Image alt tag

Error!

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

Sorry, we are unable to process your request.

Error!

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!

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

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.

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

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

While media reports have emphasized the recent negative performance of municipal bonds, many indicators signal a healthy, resilient market.

 

In Brief

  • While the municipal bond market has had a less than ideal start to 2018, we believe it is worth focusing on the factors that should continue to support the market. Chief among them:
    • The muni market, as represented by the Bloomberg Barclays Municipal Bond Index, has delivered consistent long-term performance.
    • Based on an analysis of return components of the muni-bond index, munis’ tax-advantaged status continues to enhance returns versus other fixed-income benchmarks.
    • Muni-market credit quality remains strong.
    • Supply and demand factors appear to be in the market’s favor.
    • Market predictions of rising interest rates frequently do not pan out.
  • The key takeaway: Long-term investors should remember the municipal bond market’s historical resilience as they survey the current environment.

 

Through the first four months of 2018 (ended April 30), most sectors of the U.S. municipal bond market have had negative total returns, meaning that bond prices have decreased as yields have risen.  These yield movements have raised concerns for some investors, and have led to some negative media commentary about the market’s performance.  Municipal-bond mutual funds suddenly have faced small outflows over the past couple of weeks, according to data from Lipper/ICI, somewhat reversing months of positive flows—which still total $6 billion year to date through May 2, 2018—while separately managed accounts were rapidly gaining assets.

Given this backdrop, we thought it would be worthwhile to reflect on some important points about what has been happening in the municipal bond market, and how things look, to us, going forward.

1. Munis’ long-term track record remains solid.
The total return of the benchmark Bloomberg Barclays Municipal Bond Index (the muni-bond index) was -1.46% through April 30, 2018, according to Bloomberg data.  Interestingly, the trailing one-year return of the muni-bond index has been positive, at 1.56%, so despite the negative first four months of the year, those who have been invested in the market for a full year have seen their portfolios increase in value. What’s more, the muni-bond index has outperformed the Bloomberg Barclays U.S. Aggregate Bond Index (Aggregate index) over the trailing one-, three-, five-, seven-, and 10- year periods. Munis’ consistent long-term track record—through a variety of economic and market environments—serves as a reminder that an overly narrow focus on short-term performance may lead to inappropriate investment decisions.

2. Munis’ tax-advantaged status continues to enhance returns.
In addition, the -1.46% return on the muni-bond index has been superior to that of the Aggregate Index (-2.19%) and the Bloomberg Barclays U.S. Corporate Bond Index (Corporate index; -3.22%) through April 30, and these figures do not even consider the tax benefit associated with municipal bond returns. For example, if you were to gross up the coupon component of the index’s total return for taxes, the index’s taxable-equivalent total return (based on a tax rate of 37%1) would have been -0.51%, demonstrating an excess return of 1.68% and 2.71%, respectively, relative to the Aggregate and Corporate indexes. 

3. Demand factors remain favorable.
There are many reasons why demand for municipal bonds remains strong. Chief among them is the tax legislation that was passed by Congress in December 2017. This bill put a cap of $10,000 on state and local taxes that could be deducted from federally taxable income; it also reduced the deductibility of mortgage interest, to a principal amount of $750,000, from $1.0 million, for homes purchased after December 15, 2017.  These changes reduced the value of these popular tax exemptions—but, to our thesis, the tax exemption on municipal bond interest did not change.  These reduced exemptions have increased the demand from investors in high-tax states looking for income exempt from taxes, because less is now available from other alternatives.

Matters are different, however, for municipal-bond mutual funds. Since the most recent low in interest rates in July 2016, the yield on the 10-year U.S. Treasury note has risen by more than 100 basis points, or more than a full 1%.  During the months around and including July 2016, there was very high demand for municipal-bond investment products.  Therefore, because rates now are much higher, it seems odd that the demand for municipal bond mutual funds is lower.  In this environment, such a mismatch may present a better opportunity for investors to capture value, as buyers eventually should become attracted to the higher yields.

