as well as rise, and an investor may not get back the amount originally invested. Investment decisions should always be made based on an investor’s specific financial needs, objectives, goals, time horizon, and risk tolerance.
Please consult your investment professional for additional information concerning your specific situation.
The information provided is not directed at any investor or category of investors and is provided solely as general information about Lord Abbett’s products and services and to otherwise provide general investment education. None of the information provided should be regarded as a suggestion to engage in or refrain from any investment-related course of action as neither Lord Abbett nor its affiliates are undertaking to provide impartial investment advice, act as an impartial adviser, or give advice in a fiduciary capacity. If you are an individual retirement investor, contact your financial advisor or other fiduciary about whether any given investment idea, strategy, product or service may be appropriate for your circumstances.
This broadcast is the copyright © 2021 of Lord, Abbett & Co. LLC. All Rights Reserved. This recording may not be reproduced in whole or in part or any form without the permission of Lord Abbett. Lord Abbett mutual funds are distributed by Lord Abbett Distributor LLC.
FOR MORE INFORMATION ON ANY LORD ABBETT FUNDS, CONTACT YOUR INVESTMENT PROFESSIONAL OR LORD ABBETT DISTRIBUTOR LLC AT 888-522-2388, OR VISIT US AT LORDABBETT.COM FOR A PROSPECTUS WHICH CONTAINS IMPORTANT INFORMATION ABOUT A FUND'S INVESTMENT GOALS, SALES CHARGES, EXPENSES AND RISKS THAT AN INVESTOR SHOULD CONSIDER AND READ CAREFULLY BEFORE INVESTING.