Fund Review as of 12/31/2014

The Multi-Asset Balanced Opportunity Fund returned 1.75%, reflecting performance at the net asset value (NAV) of Class A shares, with all distributions reinvested, for the quarter ended December 31, 2014, 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 2.05%. 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 December 31, 2014, are: one year: 3.50%; five years: 8.64%; and 10 years: 5.71%. Expense ratio, gross5: 1.20%, and net (excludes other expenses)6: 1.05%.

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 tactical asset-allocation level, the Fund’s holdings in international equities and high-yield bonds detracted from relative performance, as these categories underperformed the Fund’s benchmark.  International equities saw downward price pressure in the fourth quarter on continued concerns about stagnating economies in Europe and slowing growth in China.  In contrast, domestic mid cap and large cap equities outperformed the Fund’s benchmark, and, consequently, allocations to these categories contributed to performance relative to the benchmark.

Although allocations to the international equity and high-yield bond asset classes were detractors from relative performance, security selection within those groups helped to offset the negative impact.  Within international equities, stock selection in the industrials sector contributed to relative performance during the fourth quarter of 2014. For example, shares of Air New Zealand Ltd., an international and domestic airline company, steadily rose, as the company benefited from favorable domestic operating conditions, increased passenger loads, and lower fuel prices. In addition, shares of bpost, a Belgium-based provider of postal services, increased following strong third quarter earnings and declining gas prices.  Among high-yield bonds, security selection in the gaming and energy sectors contributed the most to relative performance.

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


Looking ahead, lower oil prices and a stronger U.S. dollar may serve to narrow the gap in economic performance between the United States and other developed nations. While U.S. consumers and corporations will benefit from decreased transportation and input costs, the stimulative impact may be partially offset by disruption in the energy sector. But Europe and Asia, which import most of their oil, should reap significant benefits. Likewise, a weaker euro and yen should improve the competitive fortunes of exporters in those regions, while serving as a headwind for U.S. companies selling overseas.

Given the tenuous nature of the global economic recovery, potential monetary policy missteps may represent the biggest risk to growth. If, for example, the European Central Bank drags its heels on quantitative easing in hopes that lower energy costs and rising exports will be enough to spur growth, the specter of deflation feared by policymakers and market participants may very well become a reality.

A combination of relative value, monetary policy outlook, and global economic views led to a number of tactical shifts across our multi-asset-class portfolios during the fourth quarter.  Within equities, while we continued to emphasize U.S. securities, we modestly increased our allocations to international stocks. Given our positive outlook for the U.S. dollar, however, we elected to hedge these purchases from a currency perspective. In fixed income, we continue to see relative value in credit-sensitive securities, adding to our high-yield positions while reducing exposure to more interest rate-sensitive sectors of the market. Finally, we also continued to pare our allocations to emerging market currencies that have faced the dual headwinds of shaky developed market growth and declining commodity prices.

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

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