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

 

High Yield Fund

Summary

Summary

What is the High Yield Fund?

The Fund seeks to deliver current income and the opportunity for capital appreciation by investing primarily in high yield corporate bonds.

A HERITAGE OF HIGH YIELD

Brings a 40+ year history of high-yield investing, focused on fundamental, bottom-up credit research.

 

AN OPPORTUNISTIC APPROACH

Provides the flexibility to adjust to the market environment and take advantage of opportunities across the credit spectrum.

STRONG TRACK RECORD

Has offered a track record of strong performance versus peers in up and down markets, demonstrating the strength of this active approach as a core high-yield holding over a full market cycle.

Yield

Dividend Yield 1 as of 12/09/2016  

  Subsidized3 Un-Subsidized4
w/o sales charge - 6.08%
w/ sales charge - 5.94%

30-Day Standardized Yield 2 as of 11/30/2016  

5.79%

Expense Ratioas of 11/30/2016

Fund Basicsas of 10/31/2016

Total Net Assets
$5.82 B
Inception Date
12/31/1998
Dividend Frequency
Monthly (Daily Accrual)
Number of Holdings
723
CUSIP
54400N102
Minimum Initial Investment
$1,500+

Fund Expense Ratio :

0.94%

YTD 1-YR 3-YR 5-YR 10-YR Since Inception 12/31/1998
w/o sales charge 13.74% 10.93% 5.08% 8.53% 7.58% 6.93%
Lipper Category Avg. High Yield Funds 11.35% 8.78% 2.84% 6.31% 5.86% -
BofA Merrill Lynch U.S. High Yield Constrained Index 15.22% 12.25% 4.25% 7.46% 7.36% 6.85%
w/ sales charge 11.16% 8.49% 4.27% 8.03% 7.33% 6.80%

Fund Expense Ratio :

0.94%

Fund Expense Ratio :

0.94%

YTD 1-YR 3-YR 5-YR 10-YR Since Inception 12/31/1998
w/o sales charge 13.51% 11.45% 6.08% 9.17% 7.85% 6.99%
Lipper Category Avg. High Yield Funds 11.44% 9.47% 4.02% 7.05% 6.30% -
BofA Merrill Lynch U.S. High Yield Constrained Index 15.32% 12.82% 5.28% 8.24% 7.68% 6.92%
w/ sales charge 10.93% 9.00% 5.28% 8.66% 7.61% 6.85%

Fund Expense Ratio :

0.94%

RELATED CONTENT

U.S. High-Yield: The Real Cost of Low-Cost Strategies
May 12, 2016

While the low fees on high-yield ETFs seem attractive, ETFs’ approach of closely following benchmarks presents disadvantages.

U.S. High Yield: A Turnaround Tale
April 18, 2016

After hitting a market bottom mid-quarter, U.S. high-yield bonds experienced a sharp turnaround as March approached.

High Yield: What's the Spread?
February 1, 2016

Previous instances in which high-yield spreads exceeded 800 basis points were attractive entry points into the U.S. high-yield market.

Type Assets
High Yield Bonds
Investment Grade Bonds
Bank Loans
Equity
Convertibles
Other
Cash
Maturity Assets
Less than 1 year
1-2.99 years
3-4.99 years
5-6.99 years
7-9.99 years
Greater than 10 years

Credit Quality Distribution as of 10/31/2016 View Portfolio

Rating Assets
BBB
BB
B
<B
Not Rated

Investment Team

Steven F. Rocco
Steven F. Rocco, CFA

Partner & Portfolio Manager

15 Years of Industry Experience

Robert A. Lee
Robert A. Lee

Partner & Chief Investment Officer

25 Years of Industry Experience

Supported By 55 Investment Professionals and 13 Years Avg. Industry Experience

Contact a Representative

To contact your representative, enter your zip code and select your channel below.

