Market Review as of 03/31/2015

The U.S. equity market (as represented by the S&P 500® Index1) barely edged up during the first quarter of 2015, amid a moderating economy and the prospect of a hike in interest rates. Hindered by harsh weather, a strong dollar, and slow global growth, U.S. real gross domestic product (GDP) expanded by 2.2% in the fourth quarter (according to the third estimate by the U.S. Bureau of Economic Analysis), down from 5.0% in the previous quarter.2 Exports, spending by state and local governments, and personal consumption expenditures bolstered growth, though spending on durable goods weakened.  

The Federal Reserve (the “Fed”) noted that U.S. economic activity expanded around the country, with most districts reporting increased home sales and improvement in employment, though wage pressures remained moderate. Manufacturing, construction, and real estate activity was mixed, while banking conditions were mostly positive.3

Elsewhere, the eurozone showed improvement, primarily as a result of strengthening in Germany. In Japan, fourth-quarter 2014 economic activity bounced back from a contraction in the third quarter. In China, the economy continued to slow, prompting the People’s Bank of China to cut its official interest rate in February, the second reduction in three months.  

The S&P 500 rose 0.95% during the quarter, with gains occurring in six of 10 major sectors. The consumer staples, consumer discretionary, telecom services, and healthcare sectors outperformed the broader market. Growth stocks (as represented by the Russell 3000® Growth Index4) outperformed value stocks (as represented by the Russell 3000® Value Index5). Small caps (as represented by the Russell 2000® Index6) outperformed large cap stocks (as represented by the Russell 1000® Index7). 

Fund Review as of 03/31/2015

The Fund returned -0.05%, reflecting the performance at the net asset value (NAV) of Class A shares, with all distributions reinvested for the quarter ended March 31, 2015, compared to its benchmark, the Russell 1000® Value Index,8 which returned -0.72% for the same period. Average total returns, which reflect performance at the maximum 5.75% sales charge applicable to Class A share investments and include the reinvestment of all distributions, as of March 31, 2015, are: one year: 3.14%; and since inception (December 29, 2011): 17.09%. Expense ratio, gross: 1.08%; and net: 0.75%.

Performance data quoted represent past performance, which is no guarantee of future results. Current performance may be higher or lower than the performance data quoted. The investment return and principal value of an investment in the fund will fluctuate so that shares, on any given day or when redeemed, may be worth more or less than their original cost. To obtain performance data current to the most recent month-end, call Lord Abbett at 888-522-2388 or visit us at

Consistent with our Calibrated investment approach that seeks excess returns exclusively through security selection, individual stock positions drove relative performance during the quarter. Specifically, the Fund’s overweight position in Aetna Inc., a diversified healthcare company, was a top contributor to relative performance.  Shares of the firm continued to benefit from improving cost trends and additional enrollment stemming from the Affordable Care Act. Another contributor to relative performance was the Fund’s overweight position in Valero Energy Corp., an independent petroleum refining and marketing company. The company’s share price benefited from an announcement that the company’s dividend would increase, which reinforced management’s commitment to returning capital to shareholders. The Fund’s overweight position in Pfizer Inc., a research-based, global pharmaceutical company, also contributed to performance during the quarter. Pfizer expanded its foothold in the industry by acquiring Hospira, Inc., a pharmaceutical and medical device company.

The Fund’s underweight in UnitedHealth Group Inc., an owner and manager of organized health systems, detracted from relative performance.  UnitedHealth’s shares rose after reporting a fourth-quarter profit that beat analysts’ estimates, as revenue climbed in its technology and consulting group.   The Fund’s overweight position in Micron Technology Inc., a semiconductor company, also detracted from relative performance.  Share prices declined during the quarter, as investors’ expectations for revenue growth diminished due to a weaker personal computer demand, which accounts for approximately 30% of Micron’s sales. Finally, the Fund’s overweight position in Rowan Companies plc, a global drilling services company, also detracted from relative performance.  Although Rowan continued to be a relative outperformer among the offshore drillers, shares declined due to continued volatility in energy prices.

Please refer to under the “Portfolio” tab for a complete list of holdings of the Fund, including the securities discussed above.

Contact a Representative