LHYFX | High Yield Fund Class F | Lord Abbett
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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 10/22/2021  

w/o sales charge 4.71%

30-Day Standardized Yield 2 as of 09/30/2021  

3.59%

Fund Basicsas of 09/30/2021

Total Net Assets
$7.49 B
Inception Date
09/28/2007
Dividend Frequency
Monthly
Fund Expense Ratio
0.80%
Number of Holdings
750

Fund Expense Ratio :

0.80%

YTD 1-YR 3-YR 5-YR 10-YR Since Inception 09/28/2007
w/o sales charge 5.63% 13.19% 5.98% 6.02% 7.64% 7.24%
Lipper Category Avg. High Yield Funds 4.51% 10.91% 5.99% 5.63% 6.36% -
ICE BofA U.S. High Yield Constrained Index 4.68% 11.46% 6.59% 6.34% 7.29% 7.19%

Fund Expense Ratio :

0.80%

Fund Expense Ratio :

0.80%

YTD 1-YR 3-YR 5-YR 10-YR Since Inception 09/28/2007
w/o sales charge 5.63% 13.19% 5.98% 6.02% 7.64% 7.24%
Lipper Category Avg. High Yield Funds 4.51% 10.91% 5.99% 5.63% 6.36% -
ICE BofA U.S. High Yield Constrained Index 4.68% 11.46% 6.59% 6.34% 7.29% 7.19%

Fund Expense Ratio :

0.80%

RELATED CONTENT

Uncovering Opportunity in a Rebounding U.S. High Yield Market
June 11, 2020

With the broad financial market recovery since late March, U.S. high yield is no longer as dislocated, but the rationale for a strategic allocation to the asset class remains intact in our view.

“Fallen Angels” Gain a Rising Profile in High Yield
June 1, 2020

Bonds downgraded from investment grade to speculative grade historically have outperformed other areas of high yield—but we believe a selective approach to these securities is crucial.

U.S. High Yield: Navigating Through the Volatility
March 31, 2020

Lord Abbett experts assess the challenges—and opportunities—they’re finding in today’s U.S. high yield market.

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

Credit Quality Distribution as of 09/30/2021 View Portfolio

Rating Assets
A
BBB
BB
B
<B
Not Rated

INVESTMENT TEAM

Steven F. Rocco
Steven F. Rocco, CFA

Partner & Co-Head of Taxable Fixed Income

19 Years of Industry Experience

Robert A. Lee
Robert A. Lee

Partner & Co-Head of Taxable Fixed Income

29 Years of Industry Experience

Christopher Gizzo
Christopher Gizzo, CFA

Managing Director, Portfolio Manager

12 Years of Industry Experience

Karen  J. Gunnerson
Karen J. Gunnerson

Portfolio Manager

8 Years of Industry Experience

Supported By 63 Investment Professionals with 16 Years Avg. Industry Experience

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Performance

Performance

Dividend Yield 1 as of 10/22/2021  

w/o sales charge 4.71%

30-Day Standardized Yield 2 as of 09/30/2021  

  Subsidized3 Un-Subsidized4
w/o sales charge 3.59% 3.59%

Fund Expense Ratio :

0.80%

YTD 1-YR 3-YR 5-YR 10-YR Since Inception 09/28/2007
w/o sales charge 5.63% 13.19% 5.98% 6.02% 7.64% 7.24%
Lipper Category Avg. High Yield Funds 4.51% 10.91% 5.99% 5.63% 6.36% -
ICE BofA U.S. High Yield Constrained Index 4.68% 11.46% 6.59% 6.34% 7.29% 7.19%

Fund Expense Ratio :

0.80%

Fund Expense Ratio :

0.80%

YTD 1-YR 3-YR 5-YR 10-YR Since Inception 09/28/2007
w/o sales charge 5.63% 13.19% 5.98% 6.02% 7.64% 7.24%
Lipper Category Avg. High Yield Funds 4.51% 10.91% 5.99% 5.63% 6.36% -
ICE BofA U.S. High Yield Constrained Index 4.68% 11.46% 6.59% 6.34% 7.29% 7.19%

Fund Expense Ratio :