Performance

Performance

Dividend Yield 1 as of 12/09/2016  

  Subsidized3 Un-Subsidized4
w/o sales charge - 6.08%
w/ sales charge - 5.94%

30-Day Standardized Yield 2 as of 11/30/2016  

 
w/o sales charge 5.79%

Fund Expense Ratio :

0.94%

YTD 1-YR 3-YR 5-YR 10-YR Since Inception 12/31/1998
w/o sales charge 13.74% 10.93% 5.08% 8.53% 7.58% 6.93%
Lipper Category Avg. High Yield Funds 11.35% 8.78% 2.84% 6.31% 5.86% -
BofA Merrill Lynch U.S. High Yield Constrained Index 15.22% 12.25% 4.25% 7.46% 7.36% 6.85%
w/ sales charge 11.16% 8.49% 4.27% 8.03% 7.33% 6.80%

Fund Expense Ratio :

0.94%

Fund Expense Ratio :

0.94%

YTD 1-YR 3-YR 5-YR 10-YR Since Inception 12/31/1998
w/o sales charge 13.51% 11.45% 6.08% 9.17% 7.85% 6.99%
Lipper Category Avg. High Yield Funds 11.44% 9.47% 4.02% 7.05% 6.30% -
BofA Merrill Lynch U.S. High Yield Constrained Index 15.32% 12.82% 5.28% 8.24% 7.68% 6.92%
w/ sales charge 10.93% 9.00% 5.28% 8.66% 7.61% 6.85%

Fund Expense Ratio :

0.94%

Best returns

Durations Fund Returns Blended Index
3-Mo 17.32 23.1
1-Yr 54.92 64.19

Worst returns

Durations Fund Returns Blended Index
3-Mo -26.22 -29.38
1-Yr -27.59 -30.77
Year Fund Returns BofA Merrill Lynch U.S. High Yield Constrained Index
2015 -2.26% -4.61%
2014 3.46% 2.51%
2013 9.69% 7.41%
2012 16.50% 15.55%
2011 3.15% 4.37%
2010 14.31% 15.07%
2009 50.51% 58.10%
2008 -23.42% -26.11%
2007 2.43% 2.53%
2006 9.94% 10.76%
2005 1.15% -
2004 10.42% -
2003 21.59% -
2002 -0.10% -
2001 5.36% -
2000 -3.01% -
1999 6.57% -
1998 0.80% -
Year Q1 Q2 Q3 Q4 Yearly Returns
2016 2.01% 5.52% 5.46% - 15.28%
2015 3.05% 0.86% -4.23% -1.81% -2.26%
2014 2.92% 3.38% -1.83% -0.95% 3.46%
2013 3.97% -1.03% 2.51% 3.99% 9.69%
2012 6.63% 0.36% 5.06% 3.61% 16.50%
2011 3.82% 1.07% -7.02% 5.73% 3.15%
2010 4.93% -0.92% 6.33% 3.40% 14.31%
2009 5.95% 17.32% 14.23% 6.01% 50.51%
2008 -3.43% 1.99% -7.81% -15.68% -23.42%
2007 2.98% 0.17% 0.48% -1.17% 2.43%
2006 2.57% 0.01% 2.80% 4.27% 9.94%
2005 -1.74% 1.49% 0.87% 0.56% 1.15%
2004 1.07% -0.32% 4.34% 5.04% 10.42%
2003 4.06% 8.25% 2.40% 5.41% 21.59%
2002 1.51% -3.59% -3.78% 6.10% -0.10%
2001 5.14% -1.67% -3.99% 6.15% 5.36%
2000 -1.66% 0.99% 0.31% -2.65% -3.01%
1999 3.43% -0.11% -0.81% 3.99% 6.57%
1998 - - - - 0.80%

Growth of $10,000 as of 11/30/2016

NAV Historical Prices

Date Net Asset Value

Portfolio

Portfolio

Rating Assets
High Yield Bonds
Investment Grade Bonds
Bank Loans
Equity
Convertibles
Other
Cash
Rating Assets
Less than 1 year
1-2.99 years
3-4.99 years
5-6.99 years
7-9.99 years
Greater than 10 years

Credit Quality Distribution as of 10/31/2016

Rating Assets
BBB
BB
B
<B
Not Rated

Portfolio Positioning as of 09/30/2016

  • Despite negative returns for US Treasury bonds, most major categories of U.S. fixed income posted positive returns for the third quarter of 2016. High yield credit outperformed investment grade bonds, driven by continued stability in commodity prices and the search for yield.
  • The portfolio remains underweight the health care and telecom sectors, relative to its benchmark, the BofA Merrill Lynch U.S. High Yield Constrained Index. Concerns relating to the pharmaceutical industry and a loss of earnings momentum in hospitals drove the decision to underweight health care in the beginning of the year, while competitive pressures within the telecom space compelled an underweight therein.
  • We added to the portfolio’s positions in the basic industry sector, which remains the largest overweight in the portfolio. We favor the metals and mining space within the sector, as many companies in the sub-sector are increasingly focusing on deleveraging and balance-sheet repair, providing support for the bonds.
  • The portfolio remains overweight the energy sector. We continued to add exposure to energy, as we have found opportunities in select companies in the U.S. oil shale industry trading at attractive valuations.
  • As of quarter-end, the portfolio had modest allocations in out-of-index sectors, such as bank loans, convertibles, investment-grade bonds, and equities. Select opportunities in these sectors offer attractive risk/reward profiles, while also providing additional portfolio diversification and avenues for liquidity.

