LHYQX | High Yield Fund Class R2 | Lord Abbett

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High Yield Fund

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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 09/23/2022  

w/o sales charge 5.77%

30-Day Standardized Yield 2 as of 08/31/2022  

5.83%

Fund Basicsas of 08/31/2022

Total Net Assets
$4.99 B
Inception Date
09/28/2007
Dividend Frequency
Monthly
Fund Expense Ratio
1.28%
Number of Holdings
668

Fund Expense Ratio :

1.28%

YTD 1-YR 3-YR 5-YR 10-YR Since Inception 09/28/2007
w/o sales charge -13.36% -12.99% -0.68% 1.04% 4.03% 5.35%
Lipper Category Avg. High Yield Funds -10.46% -9.94% 0.68% 2.04% 3.70% -
ICE BofA U.S. High Yield Constrained Index -11.02% -10.42% 0.78% 2.41% 4.43% 5.95%

Fund Expense Ratio :

1.28%

Fund Expense Ratio :

1.28%

YTD 1-YR 3-YR 5-YR 10-YR Since Inception 09/28/2007
w/o sales charge -15.78% -14.92% -1.60% 0.72% 4.08% 5.22%
Lipper Category Avg. High Yield Funds -13.28% -12.18% -0.15% 1.57% 3.64% -
ICE BofA U.S. High Yield Constrained Index -14.03% -12.66% -0.07% 1.94% 4.40% 5.77%

Fund Expense Ratio :

1.28%

RELATED CONTENT

A Powerful Trend That Could Support U.S. High Yield in 2022
December 6, 2021

We expect a surge in “rising stars”—upgrades of U.S. debt issues from high yield to investment grade—over the next two years.

Type Assets
High Yield Bonds
Equity
Bank Loans
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 08/31/2022 View Portfolio

Rating Assets
BBB
BB
B
<B
Not Rated

INVESTMENT TEAM

Steven F. Rocco
Steven F. Rocco, CFA

Partner & Co-Head of Taxable Fixed Income

21 Years of Industry Experience

Robert A. Lee
Robert A. Lee

Partner & Co-Head of Taxable Fixed Income

31 Years of Industry Experience

Christopher Gizzo
Christopher Gizzo, CFA

Managing Director, Deputy Director of Leveraged Credit

14 Years of Industry Experience

Karen  J. Gunnerson
Karen J. Gunnerson

Portfolio Manager

12 Years of Industry Experience

Supported By 70 Investment Professionals with 16 Years Avg. Industry Experience

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Performance

Performance

Dividend Yield 1 as of 09/23/2022  

w/o sales charge 5.77%

30-Day Standardized Yield 2 as of 08/31/2022  

  Subsidized3 Un-Subsidized4
w/o sales charge 5.83% 5.83%

Fund Expense Ratio :

1.28%

YTD 1-YR 3-YR 5-YR 10-YR Since Inception 09/28/2007
w/o sales charge -13.36% -12.99% -0.68% 1.04% 4.03% 5.35%
Lipper Category Avg. High Yield Funds -10.46% -9.94% 0.68% 2.04% 3.70% -
ICE BofA U.S. High Yield Constrained Index -11.02% -10.42% 0.78% 2.41% 4.43% 5.95%

Fund Expense Ratio :

1.28%

Fund Expense Ratio :

1.28%

YTD 1-YR 3-YR 5-YR 10-YR Since Inception 09/28/2007
w/o sales charge -15.78% -14.92% -1.60% 0.72% 4.08% 5.22%
Lipper Category Avg. High Yield Funds -13.28% -12.18% -0.15% 1.57% 3.64% -
ICE BofA U.S. High Yield Constrained Index -14.03% -12.66% -0.07% 1.94% 4.40% 5.77%

Fund Expense Ratio :

