Diversified Equity Strategy Fund Class F | Lord Abbett

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Diversified Equity Strategy Fund

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Summary

Summary

What is the Diversified Equity Strategy Fund?

The Fund seeks to deliver long-term growth of capital by investing primarily in Lord Abbett Funds that invest in stocks across all market capitalizations of U.S. and select international companies.

Fund Basics

Total Net Assets
-
Inception Date
Dividend Frequency
-
Number of Holdings
-

Investment Team

martini
Giulio Martini

Partner, Director of Strategic Asset Allocation

37 Years of Industry Experience

Robert A. Lee
Robert A. Lee

Partner & Co-Director of Taxable Fixed Income

31 Years of Industry Experience

Supported By 8 Investment Professionals with 26 Years Avg. Industry Experience

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Performance

Performance

Portfolio

Portfolio

Portfolio Positioningas of 03/31/2017

  • The Diversified Equity Strategy Fund underperformed its benchmark, a blend of 85% Russell 3000® Index/15% MSCI EAFE Index with Gross Dividends, during the first quarter of 2017. During the period, both the Fund’s strategic allocation and the performance of the underlying investment strategies detracted from performance.
  • The Fund’s weightings in domestic large-cap and mid-cap value stocks detracted from relative performance, as these categories underperformed the Fund’s benchmark.
  • The Fund’s allocations to domestic large-cap growth stocks and international small-cap equities contributed to relative performance, as these strategies outperformed the Fund’s benchmark.
  • During the quarter, the Fund’s weighting in the financials sector declined, while its allocation to the information technology sector increased. The financials and information technology sectors are the largest weightings in the Fund.

Dividends & Cap Gains

Dividends & Cap Gains

Fees & Expenses

Fees & Expenses

Fund Review

Fund Review

Market Review as of 12/31/2016

The U.S. equity market (as represented by the S&P 500® Index1) finished positive for the period. Donald Trump defeated Hillary Clinton to become the forty-fifth president of the United States and set up the markets for a strong post–election rally to finish off 2016 due to expectations for increased infrastructure spending and broad tax reform under the new administration. At its December meeting, the U.S. Federal Reserve (Fed) raised its benchmark interest rate for the second time in a decade, from a range of 0.25–0.50% to a range of 0.50–0.75%, and indicated that it was targeting three rate hikes in 2017. The unemployment rate edged higher, from 4.6% in November to 4.7% in December, and the U.S. economy added 156,000 jobs, missing an expected increase of 178,000 but showing a 2.9% annualized gain in hourly wages. A positive corporate earnings season also contributed to market performance during the quarter. Seventy-two percent of companies in the S&P 500 reported third-quarter earnings above their mean estimates, but just 55% of companies in the index reported third-quarter sales above their mean estimates.2 According to the third estimate from the Bureau of Economic Analysis,  U.S. real gross domestic product in the third quarter expanded by 3.5%,3 an upward revision from previous estimates, with a rise in nonresidential fixed investment, personal consumption expenditures, and state and local government spending as the primary contributors. The Fed noted that between early October and mid-November 2016, U.S. economic activity, as a whole, continued to expand in most districts around the country. The strong dollar was cited as a headwind to more robust demand for manufactured products in a few districts, due to exports becoming more expensive. Most districts reported higher retail sales, especially for apparel and furniture. In addition, some districts reported a tightening in labor market conditions and slight upward pressure on overall prices.4

International equities (as represented by the MSCI EAFE Index5) declined during the fourth quarter. The key themes during the quarter were the international ramifications from the U.S. election, the Italian constitutional referendum, and the OPEC oil output cut. The November election of Trump drove the Japanese yen sharply lower, resulting in a double-digit rally in Japan’s Nikkei to close out the year. The Mexican peso also has suffered significantly since the election, as Trump repeatedly threatened to build a border wall with Mexico and took aim at multinational exporters and free-trade agreements. In Italy, a referendum on constitutional reforms to make laws easier to pass was voted down, causing Prime Minister Matteo Renzi to submit his resignation. The Italian government also formed a €20 billion facility in December to provide stability to its banking sector after capital levels fell and bad debt rose at several Italian banks. Oil prices rose during the fourth quarter, as the Organization of Petroleum Exporting Countries reached a deal to reduce oil production for the first time since 2008.

The S&P 500 returned 3.82% during the fourth quarter. Of the 11 major sectors, the financials, energy, industrials, materials, and telecommunication services sectors outperformed the broader market. Value stocks6 outperformed growth stocks,7 while large-cap stocks8 lagged small-cap stocks.9

Fund Reviewas of 12/31/2016

The Fund* underperformed its benchmark, a blend consisting of 85% Russell 3000® Index10/15% MSCI EAFE Index with Gross Dividends,11 for the quarter ended December 31, 2016.

During the period, both the Fund’s strategic allocation and performance of the underlying investment strategies detracted from performance. The Fund’s allocation to U.S. large-cap growth equities detracted from relative performance, as domestic growth stocks underperformed the Fund’s benchmark. The Fund’s weighting in domestic large-cap value stocks contributed to performance, as large-cap value equities outperformed the Fund’s benchmark.

Within the Fund’s domestic large-cap growth strategy, which underperformed its underlying benchmark, security selection in the information technology sector was the largest detractor from relative performance during the period. Ellie Mae, Inc., a provider of on-demand software solutions and services for the residential mortgage industry in the United States, detracted most. Shares of Ellie Mae fell as investors anticipated that potential changes in the regulatory environment would no longer benefit its business model in the future. Security selection in the consumer discretionary sector was another detractor from relative performance during the period. Amazon.com, Inc., online consumer products retailer, detracted most. Shares of Amazon.com fell as part of a general move downward of “FANG” stocks after the election.

Within the Fund’s U.S. large-cap value equity strategy, which outperformed the benchmark during the period, security selection in the consumer staples sector was a large contributor to relative performance.

Tobacco producer Reynolds American, Inc. contributed most. The stock reacted positively to British American Tobacco plc’s offer to acquire the 58% of Reynolds that it does not already own. In addition, security selection in the health care sector contributed to relative performance during the period. UnitedHealth Group, a diversified health care company, contributed most. The company delivered earnings results that beat expectations, raised full-year guidance, and reported strong membership growth.

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

Fund Documents

Fund Documents

Fund Document Not Available.

Class F - The inception date for Class F shares is September 28, 2007. The performance quotations for Class F are based on the following methods of calculation: (a) for periods prior to September 28, 2007, a restated figure is used based on the Fund's Class I performance, which does not have a 12b-1 fee, adjusted to reflect the Rule 12b-1 rate differential between Class I and Class F; and (b) for periods after September 28, 2007, actual Class F performance is used reflecting all charges and fees applicable to Class F shares.

Class F shares are available only to eligible fee-based advisory programs and certain registered investment advisers. For additional information, see the Fund’s current prospectus.

Class F - The inception date for Class F Shares is August 31, 2020. The performance quotations for Class F are based on the following methods of calculation: (a) for periods prior to August 31, 2020, a restated figure is used based on the Fund's Class I performance, adjusted to reflect the fees and expenses of Class F Shares ; and (b) for periods after August 31, 2020, actual Class F performance is used reflecting all charges and fees applicable to Class F shares.

Class F shares are available only to eligible fee-based advisory programs and certain registered investment advisers. For additional information, see the Fund’s current prospectus.

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