Portfolio Details as of 10/31/2016

Total Net Assets
$5.82 B
Number of Issues
723
Average Coupon
6.70%
Average Maturity
6.45 Years
Average Effective Duration
4.37 Years

Dividends & Cap Gains

Dividends & Cap Gains

Dividend Payments

Dividend Payments

For
YTD Dividends Paidas of 12/09/2016
$0.402
Dividend Frequency
Monthly (Daily Accrual)
Record Date Ex-Dividend Date Reinvest & Payable Date Dividend Reinvest Price
Daily Daily 11/30/2016 $0.03797 $7.41
Daily Daily 10/31/2016 $0.03697 $7.45
Daily Daily 09/30/2016 $0.03743 $7.47
Daily Daily 08/31/2016 $0.03705 $7.46
Daily Daily 07/31/2016 $0.03679 $7.35
Daily Daily 06/30/2016 $0.03691 $7.19
Daily Daily 05/31/2016 $0.03719 $7.15
Daily Daily 04/30/2016 $0.03665 $7.12
Daily Daily 03/31/2016 $0.03561 $6.92
Daily Daily 02/29/2016 $0.03492 $6.70
Daily Daily 01/31/2016 $0.03487 $6.71

Upcoming Dividend Payment Dates

Record Date Ex-Dividend Date Reinvest & Payable Date
Daily Daily 12/31/2016

Capital Gains Distributions

For
Record Date Reinvest & Payable Date Long-term Short-term * Total Reinvest Price
12/18/2014 12/19/2014 $0.0899 $0.0792 $0.1691 $7.44

Upcoming Capital Gain Distribution

Record Date Ex-Dividend Date
12/15/2016 12/16/2016

Fees & Expenses

Fees & Expenses

Sales Charge Schedule as of 12/09/2016

  Sales Charge Dealer's Concession Prices at Breakpoint
Less than $100,000 2.25% 2.00% $7.67
$100,000 to $249,999 1.75% 1.50% $7.63
$250,000 to $499,999 1.25% 1.00% $7.59
$500,000 to $999,999 0.00% 1.00% $7.50
$1,000,000 to $5,000,000 0.00% 1.00% $7.50

Expense Ratioas of 11/30/2016

Fund Review

Fund Review

Market Review as of 09/30/2016

Most major categories of U.S. fixed income securities posted positive returns for the third quarter of 2016, with high yield credit outperforming investment grade bonds, driven by continued stability in commodity prices and the search for yield. In the United States, the Federal Reserve (Fed) remained cautious and opted not to hike rates, though it offered a relatively hawkish message foreshadowing a potential hike in December. Despite a subsequent spike following the announcement, volatility for the most part has remained subdued.

In U.S. economic data, inflation continued to struggle reaching the Fed’s 2% inflation target, as the overall Consumer Price Index (CPI)1 increased 1.1% over the 12-month period ended August 2016. CPI (excluding food and energy prices) increased 2.3% over the same 12-month period.2

Meanwhile, the U.S. Bureau of Labor Statistics reported that non-farm payrolls increased by 151,000 in August and that the unemployment rate remained at 4.9%. Over the past three months, job gains have averaged 232,000 per month. The number of unemployed persons was essentially unchanged, at 7.8 million, in August, and the unemployment rate was 4.9% for the third month in a row. Both measures have shown little movement over the year.3

The Fed’s policy-setting arm, the Federal Open Market Committee (FOMC), held its meeting on September 20–21, and later released a statement, which indicated that the labor market has continued to strengthen and that the growth of economic activity has picked up from the modest pace seen in the first half of the year. Although the unemployment rate has little changed in recent months, job gains have been solid, on average. The FOMC further noted that household spending has been growing strongly, but that business fixed investment has remained soft. The Fed again noted that inflation has continued to run below the FOMC’s 2% longer-run objective, partly reflecting earlier declines in energy prices and in prices of non-energy imports. Despite these headwinds, the Fed expects inflation to rise, to 2%, over the medium term, as the transitory effects of past declines in energy and import prices dissipate and the labor market strengthens further. During the September meeting, the Fed decided to maintain its target for the fed funds rate in the range of 0.25–0.50%. The FOMC judged that the case for an increase in the fed funds rate had strengthened, but decided, for the time being, to wait for evidence of continued progress toward its objective. The stance of monetary policy remains accommodative, thereby supporting further improvement in labor market conditions and a return to 2% inflation.4 Fed policymakers’ median projected estimate for the fed funds fell, to 0.625%, for the end of 2016.5