0.80%

Year Fund Returns ICE BofA U.S. High Yield Constrained Index
2020 4.58% 6.07%
2019 15.19% 14.41%
2018 -5.07% -2.27%
2017 8.61% 7.48%
2016 15.96% 17.49%
2015 -2.18% -4.61%
2014 3.56% 2.51%
2013 9.80% 7.41%
2012 16.63% 15.55%
2011 3.23% 4.37%
2010 14.40% -
2009 50.47% -
2008 -23.21% -
2007 1.71% -
Year Q1 Q2 Q3 Q4 Yearly Returns
2021 1.75% 3.13% 0.66% - 5.95%
2020 -16.65% 10.76% 5.72% 7.16% 4.58%
2019 7.53% 3.80% 0.30% 2.89% 15.19%
2018 -1.05% -0.02% 2.57% -6.45% -5.07%
2017 2.85% 2.00% 2.48% 1.03% 8.61%
2016 2.18% 5.39% 5.49% 2.08% 15.96%
2015 3.07% 0.89% -4.21% -1.79% -2.18%
2014 2.94% 3.41% -1.81% -0.93% 3.56%
2013 4.00% -1.01% 2.54% 4.02% 9.80%
2012 6.66% 0.39% 5.09% 3.64% 16.63%
2011 3.84% 1.09% -7.01% 5.76% 3.23%
2010 4.95% -0.91% 6.36% 3.43% 14.40%
2009 6.02% 17.34% 14.07% 6.03% 50.47%
2008 -3.36% 2.05% -7.88% -15.49% -23.21%
2007 3.09% 0.22% -0.46% -1.11% 1.71%

