LHYOX | High Yield Fund Class F3 | 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 12/06/2021  

w/o sales charge 5.57%

30-Day Standardized Yield 2 as of 10/31/2021  

4.01%

Fund Basicsas of 10/29/2021

Total Net Assets
$7.47 B
Inception Date
04/05/2017
Dividend Frequency
Monthly
Fund Expense Ratio
0.61%
Number of Holdings
769

Fund Expense Ratio :

0.61%

YTD 1-YR 3-YR 5-YR 10-YR Since Inception
w/o sales charge 4.88% 6.90% 7.21% 5.95% 7.39% -
Lipper Category Avg. High Yield Funds 3.33% 5.22% 6.52% 5.41% 5.89% -
ICE BofA U.S. High Yield Constrained Index 3.40% 5.38% 7.07% 6.09% 6.78% -

Fund Expense Ratio :

0.61%

Fund Expense Ratio :

0.61%

YTD 1-YR 3-YR 5-YR 10-YR Since Inception
w/o sales charge 5.91% 13.51% 6.23% 6.24% 7.84% -
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% -

Fund Expense Ratio :

0.61%

RELATED CONTENT

Yield, Stability, Liquidity, and Diversification: Are Fixed Income Allocations Still Up to the Task?
October 27, 2020

In an era of ultra-low interest rates, we re-examine the purpose and constitution of Core fixed income.

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.

Type Assets
High Yield Bonds
Bank Loans
Equity
Investment Grade Bonds
Convertibles
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 10/29/2021 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 12/06/2021  

w/o sales charge 5.57%

30-Day Standardized Yield 2 as of 10/31/2021  

  Subsidized3 Un-Subsidized4
w/o sales charge 4.01% 4.01%

Fund Expense Ratio :

0.61%

YTD 1-YR 3-YR 5-YR 10-YR Since Inception
w/o sales charge 4.88% 6.90% 7.21% 5.95% 7.39% -
Lipper Category Avg. High Yield Funds 3.33% 5.22% 6.52% 5.41% 5.89% -
ICE BofA U.S. High Yield Constrained Index 3.40% 5.38% 7.07% 6.09% 6.78% -

Fund Expense Ratio :

0.61%

Fund Expense Ratio :

0.61%

YTD 1-YR 3-YR 5-YR 10-YR Since Inception
w/o sales charge 5.91% 13.51% 6.23% 6.24% 7.84% -
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% -

Fund Expense Ratio :

0.61%

Year Fund Returns ICE BofA U.S. High Yield Constrained Index
2020 4.80% 6.07%
2019 15.36% 14.41%
2018 -4.95% -2.27%
2017 8.76% 7.48%
2016 16.32% 17.49%
2015 -1.94% -4.61%
2014 3.74% 2.51%
2013 9.96% 7.41%
2012 16.77% 15.55%
2011 3.45% 4.37%
2010 14.60% -
2009 50.86% -
2008 -23.11% -
2007 2.90% -
2006 - -
Year Q1 Q2 Q3 Q4 Yearly Returns
2021 1.93% 3.04% 0.84% - 5.39%
2020 -16.51% 10.76% 5.74% 7.18% 4.80%
2019 7.70% 3.83% 0.36% 2.79% 15.36%
2018 -0.99% 0.04% 2.48% -6.36% -4.95%
2017 2.88% 2.02% 2.52% 1.07% 8.76%
2016 2.23% 5.43% 5.53% 2.27% 16.32%
2015 3.25% 0.80% -4.13% -1.72% -1.94%
2014 2.98% 3.44% -1.76% -0.87% 3.74%
2013 4.03% -0.96% 2.70% 3.92% 9.96%
2012 6.68% 0.44% 5.12% 3.67% 16.77%
2011 3.88% 1.14% -6.92% 5.78% 3.45%
2010 4.99% -0.84% 6.39% 3.47% 14.60%
2009 6.04% 17.48% 14.04% 6.19% 50.86%
2008 -3.31% 2.09% -7.81% -15.52% -23.11%
2007 3.13% 0.26% 0.58% -1.06% 2.90%
2006 - - - 4.38% -

NAV Historical Prices

Date Net Asset Value

Portfolio

Portfolio

Rating Assets
High Yield Bonds
Bank Loans
Equity
Investment Grade Bonds
Convertibles
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 10/29/2021

