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

 

Fixed-Income Insights

During a stormy season for financial markets, the asset class represented an oasis of tranquility for investors. Here’s why the calm may continue.

 

In Brief

  • While equity and taxable fixed-income markets have been marked by volatility this summer, the municipal bond market has been relatively calm.
  • What’s behind the trend? Unlike other markets, which have been whipsawed by fast-moving global developments, the fundamental factors influencing the muni sector have been characterized by less uncertainty.
  • The key takeaway—With other markets grabbing the headlines, municipal bonds’ steady performance has received little notice. But since the asset class has provided a relatively stable investment compared to the volatility of other markets, investors may begin paying greater attention.

 

Volatility has been the watchword in financial markets this summer, with the ups and downs of the equity and Treasury markets making headlines. One corner of the financial world, though, that has not been getting as much attention is the municipal bond market. Most of the news out of the muni sector has been focused on a handful of situations involving fiscally stressed issuers, such as Puerto Rico and Chicago, whose problems have been well documented for some time. Many investors might not be aware of how the municipal bond market is actually performing, because it has not been volatile enough to be newsworthy.

Equity and taxable fixed-income markets have been reacting dramatically to a range of global events, such as China’s slowing growth, falling oil prices, and the eurozone’s continuing issues with Greece. But the primary factors driving the municipal bond market are ones that have, historically, influenced prices—the U.S. economy, global interest rate movements, individual investor demand, and municipal bond issuer supply—and right now, those factors are characterized by less uncertainty than the global concerns listed above.  Overall, the combined impact of these factors on prices of muni securities has been mild, leading to a period of relative calm compared with other asset classes.

A Tranquil Summer
Just how calm has the muni market been? There are several ways to measure the market’s limited relative volatility. One is to look at the movement in Municipal Market Data’s (MMD) daily interest-rate scales, perhaps the most widely used benchmark for municipal bond rates, and compare it with similar data on U.S. Treasury securities from Bloomberg. What are the data telling us?

1. Since June 30, the quoted interest rates for 30-year ‘AAA’ rated municipal bonds have ranged from a low of 3.00% to a high of 3.33%—a range of 33 basis points (bps). In comparison, during the same period the 30-year U.S. Treasury bond has been in a range of 2.72–3.23%—a spread of 51 bps.

2. Among intermediate-dated securities, the 10-year ‘AAA’ municipal bond yield range has been 2.09–2.33%, while the range on the 10-year U.S. Treasury note has been 2.00–2.45%. The range on the 10-year muni segment, at 24 bps, is far narrower than the 45 basis-point differential among Treasuries of similar maturity. 

3. To go even shorter, five-year ‘AAA’ muni yields have seen a range of 1.27–1.42%, while five-year Treasuries have had a range of 1.37–1.72%. This means five-year municipals have been around 15 bps, or 0.15%, while Treasuries have been around 35 bps, or 0.35%. 

Overall, no matter which maturities we look at, municipals have had much less volatility. Some may say that these are just benchmark movements—but how have portfolios actually fared? Let’s look at Chart 1, which compares the price volatility of Lord Abbett municipal bond funds to that of other asset classes for the period June 30 to September 11, 2015:

 

Chart 1. Price Data Point to the Muni Sector’s Low Volatility in Recent Months
Volatility range (percentage from lowest value to highest) for daily prices of indicated indexes and net asset values of representative Lord Abbett municipal bond funds, June 30–September 11, 2015   

Source: MSCI, Bloomberg, Merrill Lynch, and Lord Abbett. “MSCI EAFE” refers to the MSCI EAFE Index. “S&P 500” refers to the S&P 500® Index. High-yield bonds represented by the BofA Merrill Lynch U.S. High Yield Master II Index. “Barclays Aggregate” refers to the Barclays U.S. Aggregate Bond Index. Indexes are unmanaged, do not reflect the deduction of fees and expenses, and are not available for direct investment.
Mutual funds generally must calculate their net asset value (NAV) at least once every business day, typically after the major U.S. exchanges close. The NAV of a single share of a fund (or the "per share NAV") is calculated by dividing the fund’s NAV by the number of shares that are outstanding. Per-share NAV figures in this table are for Class A shares, as reported on the indicated date. For Lord Abbett Funds daily and historical prices please see lordabbett.com.
Past performance is no guarantee of future results. The historical data are for illustrative purposes only and are not intended to predict or depict future results. Performance during other time periods may differ. Due to market volatility, the market may not perform in a similar manner in the future. 