NAV Historical Prices

Date Net Asset Value

Portfolio

Portfolio

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

Credit Quality Distribution as of 09/30/2021

Rating Assets
A
BBB
BB
B
<B
Not Rated

Portfolio Positioning as of 06/30/2021

  • Throughout the quarter, we increased the portfolio’s energy allocation and it became the largest overweight position. The sector should benefit from the ongoing global economic recovery and increased consumer activity. While the portfolio’s largest underweight subsector remained the gas distribution subsector, the portfolio’s largest overweight subsector was exploration and production (E&P) by a significant margin. Exposure to E&P primarily was in BB securities issued by larger, well-capitalized operators that we believe are best positioned to be rewarded as potential rising stars over the coming year(s). However, we continued to add selectively to mid/low B-rated and CCC-rated energy credits over the last few months, which continued into June. This strategy primarily reflected attractive relative valuations as lower quality credit tiers outperformed higher quality tiers within the high yield cohort. Energy is also supported by a positive outlook in commodities highlighted by the recent surge in the WTI Crude Index past $70 per barrel. Looking forward, we expect to continue building on the portfolio’s position in the energy sector through lower credit securities, while implementing our sell discipline to trim the portfolio’s exposure to winners within the sector as the market recognizes their value. We are still constructive on the sector as we believe it is supported by solid growth and a positive earnings outlook with low projected default rates. We also continue to look for ESG-friendly opportunities within energy, specifically with respect to low-carbon and alternative energy sources.
  • We remained constructive on the leisure sector as it finished the quarter as the portfolio’s second largest overweight position. The portfolio’s allocation to leisure had primarily been in regional gaming credits with the gaming industry benefitting from increased consumer demand. Regional gaming, particularly casinos, also benefitted as they are typically less reliant on ‘fly-in’ customers and workweek business conferences, both of which are a larger part of the industry in international gaming centers such as Las Vegas. While gaming is the largest subsector overweight in the portfolio within leisure, we gradually added to other areas over the quarter including theaters, hotels and airlines which are all related to our reopening trades and should continue to benefit from further economic reopening. However, we discontinued adding to this sector towards the end of June due to the increased relative valuation associated with these securities.
  • While most sector positions remained stable over the quarter, we notably reduced the portfolio’s allocation to the basic industry sector. Specifically, we have capitalized on some of the portfolio’s positions in builders and building products due to increased relative valuations. Towards the tail end of the quarter, we reduced securities in subsectors such as metals and mining and trimmed the portfolio’s holdings that were associated with the reflationary trade from previous months.
  • The telecommunications sector remained the portfolio’s largest underweight as we have continued to target more cyclical credits that are associated with economic recovery. The industry also continued to struggle with secular issues with traditional wireline companies particularly at risk as their customer base continued to erode. Meanwhile, in our view, the wireless subsector within telecommunications remained fully valued.
  • We continue to have a broadly constructive view on high yield credit while also acknowledging that current spread levels are now marginally tighter than their pre-COVID levels. The portfolio is positioned for modest spread compression going forward, with a skew towards lower rated segments of the market. Call constraints are placing an upside limit on price appreciation more so in BBs and Bs, relative to CCCs, exacerbated by the recent rally in benchmark yields. As a result, we see a return profile potentially driven by carry in 2H21. We continue to be active in the new issue market given positive convexity opportunities there, while monitoring for the emergence of negative trends in underwriting quality. We expect another record year of issuance in the high yield market, but believe technicals will remain favorable as we see up to 10% of the face value of the high yield market transitioning to investment grade over the coming 12-18 months, and activity remaining skewed to refinancing, all amidst a global dearth of yield in fixed income.
  • We believe the current economic landscape is a favorable environment for high yield issuers supported by solid economic growth (albeit likely to peak on a y/y basis in Q2) and a positive earnings outlook with low projected default rates.  Using the approach of looking to the distress ratio as a guide, we estimate default loss over the coming 12 months of approximately 1% or less, falling from a peak of over 6% in late 2020. Additionally, the pace of upgrades has been meaningfully larger than the pace of downgrades. We believe the declining intensity in the default cycle over time along with the uplift in credit quality are key ingredients that further support our continued positive outlook on the U.S. high yield bond sector broadly. We also continue to see modest upside in select fallen angels, many of which we believe should regain investment grade status over the coming year or two.
  • The Fund’s positioning currently reflects this overall risk posture which has continued to take advantage of reflationary themes in the economy, with overweights in energy, leisure, basic industry and retail. While investor tilts over the last 6 months make this stance far less of an out of consensus view than when we had set them in 2020, valuations suggest positioning is not yet fully reflective of the fuller broadening of investor support we expect to come in these sectors.
  • The Fund maintained modest allocations to out-of-index sectors, such as bank loans, convertibles, and investment grade bonds. We believe select exposures to these sectors offer attractive risk-reward opportunities, potential portfolio diversification benefits and avenues for liquidity.

Portfolio Details as of 09/30/2021

Total Net Assets
$7.49 B
Number of Issues
750
Average Coupon
5.57%
Average Maturity
7.53 Years
Average Effective Duration
4.24 Years

Dividends & Cap Gains

Dividends & Cap Gains

Dividend Payments

Dividend Payments

For
YTD Dividends Paidas of 10/22/2021
$0.271
Dividend Frequency
Monthly (Daily Accrual)
Record Date Ex-Dividend Date Reinvest & Payable Date Dividend Reinvest Price
Daily Daily 09/30/2021 $0.02964 $7.55
Daily Daily 08/31/2021 $0.02984 $7.58
Daily Daily 07/31/2021 $0.03026 $7.57
Daily Daily 06/30/2021 $0.03117 $7.59
Daily Daily 05/31/2021 $0.03072 $7.51
Daily Daily 04/30/2021 $0.03056 $7.51
Daily Daily 03/31/2021 $0.02978 $7.45
Daily Daily 02/28/2021 $0.02995 $7.49
Daily Daily 01/31/2021 $0.02968 $7.43

Upcoming Dividend Payment Dates

Record Date Ex-Dividend Date Reinvest & Payable Date
Daily Daily 10/31/2021
Daily Daily 11/30/2021
Daily Daily 12/31/2021

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 $7.43

Upcoming Capital Gain Distribution

Record Date Ex-Dividend Date
12/16/2021 12/17/2021

Fees & Expenses

Fees & Expenses

Expense Ratioas of 09/30/2021

0.80%

Fund Documents

Fund Documents

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The ICE BofA Merrill Lynch U.S. High Yield 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.

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