1.28%

Year Fund Returns ICE BofA U.S. High Yield Constrained Index
2021 5.72% 5.35%
2020 4.08% 6.07%
2019 14.57% 14.41%
2018 -5.58% -2.27%
2017 8.06% 7.48%
2016 15.51% 17.49%
2015 -2.59% -4.61%
2014 3.08% 2.51%
2013 9.25% 7.41%
2012 16.01% 15.55%
2011 2.79% -
2010 13.86% -
2009 49.84% -
2008 -23.22% -
2007 1.58% -
Year Q1 Q2 Q3 Q4 Yearly Returns
2022 -5.49% -10.88% - - -15.81%
2021 1.76% 2.86% 0.67% 0.34% 5.72%
2020 -16.77% 10.73% 5.56% 6.99% 4.08%
2019 7.36% 3.80% 0.05% 2.75% 14.57%
2018 -1.15% -0.26% 2.44% -6.52% -5.58%
2017 2.72% 1.74% 2.48% 0.90% 8.06%
2016 1.91% 5.40% 5.34% 2.09% 15.51%
2015 3.08% 0.64% -4.29% -1.89% -2.59%
2014 2.81% 3.27% -1.91% -1.03% 3.08%
2013 3.99% -1.11% 2.41% 3.74% 9.25%
2012 6.51% 0.28% 5.08% 3.37% 16.01%
2011 3.71% 1.11% -7.18% 5.61% 2.79%
2010 4.82% -0.87% 6.07% 3.30% 13.86%
2009 5.85% 17.29% 14.00% 5.87% 49.84%
2008 -3.36% 1.93% -7.57% -15.68% -23.22%
2007 2.91% 0.11% -0.16% -1.24% 1.58%

NAV Historical Prices

Date Net Asset Value

Portfolio

Portfolio

Rating Assets
High Yield Bonds
Equity
Bank Loans
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 08/31/2022

