Fund Review as of 09/30/2015

The Multi-Asset Balanced Opportunity Fund returned -7.78%, reflecting performance at the net asset value (NAV) of Class A shares, with all distributions reinvested, for the quarter ended September 30, 2015, compared to its benchmark, the 40% Russell 1000® Index1/35% Barclays U.S. Aggregate Bond Index2/15% BofA Merrill Lynch U.S. High Yield Constrained Index3/10% MSCI EAFE Index with Gross Dividends,4 which returned -4.07%. The Fund’s average annual total returns, which reflect performance at the maximum 2.25% sales charge applicable to Class A share investments and include the reinvestment of all distributions, as of September 30, 2015, are: one year:-6.93%; five years: 6.31%; and 10 years: 4.90%. Expense ratio, gross: 1.17%, and net 1.03%.

Performance data quoted represent past performance, which is no guarantee of future results. Current performance may be higher or lower than the performance data quoted. The investment return and principal value of an investment in the fund will fluctuate so that shares, on any given day or when redeemed, may be worth more or less than their original cost. To obtain performance data current to the most recent month-end, call Lord Abbett at 888-522-2388 or visit us at

At the asset allocation level, the Fund’s holdings in mid-cap equities detracted from relative performance, as this category underperformed the Fund’s benchmark. Security selection within this group drove relative underperformance during the period. In addition, the Fund’s exposure to international equities detracted from relative performance, as non-U.S. stocks saw downward price pressure in the third quarter on continued concerns about slowing growth in China.

Allocations to high-yield and short duration bonds contributed to performance, as both asset classes outperformed the Fund’s benchmark during the quarter. High-yield new-issue volume was subdued in the third quarter, and totaled only $59.7 billion, a 38% decline from the previous quarter. Within securitized sectors, allocations to short duration commercial mortgage-backed securities (CMBS) and asset-backed securities (ABS) aided portfolio performance as both groups outperformed in the second quarter. Within CMBS, we continue to focus on single-issue, single-borrower deals, preferring their stronger underwriting standards. The exposure to ABS continued to generate strong risk-adjusted returns, while providing additional liquidity for the portfolio.

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


Looking forward, the full impact of China’s slowdown on global growth remains to be seen. Although monetary policy is already highly accommodative across developed markets, additional fiscal stimulus remains a possibility. While our base case is that the global economy will continue to expand at a modest rate, we remain vigilant with respect to potential spillover risks.

The global growth scare led to a sharp sell-off in equities during the quarter. As a consequence, the U.S. equity risk premium (a measure of the relative attractiveness of stocks versus bonds) reached its highest level in two years. This relative value signal, coupled with expectations of positive U.S. growth and accommodative Fed policy, led us to increase our domestic equity allocations. In doing so, we reduced our overweight to international stocks. While non-U.S. equities should continue to benefit from relatively depressed currencies and supportive monetary policies, we now favor a more balanced allocation between domestic and international stocks.

Valuations for high-yield corporate bonds also became more attractive during the quarter, as growth concerns and sector-specific issues led to wider credit spreads. We took advantage of the sell-off to increase our overweight position, although we continue to be very selective in our industry allocations. Our underweight to high grade securities reflects both valuation and technical considerations. Foreign central banks, such as those in China and Russia, have been selling U.S. Treasuries to fund purchases of their own currencies amidst capital outflows. This trend accelerated during the quarter, and may represent a potential overhang going forward.   

The U.S. Federal Reserve’s early and aggressive response to the financial crisis enabled the U.S. economy to recover more quickly than other advanced economies. A natural consequence of economic recovery is monetary policy normalization, which is expected to occur first in the U.S. This progression is supportive of secular dollar strength relative to other developed market currencies such as the euro. Within emerging markets, we maintained our neutral stance but made a number of tactical shifts at the regional level. For example, we increased our allocations to certain emerging countries in Asia at attractive valuations following recent underperformance. Looking ahead, the start of U.S. policy normalization should remove an element of uncertainty around the asset class.

Effective November 29, 2013, the Lord Abbett Balanced Strategy Fund changed its name to Lord Abbett Multi-Asset Balanced Opportunity Fund.

The Fund invests all of its net assets directly in the underlying funds. The percentages are based on individual securities owned in one or more of the underlying funds. The Fund’s portfolio is actively managed and, therefore, its holdings and the weightings of a particular issuer or a particular sector as a percentage of portfolio assets may change significantly over time. Sectors may include many industries.  The mention of specific portfolio holdings is for information only.  It does not constitute a recommendation or an offer for a particular security or fund, nor should it be taken as a solicitation or recommendation to buy or sell securities or other investments.

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