Rating Assets
A
BBB
BB
B
<B
Not Rated

Portfolio Positioning as of 09/30/2021

  • Throughout the quarter, we maintained our conviction in the energy sector and added to the Fund’s top overweight position. The sector should benefit from the ongoing global economic recovery and increased consumer activity. While the Fund’s largest underweight subsector remained the gas distribution subsector, the Fund’s largest overweight subsector was exploration and production (E&P) by a significant margin. Exposure to this subsector remained primarily in BB securities issued by larger, well-capitalized operators best positioned to be rewarded as potential rising stars over the next year or two. Looking forward, we expect to continue building on the Fund’s position in the energy sector in the high yield space that remains supported by solid growth and a positive earnings outlook with low projected default rates. The Fund’s overweight position continued to be supported by strong fundamentals in energy companies that have been able to generate cashflow on a more consistent basis and have more robust balance sheet management. The sector also continued to be supported by a positive outlook in commodity prices, as Delta variant fears subsided and expectations for global economic growth rose. As such, WTI Crude futures regained momentum during in September and finished the quarter just above $75 per barrel. More recently, we refocused on adding in the area of BB-rated rising star candidates.
  • Separately, we remained constructive in basic industry and retail sectors which are now the second and fifth largest overweight positions of the Fund, respectively. The Delta variant was a significant headwind, particularly in the beginning of the quarter as cases drastically increased. As Delta variant headwinds begin to abate, we favor the long-term picture for both sectors. However, we reduced some of the Fund’s metals and mining exposure as we believe that energy-related commodities and consumer-oriented names that fall in the reopening theme have more relative value. Additionally, our caution was fueled by the potential slowdown in growth expectations in China due to regulatory pressures. Regarding retail, we believe its post-pandemic recovery has yet to be fully realized, and the consumer is still strong, boosted by continued labor market recovery and record high savings rates. That being said, we must be mindful of slowdowns in the economy and the inevitable reduction of fiscal and monetary stimulus on the horizon. The most recent release of the Purchasing Managers’ Index (PMI), which indicates trends in U.S. manufacturing, showed a softening of demand from its peaks seen earlier in the year and supply chain disruptions continuing to hamper production.
  • The leisure sector finished the quarter as the fourth largest overweight position in the Fund. Many of the Fund’s positions in this sector performed well above expectations, and we monetized these investments due to a combination of relative valuation and caution around the increasing Delta variant cases. However, most recently we reversed that shift and reentered the sector in the latter half of the quarter as Delta variant cases began to trend in the right direction, lifting the weight on the sector as a result. The Fund’s allocation to leisure had primarily been in regional gaming credits with the gaming industry benefiting from increased consumer demand. Regional gaming, particularly casinos, had benefited 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. Outside of gaming, the Fund’s positions in areas including theaters, hotels and airlines which were all associated with our reopening trades. We have retargeted these areas as potential new investments as we shift the Fund back into the leisure sector.
  • The telecommunications sector remained the Fund’s largest underweight as we have continued to target more cyclical credits that are associated with the 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 U.S. high yield credit. Year-to-date, high yield spread tightening has more than fully offset the move higher in benchmark risk-free yields. Although U.S. Treasury yields may continue rising on the back of a taper by the Fed, we believe that such a taper would be consistent with strong economic momentum which could offset any related financial conditions tightening. High yield spreads should offset that rise, as economic health is ultimately the arbiter of credit spreads.
  • We expect the trailing 12-month default rate to continue to fall below 1% through year end after peaking just above 6% in December. Furthermore, the U.S. distress ratio is at the lowest levels in 10 years, sitting at just 2.2% of the high yield market. Given the inverse relationship between recovery levels and the default rate, we expect default losses to account for a minimal drag on high yield index performance for the remainder of 2021 and through 2022. While we expect another record year of issuance in the high yield market, we 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 18 months, and activity remaining skewed to refinancing. Year-to-date through the end of September, demand has held up strongly, outstripping supply by approximately $1 billion.
  • We believe the current economic landscape is a favorable environment for high yield issuers and our Fund’s positioning currently reflects this risk posture. We have heavy exposure to the energy sector that should benefit from a strong outlook on commodities and supply and demand technicals on oil prices. The Fund also continues to be favorable on cyclical sectors including basic industry and retail, as we believe that COVID-19 and its impacts have reached another apex, which bodes well for a value or reopening rotation after those factors have lagged for six months. Moving forward, we favor lower quality credit tiers as some of our caution around the potential risks of the Delta variant and its implications for future economic growth subsided.
  • The Fund maintained modest allocations to out-of-index sectors, such as bank loans, common stock, convertibles, and investment grade bonds. We believe select exposures to these sectors offer attractive risk-reward opportunities, potential Fund diversification benefits and avenues for liquidity.

Portfolio Details as of 10/29/2021

Total Net Assets
$7.47 B
Number of Issues
769
Average Coupon
5.56%
Average Maturity
7.55 Years
Average Effective Duration
4.04 Years

Dividends & Cap Gains

Dividends & Cap Gains

Dividend Payments

Dividend Payments

For
YTD Dividends Paidas of 12/06/2021
$0.350
Dividend Frequency
Monthly (Daily Accrual)
Record Date Ex-Dividend Date Reinvest & Payable Date Dividend Reinvest Price
Daily Daily 11/30/2021 $0.03476 $7.46
Daily Daily 10/31/2021 $0.03180 $7.60
Daily Daily 09/30/2021 $0.03104 $7.60
Daily Daily 08/31/2021 $0.03123 $7.62
Daily Daily 07/31/2021 $0.03166 $7.61
Daily Daily 06/30/2021 $0.03254 $7.63
Daily Daily 05/31/2021 $0.03213 $7.56
Daily Daily 04/30/2021 $0.03195 $7.55
Daily Daily 03/31/2021 $0.03120 $7.50
Daily Daily 02/28/2021 $0.03123 $7.53
Daily Daily 01/31/2021 $0.03108 $7.48

Upcoming Dividend Payment Dates

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

Fees & Expenses

Fees & Expenses

Expense Ratioas of 11/30/2021

0.61%

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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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