Lord Abbett Short Duration Income Fund

Scorecard
4 / 5 Stars
Lipper
5 5 5 4 1
Zacks Investment Research
1 (Strong Buy)
Standard & Poor's
4 / 5 Stars
TheStreet.com
B- (Buy)

#4 in Short-Term Bond

U.S. News evaluated 122 Short-Term Bond Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.

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Performance

The fund has returned 1.84 percent over the past year, 3.73 percent over the past three years, 6.16 percent over the past five years, and 4.36 percent over the past decade. 

Trailing Returns Updated 03.31.2014
Year to date 0.9%
1 Year 1.8%
3 Years (Annualized) 3.7%
5 Years (Annualized) 6.2%
10 Years (Annualized) 4.4%

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Summary

Lord Abbett Short Duration Income is starting to find its footing.

As of April 22, 2014, the fund has assets totaling almost $34.46 billion invested in 1,128 different holdings. Its portfolio consists largely of mortgage-backed securities and corporate debt.

Recently, this fund has been a solid performer. After a breakout 2009, during which the fund returned nearly 17 percent, it has stayed close to the front of the pack so far this year. As of late, the fund has sported overweights to both corporate bonds and mortgage-backed securities. Within the corporate sector, management owns a lot of debt from financial companies, including Citigroup and Bank of America. As for mortgage-backed securities, the fund owns a number of tame bonds, including many that are tied to Freddie Mac, a housing giant that was effectively nationalized during the recession. Looking forward, this fund is well positioned for rising interest rates. While interest rates are still at historic lows, it's just a matter of time before they start creeping back up. When that happens, funds with shorter durations will feel less pain since they're not as sensitive to rate changes. The fund has returned 1.84 percent over the past year and 3.73 percent over the past three years. 

Over the past several years, the fund has seen its fair share of disappointments. Notably, since 2000, it has landed in the bottom half of its Morningstar category in five separate years. Still, things appear to be turning around for the better. The fund has returned 6.16 percent over the past five years and 4.36 percent over the past decade. 

Investment Strategy

Recently, the fund has been finding opportunities in the mortgage and corporate spaces. Meanwhile, management is not averse to stretching for yield. As of the end of the second quarter, the fund had nearly 60 percent of its bond holdings in securities rated AAA. But on the other end of the spectrum, it had rather substantial overweights to both BB and B bonds, both of which are considered to be of the junk variety. Another important element of management's strategy is keeping a lid on the fund's average duration in order to minimize interest rate risk.

Role in Portfolio

This fund can lend support to a well-balanced portfolio.

Management

Robert Lee, Andrew O'Brien, and Steven Rocco manage the fund.  

Fees

Lord Abbett Short Duration Income Fund has an expense ratio of 0.58 percent. 

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Risk

This fund has a short average duration, so it's well positioned for interest rate hikes. Still, management's use of junk bonds does come with some risks.   

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Fund Opinions

The fund's Value Line Overall Rank, a measure of risk-adjusted performance and relative growth in fund returns, is 2 on a scale of 1 to 5, with 1 being the best and 5 the worst.

Value Line 2014-04-10

The fund's Value Line Growth Persistence rank, which awards funds that consistently outperform their broad universes, is 3 for one year, 3 for five years, and 3 for 10 years. Scores are on a 1 to 5 scale, with 1 being the best and 5 the worst.

Value Line 2014-04-10

The fund's Value Line Risk Rank, a measure of volatility, is 2 on a scale of 1 to 5, with 1 being the least volatile and 5 the most.

Value Line 2014-04-10

In the annual Lipper/Barron's Fund Families Survey of 2009, Lord Abbett ranks 13 out of 61 fund families surveyed.  

2010-10-21

In the annual Lipper/Barron's Fund Families Survey of 2009, Lord Abbett ranks 13 out of 61 fund families surveyed.  

2010-10-21