Fund Review as of 06/30/2015

The Multi-Asset Balanced Opportunity Fund returned -0.61%, reflecting performance at the net asset value (NAV) of Class A shares, with all distributions reinvested, for the quarter ended June 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 -0.46%. 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 June 30, 2015, are: one year:-1.69%; five years: 10.09%; and 10 years: 6.03%. Expense ratio, gross5: 1.17%, and net (excludes other expenses)6: 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. In addition, the Fund’s underweight to developed markets currencies was a detractor from relative performance as these currencies rallied in the second quarter. The U.S. Federal Reserve adopted a more dovish stance in its policy deliberations, and reiterated its commitment to supporting economic growth as a result of disappointing U.S. growth in the first quarter. This change in tone led to modest depreciation of the U.S. dollar against developed currencies such as the euro.

Allocations to high-yield bonds and international equities contributed to performance as both asset classes outperformed the Fund’s benchmark during the quarter. Within high yield, fundamentals remain favorable, supported by low interest rates and an improving U.S. macroeconomic outlook, which have contributed to default rates running well below longer-term averages. This benign credit environment, combined with a rebound in oil prices (energy companies are large issuers of high yield bonds), contributed to positive returns for the sector. Within international equities, security selection in consumer discretionary and materials sectors aided portfolio performance in the second quarter.

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


Looking ahead, the growth rates of advanced economies are expected to continue moving toward their respective long-term averages. While a potential softening in the Chinese economy represents a risk to global growth, the ability and willingness of major central banks to provide extraordinary stimulus is highly supportive of future expansion for both developed and emerging economies.

The U.S. equity-risk premium (a measure of the relative attractiveness of stocks versus bonds) continues to indicate that stocks are attractively valued, although less so than in recent years. This relative value signal and a positive outlook for U.S. economic growth support a constructive view on domestic equities. Consistent with our investment process, however, we exited profitable positions in U.S. growth stocks during the period. Although the Greek debt crisis and weakness in Chinese shares weighed on investor sentiment late in the quarter, non-U.S. stocks—particularly those in developed European markets—should continue to benefit from a relatively strong U.S. dollar, lower energy costs, and highly accommodative monetary policy.

We added to the Fund’s positions in emerging-markets currencies during the period, and are now neutral versus our long-term targets. While we expect secular U.S. dollar appreciation, aggressive central bank stimulus should lead to more balanced global growth, which is supportive of emerging economies. As in past quarters, we continue to favor countries that should benefit from low oil prices, as well as those with ties to an improving European economy. Conversely, we remain wary of countries that are dependent on commodity exports. Turning to developed markets, exceptionally accommodative monetary policy in the eurozone and Japan continues to render their currencies less attractive, while commodity weakness represents a headwind for exporters such as Australia and Canada. As such, we viewed the second-quarter rally in these currencies as an opportunity to reduce the Fund’s positions in anticipation of future depreciation.

Tighter credit spreads led us to further reduce the Fund’s allocations to high-yield bonds during the second quarter. Meanwhile, we added to the Fund’s positions in investment-grade bonds that saw their valuations become more attractive as longer-term interest rates reached their highs of the year. We continue to maintain a small overweight in credit-sensitive fixed income, however, as fundamentals remain favorable and defaults are running well below long-term averages. In addition, attractive yields and relatively limited interest rate sensitivity should support credit as the Fed moves closer to “liftoff.”

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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