 

In looking at the chart, and considering what happened in other markets, all the ranges of volatility for the municipal-bond funds were all well below 1%, with the short-duration portfolio hardly moving at all. [There is no guarantee that these funds will perform in a similar manner in the future under the same market conditions.]

Four Factors
The municipal bond market has provided some tranquility for investors during a tough summer for other markets. But can this trend continue? A good way to approach this question is to review the factors mentioned earlier that have the biggest effect on municipal bond prices.

U.S. economy—Most data indicate that the U.S. economy is showing steady, though not overly strong, growth along with low inflation. There are no signs of that environment changing much in the near future.  The U.S. employment picture is improving, but hourly earnings are stable, and oil prices remain low, benefiting the consumer and keeping inflation down. Meanwhile, productivity and other economic measures are not signaling any significant changes in the near future.

Global interest rates—While there is volatility, given the low-growth U.S. economy and the eagerness of the Federal Reserve (Fed) to raise the fed funds rate sometime soon, there don’t appear to be any signs indicating significant interest-rate increases in the market in the near future. While there could be a modest uptick in rates, inflation remains low, and the Fed’s planned “liftoff” should remove some of the stimulus from the U.S. economy. Also, data for China and Europe suggest slowing growth overseas, which could ultimately extend to the U.S. economy. So, interest rates could go up some, but it does not appear that there will be any dramatic increases for a while.

Individual investor demand for municipal bonds—Demand has been lukewarm during the summer. It is interesting that the municipal market held up as well as it did, even though there were many weeks where muni-bond mutual funds had net outflows overall, according to data from Lipper. Still, any outflows were on the small side, and investors did appear to be putting money in the market through individual bond purchases and managed accounts, so there was demand for municipals through other channels. Continued volatility in other markets also could lead to more individual investor demand for municipals. Overall, the muni market has done well despite low demand—a very positive sign.

Municipal bond-issuer supply—The overall supply of newly issued muni securities is up significantly from last year. According to The Bond Buyer, with $289 billion of issuance this year, the overall supply is higher by 39%, compared with the first eight months of 2014. The fact that the market has held up well with the larger supply is another positive for the muni sector. One thing to note is that the overall supply number is a little misleading, because more than half is from refunding—that is, the refinancing of outstanding bonds at lower interest rates—rather than new-money bonds being created for new purposes. This means that as investors’ bonds are called for redemption, these issues are removed from the market. Investors’ desire to replace these issues with other muni securities has created more demand at a time when net supply of bonds has been barely positive. (Net supply refers to the total amount of bonds being issued minus bonds being called, which indicates whether the number of outstanding municipal bonds is shrinking or growing; in the current market, the majority of new bonds are not counting toward new supply outstanding, but are just being used to call outstanding bonds.)

Summing Up
Now that we’re nearing the end of summer 2015, it’s a good time to review the performance of the full range of markets and understand how they perform differently. There definitely are some correlations, but not all markets have the same volatility. The municipal bond market has performed well during some tough months for other markets, and most of the factors that typically affect the volatility of municipals appear to be somewhat benign for now. 

Clearly, there are no guarantees that the market will continue to perform in the same manner in the future, but those who have invested in municipal securities should be able to appreciate the strong relative performance munis have displayed versus other asset classes during this eventful summer. And it appears that many of the factors that influenced that performance could continue into the autumn—and beyond.

 

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.

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