4. Overall, municipal bond market credit quality is strong.
Tax revenues are coming in higher in most states, including California, New York, and Connecticut. Some of this increase is because people have been adjusting to the changes from the tax bill, but most of it stems from an economy that is steadily growing and producing more revenue.  Even fiscally stressed Illinois is seeing increased revenues from a growing economy and the state tax increases imposed last year.  Many people caught up in the headlines about the fiscal situations of Puerto Rico and Illinois might not realize that, overall, credit conditions are fairly good across the United States.

5. Muni new-issue supply is low, and isn’t showing many signs of increasing (but this could change).
The actual and possible changes from the tax bill pulled much of this year’s supply of new muni-bond issuance earlier into last December, so the new-issue market for 2018 has been very thin thus far.  Also, the tax bill eliminated the option for municipal bond issuers to do advanced-refunding bond deals—which is a way for them to lower their borrowing rates by refinancing outstanding bonds prior to their call dates—so issuers no longer have as many reasons to sell new bonds.  Last year, for example, refunding supply was more than one quarter of the total new issuance; this change from the tax bill should slow things down for a while, at least.  Further, municipalities have become more fiscally austere since the Great Recession (2008–09), and have modestly reduced leverage. With low supply and steady demand, the fundamentals remain strong for the municipal bond market.

6. Rising rates are not a done deal.
While many people predict that interest rates will continue to increase in coming months, it is important to remember that similar consensus existed last year at this time, but rates did not move as expected.  The longest maturities outperformed shorter ones significantly throughout 2017 as the yield curve flattened.  According to data from Bloomberg Barclays Indices, while munis with a maturity of one year returned 0.92% in 2017, the 10-year maturity segment posted a return of 5.83%, and the longest-dated category, 22-plus years, returned 8.19%.  We are not, however, making a similar prediction for the rest of 2018—we’re just noting that, for many years, people have been forecasting significant rate increases, and they haven’t always happened.  Also, it is important to remember that rates have risen a lot since the summer of 2016. Yet during that rough patch for the fixed-income market, investors did not see poor results from municipal-bond market investments.

While prognosticators are trying to figure out where rates will go from here, economic statistics are not supporting a major interest-rate rise at this time.  Inflation is still low, at around 2%, and economic growth is not much higher than 2%. While there is steady growth in the U.S. economy, it is not exactly a boom. The U.S. Federal Reserve is indicating that it will continue to raise the fed funds rate, potentially limiting increases in inflation and economic growth going forward.  Also, competitive interest rates in countries such as Japan and Germany are low, so it might be tough for U.S. rates to deviate too much from them.

Summing Up
Despite some of the negative media headlines, the municipal bond market did relatively well during the first four months of 2018.  It has not been as volatile as other markets, and its underlying credit quality has remained strong.  Supply and demand dynamics are favorable, and the economic environment remains supportive.  Municipal bonds still have the attractive tax exemption (as measured by tax-equivalent yields), and the low historical default-rate pattern has continued.  We will have to see how things evolve going forward, but the municipal bond market has successfully navigated challenging times in the past. Long-term investors should keep that fact in mind as they survey today’s market.

 

1Note that under current (2018) U.S. tax law, taxpayers fall into one of seven brackets by rate, depending on their taxable income, ranging from 10% to 37%. Tax-equivalent yield calculation for the municipal indexes above assumes the top marginal tax bracket of 40.8% on investment income, which includes the 37.0% income tax rate and the 3.8% in Medicare tax. This tax rate does not factor in the effect of AMT (alternative minimum tax) or taxes in your individual state. Tax-equivalent yield will vary based on an investor’s tax bracket.

 

RELATED TOPICS

About The Author

RELATED FUND
The Lord Abbett Intermediate Tax Free mutual fund seeks to deliver a high level of income exempt from federal taxation. View portfolio and performance.
RELATED FUND
The Lord Abbett High Yield Municipal Bond mutual fund seeks to deliver income exempt from federal income tax by investing in lower-rated municipal bonds.
RELATED FUND
The Lord Abbett Short Duration High Yield Municipal Bond Fund seeks to deliver a high level of income exempt from federal income tax. Learn more.

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