Rating Assets
BBB
BB
B
<B
Not Rated

Portfolio Positioning as of 6/30/2022

  • We reduced the Fund’s credit risk, increasing its quality profile. In particular, we increased the Fund’s position in BB-rated credit meaningfully throughout the quarter. This deliberate move up-in-quality was in response to increased sentiment on rising recessionary risks in the U.S. and global economies. Separately, these credits yielded more attractive relative valuations, given the recent widening in spreads from the selloff of more duration sensitive bonds within the high yield universe. In a further move to decrease credit exposure, we simultaneously rotated away from CCC-rated credit and reduced the Fund’s overall spread risk. Notably, the Fund finished the quarter underweight CCCs from a risk-adjusted standpoint.
  • Energy was the top sector overweight position. Primary exposure to this sector remained in the Exploration & Production (E&P) subsector. Issuers in this subsector continued to benefit from a positive technical relationship in oil prices that had been a result of under supply in oil inventories coupled with heightened demand for global energy. However, we continued to gradually add to other subsectors, including Gas Distribution, given more attractive relative valuations. While the Fund remains overweight and we remain constructive on the energy sector, it is important to note that the high yield energy index now trades at much tighter spreads than the overall market. As a result, the return profile of that sector will be less of a positive outlier than it has been in the post-COVID-19 period to date. Additionally, we are mindful of the possibility of moderating energy demand as global growth slows. That said, we view Energy as a much more defensive sector than in the recent past given the fundamental behavioral changes of companies within the sector.
  • We remained constructive on the Basic Industry sector which finished as the second largest sector overweight. Within the sector, we continued to favor positions in both Metals and Mining and Chemicals subsectors. Despite the pullback in commodity prices in June, the sector should continue to be supported by a strong technical relationship, particularly given many ongoing supply shortages as the Russia-Ukrainian conflict continues. We had also gradually added positions associated with U.S. home building and home buying cycles in recent weeks. Although the housing industry has faced increased headwinds recently given higher construction costs and weaker mortgage demand, several investments have yielded attractive entry points after underperformance has resulted in levels where we believe there is more relative value.
  • We reduced the Fund’s allocation to sectors with excess exposure to consumer spending. We have limited the Fund’s holdings in sectors that may face headwinds in the short term as inflation continued to rise and weigh on consumer sentiment and potential spending patterns. Two of these sectors included Retail and Leisure. With respect to retailers, issuers have experienced higher input costs and ongoing supply chain issues. Additionally, U.S. consumers began to exhibit signs of curbing consumption on goods given rising prices. This trend was evident in low-end consumers, which may have less flexibility to absorb higher prices going forward. As for Leisure, we reduced the Fund’s exposure in the Gaming and Recreation & Travel subsectors given their sensitivity to rising labor costs, as well as their less attractive valuations. Certain Recreation & Travel issuers also are expected to face additional headwinds with higher fuel costs, which should add downward pressure on margins in the near term.
  • We meaningfully added to select defensive sectors. Recessionary risks continued growing throughout the quarter given the combination of steadily high inflation and tighter monetary policy. As a result, we have migrated the Fund to a moderately more defensive posture with a focus on the Healthcare and Utilities sector. Within Healthcare, we primarily targeted health facilities issuers, specifically higher credit-quality issuers that are less sensitive to heightened wage costs. With respect to Utilities, we added to issuers from the electric-generation space where we saw attractive relative value.
  • Media and Telecommunications sectors finished as the Fund’s largest sector underweights. We moved the Fund to a significant underweight position within the Media sector as we expect rising inflation and labor costs to continue to be a significant headwind. We have particularly trimmed the Fund’s holdings within the Cable & Satellite TV subsector which we feel is more exposed to these headwinds, particularly as select issuers in this space struggle with subscriptions losses. Within Telecommunications, we expect the sector to continue struggling 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 and more valuable investments reside in other sectors.
  • The Fund’s opportunistic allocations to out-of-index sectors decreased for the quarter. While we believe that select exposures to these asset classes can offer attractive risk-reward opportunities, potential portfolio diversification benefits and avenues for liquidity, we reduced off-index exposure based on increased risk-off sentiment and moved further into high-quality high yield bonds. The strong preference for domestic, U.S. dollar, fixed rate exposure drove reductions in asset classes such as equity, convertibles, bank loans and emerging market bonds. Separately, Fund cash remains elevated compared to historical levels.

Portfolio Details as of 08/31/2022

Total Net Assets
$4.99 B
Number of Issues
668
Average Coupon
5.38%
Average Maturity
6.53 Years
Average Effective Duration
4.06 Years

Dividends & Cap Gains

Dividends & Cap Gains

Dividend Payments

Dividend Payments

For
YTD Dividends Paidas of 09/23/2022
$0.233
Dividend Frequency
Monthly (Daily Accrual)
Record Date Ex-Dividend Date Reinvest & Payable Date Dividend Reinvest Price
Daily Daily 08/31/2022 $0.02936 $6.31
Daily Daily 07/31/2022 $0.02912 $6.50
Daily Daily 06/30/2022 $0.02929 $6.19
Daily Daily 05/31/2022 $0.02952 $6.71
Daily Daily 04/30/2022 $0.02937 $6.76
Daily Daily 03/31/2022 $0.03014 $7.04
Daily Daily 02/28/2022 $0.02935 $7.16
Daily Daily 01/31/2022 $0.02770 $7.29

Upcoming Dividend Payment Dates

Record Date Ex-Dividend Date Reinvest & Payable Date
Daily Daily 09/30/2022
Daily Daily 10/31/2022
Daily Daily 11/30/2022
Daily Daily 12/31/2022

Capital Gains Distributions

For
Record Date Reinvest & Payable Date Long-term Short-term * Total Reinvest Price
12/16/2021 12/17/2021 - $0.0100 $0.0100 $7.50

Upcoming Capital Gain Distribution

Record Date Ex-Dividend Date
12/19/2022 12/20/2022

Fees & Expenses

Fees & Expenses

Expense Ratioas of 08/31/2022

1.28%

Fund Documents

Fund Documents

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Portfolio Holdings 1Q
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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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