U.S. Treasuries (as represented by the BofA Merrill Lynch U.S. Treasury Index6) posted a return of -0.33% for the three-month period ended September 30, 2016.  The high yield bond market (as represented by the BofA Merrill Lynch U.S. High Yield Constrained Index7) posted a positive return of 5.49% for the quarter, and is positive 15.32% year to date. The floating rate loan market (as represented by the Credit Suisse Leveraged Loan Index8) returned 3.07%, outperforming the broad Bloomberg Barclays U.S. Aggregate Bond Index,9 with performance driven by lower-rated loans. The convertible bond market (as represented by the BofA Merrill Lynch All Convertibles, All Qualities Index10) returned 6.02%, also benefiting from a rally in risk assets.

Among higher credit quality securities, investment grade corporate debt (as represented by the Bloomberg Barclays U.S. Corporate Bond Index11) posted a return of 1.41%. Corporate bond spreads continued to tighten during the quarter from the wide levels reached in early February, a period of extreme risk aversion. Agency mortgage-backed securities (as represented by the Bloomberg Barclays MBS Index12) returned 0.60%, and commercial mortgage-backed securities (CMBS) (as represented by the Bloomberg Barclays U.S. CMBS Investment Grade Index13) returned 0.70%, generating positive returns in spite of negative returns on Treasury securities.

The municipal bond market (as represented by the BofA Merrill Lynch U.S. Municipal Securities Index14) posted a -0.31% return, marginally outperforming the BofA Merrill Lynch U.S. Treasury Index, before accounting for the tax-exempt status of municipal bonds. Overall creditworthiness in the municipal bond market continues to improve, as most states experienced rising revenues, while maintaining balanced budgets.

Within emerging markets, the major drivers of strong performance included dovish central banks, firming commodity prices, and improving economic conditions in China. Thus, U.S. dollar-denominated emerging markets corporate debt (as measured by the JP Morgan Corporate Emerging Markets Bond Index Broad Diversified Index15) returned 3.07%, outperforming most U.S.-centric, fixed income asset classes.                                                          

According to J.P. Morgan Securities, new-issue activity for both high yield bonds and loans was heavy in September 2016. High yield bond volume totaled $35.2 billion in September, the year’s second most active calendar month (behind May’s $41.9 billion). The vast majority of this activity has been used for refinancing existing debt (70%), while actual net-new volume remains low, at $10.7 billion. High yield bond volume stands at $233.0 billion year to date, and $100.2 billion net of re-pricing/refinancing, both down versus year-ago amounts of $250.9 billion and $141.9 billion, respectively. Default activity remained modest in September, as three companies defaulted, totaling $2.7 billion in high yield bonds and institutional loans. Notably, default activity over the past four months has been fairly light, particularly when compared with the year’s first five months—an average of three and a half companies and $2.8 billion defaulted from June through September 2016, while an average of seven companies and $8.5 billion defaulted between January and May 2016. Year to date, 49 companies have defaulted, with debt totaling $53.5 billion ($42.2 billion in bonds and $11.3 billion in loans), which is 42% higher than full-year 2015’s $37.7 billion of total default volume. It should be noted that default activity has been driven by companies in the energy and metals/mining sectors, with more than 85% of this year’s default volume coming from commodity-related names. Excluding the Energy and Metals/Mining sectors, the default rate is just 0.49%, according to J.P. Morgan Securities.

Fund Review as of 09/30/2016

The Fund* modestly underperformed its benchmark, the BofA Merrill Lynch U.S. High Yield Constrained Index,7 for the quarter ended September 30, 2016.

After the initial spike caused by the United Kingdom’s surprise decision to exit the European Union, volatility in credit markets remained largely subdued during the third quarter. High yield bonds posted strong gains for the period, outperforming the majority of fixed income asset classes. We believe volatility may pick up as markets digest further political and economic ambiguity surrounding the Brexit decision, its impact on global growth, and uncertainty surrounding the upcoming presidential elections in the United States.

The Fund remains underweight the health care and telecom sectors, relative to its benchmark, the BofA Merrill Lynch U.S. High Yield Constrained Index. Concerns relating to the pharmaceutical industry and a loss of earnings momentum in hospitals drove the decision to underweight health care in the beginning of the year, while competitive pressures within the telecom space compelled an underweight therein. We added to the Fund’s positions in the basic industry sector, which remains the largest overweight. We favor the metals and mining space within the sector, as many companies in this sub-sector are increasingly focusing on deleveraging and balance-sheet repair, providing support for the bonds. The Fund remains overweight the energy sector. We continued to add exposure to energy, as we have found opportunities in select companies in the U.S. oil shale industry trading at attractive valuations.

Security selection detracted from relative performance, especially within the telecom sector. An overweight to the gaming sector also detracted, as the sector posted weak performance, relative to the broader high yield market during the quarter. The Fund’s overweight to metals and mining, in addition to security selection within the banking sector, contributed on a relative basis. In addition, security selection within the packaging and food wholesalers sectors contributed to relative performance.

Outlook

We remain generally optimistic that the U.S. economy will continue to grow at a steady, albeit subpar, pace. We still view credit-sensitive sectors of the market as representing attractive relative value, although we do believe that there is the potential for episodes of further spread widening, as the market continues to struggle with low global growth.

While our overall view remains positive, a number of short-term risks caused us to reduce risk in the Fund with the end of the year approaching. Potential risk events include elections in the United States and a referendum in Italy, signs of mounting dislocations in interbank funding markets, and indications that a broad swath of institutional investors were acting to reduce their risk exposure across a broad set of markets. As such, we are monitoring the underlying fundamentals and underlying liquidity conditions in the markets very closely and will adjust the Fund weightings as the underlying risks we have identified change.

We maintain a modest overweight to ‘CCC’ credits, although we are cautious in this segment, as valuations became stretched to a degree after rallying for the most part of the year. In addition, we like basic materials sectors, where valuations present attractive opportunities, as many companies in the space are focused on healing their balance sheets due to improving supply demand imbalance. Within energy, we favor U.S. shale industry companies which were able to achieve significant efficiency gains in the production process over the last two years.

Fund Documents

Fund Documents

Download fund documents & literature, create email subscriptions, and place direct mail order

0Documents selected
Order
Summary Prospectus
Publish Date:11/03/2015
n/a
Statutory Prospectus
Publish Date:11/03/2015
n/a
Prospectus (XBRL)
Publish Date:11/03/2015
SAI
Publish Date:11/03/2015
Annual Report
Publish Date:11/03/2015
Semi-Annual Report
Publish Date:11/03/2015
Fact Sheet
Publish Date:11/03/2015
Flyer
Publish Date:11/03/2015
Publish Date:11/03/2015
n/a
Publish Date:11/03/2015

To order literature visit full website

You may add to your cart by selecting quantities in each row below.

No rows selected. Please Go back and select at least one fund document

 
Quantity
Quantity
Remove
Remove

Class A  Except as noted below, returns with sales charges reflect a maximum sales charge of 5.75% for equity funds, 2.25% for all tax-free income funds, fixed income funds and multi-asset class funds. There are also ongoing 12b-1 service fees (and, in certain cases, distribution fees).

Class A Shares purchased subject to a front-end sales charge have no contingent deferred sales charge (CDSC). However, certain purchases of Class A shares made without a front-end sales charge may be subject to a CDSC of 1% if the shares are redeemed before the first day of the month in which the one year anniversary of the purchase falls. The CDSC is not reflected in the performance with maximum sales charge.

The BofA Merrill Lynch U.S. High Yield Master II Constrained Index is a capitalization-weighted index of all US dollar denominated below investment grade corporate debt publicly issued in the US domestic market. Qualifying securities must have a below investment grade rating (based on an average of Moody’s, S&P and Fitch), at least 18 months to final maturity at the time of issuance, at least one year remaining term to final maturity as of the rebalancing date, a fixed coupon schedule and a minimum amount outstanding of $100 million. The index caps individual issuer at 2%. Index constituents are capitalization-weighted, based on their current amount outstanding, provided the total allocation to an individual issuer does not exceed 2%. Issuers that exceed the limit are reduced to 2% and the face value of each of their bonds is adjusted on a pro-rata basis. The face values of bonds of all other issuers that fall below the 2% cap are increased on a pro-rata basis. In the event there are fewer than 50 issuers in the Index, each is equally weighted and the face values of their respective bonds are increased or decreased on a pro-rata basis.

Select funds to run a Morningstar Hypothetical Report.

    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